I previously detailed some basic portfolios as well as trading ideas. In an effort to be more user friendly, I will be tracking/updating the portfolios monthly on my blog using Google Docs. The first portfolio to be featured for the new decade is a 'basic portfolio' of 5 ETFs: BND (Vanguard Total Bond Market ETF), DBC (Powershares Commodity Index), VEU (Vanguard FTSE All-World ex-US ETF), VNQ (Vanguard REIT Index ETF), VTI (Vanguard Total Stock Market ETF).
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 December 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, VNQ, and VTI (based on 6 month returns). This combination of ETFs has been little changed over the past several months in the basic ETF portfolio as the equity markets rebounded significantly in 2009.
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 December, 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 recommend the book. Also, he has a new project which allows users to replicate the best performing hedge funds, AlphaClone.
|Ticker||Company||Free Trend Analysis||Performance (Quarter)||Half Year||Year||Sum||200-Day SMA|
|BND||Vanguard Total Bond Market ETF||Here||-0.66%||3.16%||3.30%||5.80%||1.87%|
|DBC||PowerShares DB Commodity Index Tracking||Here||12.32%||11.76%||16.19%||40.27%||9.12%|
|VEU||Vanguard FTSE All-World ex-US ETF||Here||6.13%||25.46%||37.61%||69.20%||14.84%|
|VNQ||Vanguard REIT Index ETF||Here||14.45%||53.17%||28.05%||95.67%||26.63%|
|VTI||Vanguard Total Stock Market ETF||Here||8.74%||25.74%||28.26%||62.74%||14.73%|