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Eight months ago I wrote an article on the "Holy Grail" portfolio that received significant attention. This article is a revision of that portfolio and one of the major changes is that the stocks are removed. While highly selected stocks can be used to bring down portfolio uncertainty, it is a difficult process to accomplish successfully.

The following portfolio is made up of 13 ETFs, with an emphasis on value and emerging markets. Note the high percentage allocated to Small-Cap Value (NYSEARCA:IWN) and Emerging Markets (NYSEARCA:VWO). Thirty-one percent of the portfolio is assigned to Treasury instruments in an effort to increase diversity while holding down volatility. That shows up in the third slide or the Correlation Matrix.

While a five-year span of historical data was desired, several ETFs did not have sufficient historical records so the data period was shortened to 53 months. For this analysis, I assumed the S&P 500 will grow at an annualized rate of 7.0% over the next year. Call it an optimistic assumption.

Given those assumptions, the following portfolio is projected to return nearly 8.2% annually over the next six to twelve months. This percentage meets our goal of exceeding the S&P 500 by 1% point. The projected uncertainty is under 15% or 13.9%. Scrolling down the first screen shot we note the Diversification Metric surpasses our goal of 40%. Overall, the portfolio has a global presence with a conservative bent.

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Below is a screen shot of the "Delta Factor" analysis and of the thirteen ETFs, the international REITs (NYSEARCA:RWX) is in the best position to perform well over the next year, followed by IWN, VEA, and VWO.

In the "Delta Factor" calculation, the Treasury or income type ETFs, TIP, TLT, and IEF, are compared to a bond standard (NYSEARCA:AGG) whereas the equity ETFs are compared to Vanguard's Total Market Index, VTSMX.

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The following slide shows the Correlation Matrix for the ETFs that make up this revised Holy Grail portfolio. The benefits of holding DBC, GLD, SLV, TIP, TLT, and IEF is self-evident.

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A cautionary note is appropriate when making future projections. While I never expect any of these numbers to exactly meet their goals or exactly hit their projected values, I've found them to be useful when thought of in terms of probabilities. Try not to lock on to the exact numbers but think in terms of tilting a portfolio in a particular direction.

Disclosure: I am long VTI, IWN, VNQ, VWO, RWX, DBC, RWX, IGE, GLD, SLV, TIP, TLT, IEF.