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, Random Roger (199 clicks)
Portfolio strategy, ETF investing, foreign companies
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A request came in for an update of an all-ETF portfolio exercise I first did in June, 2006. You can read the original post here.

The table to the left is a cleaner version (easier to read) of the construction of the portfolio when I wrote about in June 2007 for TSCM - you can read that here.

The portfolio from the top down is very similar to what I was doing in client accounts in June 2006. There have been a few changes in client accounts since, but I have not updated the portfolio from the time I first input it into Morningstar in June a year ago.

From the bottom up there are only a couple of ETFs there that I use for clients. I would note that WisdomTree had not made much hay by June of 2006, so a redo would look different than this mix. Obviously there are plenty of other new funds that would be considered, like maybe MOO.

Morningstar has a performance tab that is a little quirky and while I cannot vouch that it is exactly accurate, the chart below says that for the trailing 12 months it is up 19.11%. In the same time the S&P 500 is up 14.96%. Neither figure includes dividends which I will get to in a moment.

I tried to get a number from inception and that one did not seem quite right as a function of sliding the arrow along the bottom, but it shows this beating the SPX approximately 24.50% to 24.00%. If true, eh, a push.

On reason I am not a fan of this sort of portfolio is that the dividend yield from a portfolio of funds is usually less than a portfolio of individual stocks.

The few times I have looked at this on Morningstar the dividend yield has been a moving target. As of yesterday, it showed a 1.51% yield which is about 20 beeps less than the S&P 500. By using more stocks, I get a close to a 3% yield in real portfolios - though I should add that for whatever reason Morningstar does not always have accurate dividend info with ETFs.

This is merely an academic exercise to explore moderate weightings in very narrow ETFs that are poo-poohed by other people.

Morningstar does not have much in the way of information for risk adjusted return. R-Squared, Alpha, Beta and Standard Deviation are only available for 3 years and I did not see a Sharpe Ratio. Since many of the funds have not been around for three years there are no data points.

Some of the funds are up a lot and so now have a disproportionate weighting. The plan from here is to leave this original portfolio as is and create a second one. I can do one of two things with the second one.

One would be to start over with the exact same weighting into the exact same funds. The other idea would be to create a new portfolio (some of the funds would be the same) that took in new funds that have since listed and would account for the few top down portfolio changes I have made for clients since the original post 16 months ago.

So this will be a vote based on comments left. You are either voting for rebalancing the old or creating a new. Either would take a lot of cypherin' and figurin' (Jethro Bodine reference) so only one choice for now based on reader votes. And if no one gives a crap that's fine too.

Either way this is best thought of an academic exercise. Vote for what you think is most useful for the exercise.

Source: An All-ETF Portfolio With Exposure To Narrow Themes