Commission-Free ETF Portfolio Update

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Includes: AGG, BND, DBA, DBC, DJP, EEM, EFA, IWB, IWM, IYR, RWX, TIP, VB, VEU, VNQ, VNQI, VTI, VWO
by: Scott's Investments

I track 3 commission-free ETF portfolios on Scott's Investments. Not all of the ETFs are truly commission-free, but I did my best to include as many as possible in each portfolio, depending on what is available from each broker. The brokers highlighted are TD Ameritrade, Vanguard, and Fidelity. (For the full strategy background, click here.)

Investors can use the monthly moving average to determine when to invest in the index or ETF. When the ETF is above a moving average, invest in the position. When it is below its moving average, sell the position and hold cash. The objective is to participate in the index or ETF when the long-term trend is positive, and avoid the index when the trend is negative. Mebane Faber has shown in his The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets how this strategy has historically done a good job of reducing portfolio drawdown and volatility.

The signals update daily (as opposed to just at the end of the month). Thus, it is possible to get "whipsaws", where an ETF make cross above and below the moving average on a frequent basis. I typically write an update near the end of the month, but it is up to each individual on how to use the data, how frequently to check the signals, and which system works best for you.

Currently, the bond ETFs TIP, BND, and AGG are above their 10 month moving average. This is the same at the time of my last update, with the exception that VNQ was also above its 10 month moving average at the end of October. All other ETFs in the portfolios remain below their 10 month SMA.

Please note the data source is Yahoo Finance and I use the dividend adjusted closing price to calculate the moving average. It is possible to get different signals if using unadjusted closing prices to calculate moving averages.

TD AMERITRADE Position (determined by current 10 month SMA)
DJP iPath DJ-UBS Commodity Index TR ETN Cash
DBC PowerShares DB Commodity Index Tracking Cash
RWX SPDR DJ International Real Estate ETF Cash
VNQ Vanguard REIT Index ETF Cash
TIP iShares Barclays TIPS Bond Invested
BND Vanguard Total Bond Market ETF Invested
VWO Vanguard Emerging Markets Stock ETF Cash
VEU Vanguard FTSE All-World ex-US ETF Cash
VB Vanguard Small Cap ETF Cash
VTI Vanguard Total Stock Market ETF Cash
Click to enlarge

VANGUARD Position (determined by current 10 month SMA)
DBA* PowerShares DB Agricultural Commodities Cash
DBC* PowerShares DB Commodity Index Tracking Cash
VNQI Global ex-U.S. Real Estate Cash
VNQ Vanguard REIT Index ETF Cash
TIP* iShares Barclays TIPS Bond Invested
BND Vanguard Total Bond Market ETF Invested
VWO Vanguard Emerging Markets Stock ETF Cash
VEU Vanguard FTSE All-World ex-US ETF Cash
VB Vanguard Small Cap ETF Cash
VTI Vanguard Total Stock Market ETF Cash
Click to enlarge

FIDELITY Position (determined by current 10 month SMA)
DBA* PowerShares DB Agricultural Commodities Cash
DBC* PowerShares DB Commodity Index Tracking Cash
VNQI* Global ex-U.S. Real Estate Cash
IYR Dow Jones US Real Estate Cash
TIP iShares Barclays TIPS Bond Invested
AGG Barclays Aggregate Bond Invested
EEM MSCI Emerging Markets Cash
EFA MSCI EAFE Cash
IWM Russell 2000 Cash
IWB Russell 1000 Cash
Click to enlarge

Disclosure: No current positions in stocks mentioned.

Disclaimer: Please note that Scott's Investments and its author 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.