In July 2009 I profiled a momentum based ETF portfolio. I track this portfolio (and others) monthly on Scott's Investments using a spreadsheet. The portfolio consists of the ETFs with the best momentum among 5 ETFs: BND (Vanguard Total Bond Market ETF), DBC (Powershares Commodity Index), VEU (Vanguard FTSE All-World ex-US ETF), VNQ (Vanguard REIT Index ETF), VTI (Vanguard Total Stock Market ETF).
The Basic Portfolio strategy is tracked as a hypothetical portfolio on Scott's Investments with a $10,000 starting balance. The portfolio finished down over 5% for 2011, including dividends and as of the close April 30th, the portfolio is up 2% since inception.
The strategy for the portfolio is simple: purchase the top 3 ETFs with the highest average 3, 6, and 12 month returns ("3-6-12″). Only purchase the top 3 ETFs if they are also above their 200 day simple moving average at month end. Investors could also ignore the moving average indicator and purchase the top 3 ETFs strictly based on historical returns ("3-6-12″) or could use a combination of different approaches or trading strategies.
Listed below are the month end results for April of the 5 ETFs listed above. This month the top three momentum ETFs are BND, VTI and VNQ. Thus, we will be selling VEU, a holding in the portfolio since February, because it is no longer in the top 3 momentum. The proceeds will be used to purchase BND.
Many of the strategies listed here were inspired in part by Mebane Faber, author of The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets. For an even better explanation of some of the strategies, I recommend the book.
The data source for the information below is Finviz:
|Symbol||Name||Quarterly||Half Year||Year||Average||200 Day SMA|
|BND||Vanguard Total Bond Market ETF||0.83%||1.97%||6.85%||3.22%||1.63%|
|DBC||PowerShares DB Commodity Index Tracking||0.78%||3.16%||-10.01%||-2.02%||0.42%|
|VEU||Vanguard FTSE All-World ex-US ETF||1.92%||4.20%||-13.16%||-2.35%||3.57%|
|VNQ||Vanguard REIT Index ETF||6.68%||19.12%||9.26%||11.69%||14.15%|
|VTI||Vanguard Total Stock Market ETF||6.26%||13.86%||3.82%||7.98%||10.43%|