In July 2009 I profiled a momentum based ETF portfolio. I track this portfolio (and others) monthly using a spreadsheet. The portfolio consists of the ETFs with the best momentum among 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).
The Basic Portfolio strategy is tracked as a hypothetical portfolio with a $10,000 starting balance. Year to date the portfolio is down 5.2% largely in part to September's performance. The strategy was up 2.83% including dividends for the year through the end of August. The strategy for the portfolio is simple: purchase the top 3 ETFs with the highest average 3, 6, and 12 month returns ("3-6-12"). Only purchase the top 3 ETFs if they are also above their 200 day simple moving average at month end. Investors could also ignore the moving average indicator and purchase the top 3 ETFs strictly based on historical returns ("3-6-12") or could use a combination of different approaches or trading strategies.
Listed below are the month end results for September of the 5 ETFs listed above. This month the holdings are BND and cash. This combination of ETFs differs from last month's portfolio. September's poor performance in a variety of global equity and commodity markets led to DBC and VNQ trading below their long-term moving averages for much of the month. Thus, they are being sold and the proceeds moved to cash until the end of October.
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.
The data source for the information below is Finviz, and Google Finance.
|Symbol||Name||Quarterly||Half Year||Year||Average||200 Day SMA|
|BND||Vanguard Total Bond Market ETF||3.95%||6.24%||5.23%||5.14%||4.20%|
|DBC||PowerShares DB Commodity Index Tracking||-11.21%||-16.18%||6.58%||-6.94%||-12.04%|
|VEU||Vanguard FTSE All-World ex-US ETF||-23.07%||-22.37%||-13.80%||-19.75%||-18.47%|
|VNQ||Vanguard REIT Index ETF||-15.97%||-11.55%||0.79%||-8.91%||-10.49%|
|VTI||Vanguard Total Stock Market ETF||-16.36%||-15.59%||0.35%||-10.53%||-11.98%|
Disclaimer: No current positions in stocks mentioned. Please note that Scott's Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott's Investments.