Tim Middleton posted the 3Q results for his all ETF portfolio today, writes Roger Nusbaum (wish list). For the quarter his portfolio was up 4.9% vs 0.5% for the SPX (his quarter is off by a couple of days due to something about when articles publish but is it still a valid three month period). I wrote about his portfolio six months ago and noted that he had a 14.3% weight in energy, much bigger than the then 8.7% of the SPX. I said that with such a big bet on energy he would either beat by a lot or lag by a lot. Energy has been on fire and he has beat by a lot.
The current article spells out what the portfolio will look like for the fourth quarter. The weight in energy is again high at what I count to be 14.1% vs now 10.19% for the S+P 500. I emailed him about this six months ago and I got a reply that I did not fully understand so I won't try to email again.
He is effectively 40% overweight the sector. It could easily turn out to be the right call but it is a big enough bet that it should be mentioned with some detail in the article and people that implement the portfolio for themselves should know that they have this much energy and that they will lag if crude drops to $45.
I would note that energy's weight has grown by about 150 basis points over that last six months. That is not meaningless. For what its worth I took some beta out of the sector in the spring.
It might not occur to people that most of the equity components of Tim's portfolio has energy stocks in them. Too many folks might just look at the 11% weight in IGE and think 11% is in energy (for the record 84% of IGE is in energy stocks).
- ETFs mentioned in this article (clicking on a link pulls up articles for the ETF in question): IGE.
- The complete list of funds (and links to articles about them) covered by ETF Investor.
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