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
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 |
| 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 |
| 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 |
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.
