A Basic ETF Portfolio for September

I previously detailed some basic portfolios as well as trading ideas. In an effort to make my site more user friendly, I will be updating the portfolios and trading strategies monthly. The first portfolio to be featured for September is a 'basic portfolio' of 5 ETFs: BND (bonds), DBC (commodities), VEU (all world ex-us), VNQ (US REITS) and VTI (total US stock market).

One could take multiple approaches to the portfolio, from buying and holding to actively managing it; or an investor could use a combination of different approaches. Listed below are the month end results for August of the 5 ETFs listed above. One could purchase the top 1,2, or 3 performing ETFs based on momentum as judged by the 3-6-12 returns or just the 6 month returns. In this case, that would indicate a purchase of VEU, VNQ, and VTI (3-6-12 strategy), and the same VEU, VTI, and VNQ (based on 6 month returns). Another twist an investor could add would be to purchase the underlying securities based on momentum only if they are also trading above their 200 day moving average. At the end of August, all of the securities listed were above their 200 day simply moving average.

Many of the strategies listed here were inspired in part by Mebane Faber, author of The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets. For an even better explanation of some of the strategies, I'd recommend the book. Also, he has a new project which allows users to replicate the best performing hedge funds, AlphaClone. The returns speak for themselves.

The table is below, for more information on basic trading there are some free videos from INO here:

click to enlarge

No Disclosures

Comments

[Scared Stiff:]

Aren't you concerned about DBC's possible CFTC troubles?

Sep 02 12:53 PM

[Scott's Inv...:]

I tend to watch the technicals for indicators, from a momentum perspective it is not a buy when compared to the others, but is still trading above the 200 day MA. Commodities have been shown to offer diversification especially when in a positive trend, as indicated by long term moving averages.

Sep 02 01:21 PM

[djc:]

Yeah but... you also have to keep up with the news, especially regarding ETFs that use commodity futures.

In fact, take a look at UNG today - WOW.

DBC could be completely dismantled by CFTC. I wouldnt wanna be in it if that happenned, no matter where it was trading relative to the 200-day.

Sep 02 03:08 PM

[Scott's Inv...:]

If the market sees that as a potential, it will be reflected in the price action and a sell would be triggered at the 200 day MA.

Sep 02 03:23 PM