Comments on Gary Hickman's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/gary-hickman/articles http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-409500 409500 Mon, 02 Mar 2009 12:01:21 -0500
Thanks]]> http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-385570 385570 Thu, 12 Feb 2009 10:42:22 -0500 http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-347546 347546 Hm, SPY did not lose 50% last year. I thought the market was down > <40% for the year.]]> Tue, 06 Jan 2009 12:29:51 -0500 Thanks for pointing out the error. You are correct but fortunately the relative performance comparisons are the same. The corrected numbers are:
2008 5 year average
HMF -33.3% +2.43%
SPY -34.3% - 0.20%
RSP -37.5% -0.75%

On Jan 06 02:10 AM dtv999 wrote:

> Hm, SPY did not lose 50% last year. I thought the market was down
> <40% for the year.]]> http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-347540 347540 Sorry Gary, my mistake, got the symbols confused. > > If you wouldn't mind continuing the discussion...I have analyzed > your HMF, and had a few other comments. You have chosen sector based > ETFs representing all the major sectors. Between all your ETFs you > basically have every stock in the S&P and then some. However, > the return seems to outpace the S&P (at least for the years you > were able to track). I believe the key difference is that you are > equal weighting each sector. If we look at the S&P it is usually > not close to being equal weighted between sectors. At present, SPY > has about 15% financial services and less than 4% utilities. Your > HMF has 11% everywhere (I'm assuming you would rebalance once every > year or two). I would suggest that your HMF is doing better because > the sectors where the S&P is weighted over 11% have recently > been performing worse than sectors where the S&P is weighted > less than 11%. In a nutshell, the equal sector weighting provided > a little less exposure to underperforming sectors and more exposure > to the better performing sectors. > > Don't get me wrong, I think this is still a better approach than > just simply putting everthing into SPY or RSP. It certainly results > in a more diversified portfolio. > > Any thoughts?]]> Tue, 06 Jan 2009 12:24:29 -0500 Your analysis seems valid. My goal was to be very diversified and it has worked so far. As mentioned in my original article, the portfolio is revised slightly once each year. I also made a computational mistake, but the comparisons are still valid. (see my reply to dtv999)


On Jan 05 07:38 PM DRH wrote:

> Sorry Gary, my mistake, got the symbols confused.
>
> If you wouldn't mind continuing the discussion...I have analyzed
> your HMF, and had a few other comments. You have chosen sector based
> ETFs representing all the major sectors. Between all your ETFs you
> basically have every stock in the S&P and then some. However,
> the return seems to outpace the S&P (at least for the years you
> were able to track). I believe the key difference is that you are
> equal weighting each sector. If we look at the S&P it is usually
> not close to being equal weighted between sectors. At present, SPY
> has about 15% financial services and less than 4% utilities. Your
> HMF has 11% everywhere (I'm assuming you would rebalance once every
> year or two). I would suggest that your HMF is doing better because
> the sectors where the S&P is weighted over 11% have recently
> been performing worse than sectors where the S&P is weighted
> less than 11%. In a nutshell, the equal sector weighting provided
> a little less exposure to underperforming sectors and more exposure
> to the better performing sectors.
>
> Don't get me wrong, I think this is still a better approach than
> just simply putting everthing into SPY or RSP. It certainly results
> in a more diversified portfolio.
>
> Any thoughts?]]> http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-347131 347131 Tue, 06 Jan 2009 03:20:27 -0500 http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-347106 347106 Tue, 06 Jan 2009 02:10:41 -0500 http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-346952 346952 Mon, 05 Jan 2009 21:01:35 -0500 http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-346899 346899 Thanks for your comments. Actually, there is only one financial ETF > in the portfolio- IYG. XLV is health care.]]> Mon, 05 Jan 2009 19:38:14 -0500
If you wouldn't mind continuing the discussion...I have analyzed your HMF, and had a few other comments. You have chosen sector based ETFs representing all the major sectors. Between all your ETFs you basically have every stock in the S&P and then some. However, the return seems to outpace the S&P (at least for the years you were able to track). I believe the key difference is that you are equal weighting each sector. If we look at the S&P it is usually not close to being equal weighted between sectors. At present, SPY has about 15% financial services and less than 4% utilities. Your HMF has 11% everywhere (I'm assuming you would rebalance once every year or two). I would suggest that your HMF is doing better because the sectors where the S&P is weighted over 11% have recently been performing worse than sectors where the S&P is weighted less than 11%. In a nutshell, the equal sector weighting provided a little less exposure to underperforming sectors and more exposure to the better performing sectors.

Don't get me wrong, I think this is still a better approach than just simply putting everthing into SPY or RSP. It certainly results in a more diversified portfolio.

Any thoughts?


On Jan 05 10:53 AM Gary Hickman wrote:

> Thanks for your comments. Actually, there is only one financial ETF
> in the portfolio- IYG. XLV is health care.]]> http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-346359 346359 Thankyou for the portfolio idea. It seems reasonable except that > the holdings include the financial services ishares AND the financial > services SPDR. Why two ETFs in the financial services space, while > everything else seems very balanced? Is this an intentional attempt > to overweight one sector. It would seem to me that there will end > up being a disproportionate amount of money going into companies > like JP Morgan, Bank of America, and Wells Fargo. Would it be wise > to swap out either xlv or iyg for something else? Regards, Dave]]> Mon, 05 Jan 2009 10:53:50 -0500

On Jan 05 10:11 AM User 331246 wrote:

> Thankyou for the portfolio idea. It seems reasonable except that
> the holdings include the financial services ishares AND the financial
> services SPDR. Why two ETFs in the financial services space, while
> everything else seems very balanced? Is this an intentional attempt
> to overweight one sector. It would seem to me that there will end
> up being a disproportionate amount of money going into companies
> like JP Morgan, Bank of America, and Wells Fargo. Would it be wise
> to swap out either xlv or iyg for something else? Regards, Dave]]> http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-346307 346307 Mon, 05 Jan 2009 10:11:08 -0500 http://seekingalpha.com/article/113183-an-etf-package-that-outperforms-the-s-p-500-update?source=feed#comment-346186 346186 Mon, 05 Jan 2009 08:26:56 -0500 http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-124682 124682 Mon, 10 Mar 2008 11:29:29 -0400 http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-111605 111605 Sun, 20 Jan 2008 00:57:14 -0500 http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110887 110887 Wed, 16 Jan 2008 16:59:40 -0500 just one correction to my earlier reply. IYG has had an average greater return than XLF over the past 7 years , with better performance in 5 of 7 years.]]> http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110871 110871 Wed, 16 Jan 2008 16:25:00 -0500 As I briefly mentioned in the article, dividends and management fees were the main reasons for the ETF selections within a category. In perhaps an oversimplified look, DIA yields 2.3% with expenses of 0.17% vs. XLI yielding 1.6% and 0.24% expense ratio. For IYG vs. XLF, IYG has a slightly higher dividend, but more importantly it has outperformed XLF in each of the last 7 years, even with a higher expense ratio. ]]> http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110835 110835 Wed, 16 Jan 2008 14:33:48 -0500 http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110217 110217 Mon, 14 Jan 2008 12:35:30 -0500
underweighting finaciials-just financials-last year woul dhave resulted in big outperformance--and given the news that woul dhave been easy to see coming--overweighting utilities, energy and materials would have helped too.

nuff said. ]]> http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110184 110184 Mon, 14 Jan 2008 10:30:24 -0500
I imagine this allocation model is more a general concept exercise than a directive to select only iShares' products. There are, after all, less expensive etfs, and better performers, as well. Still, as a domestic only exercise, it's an interesting concept.

I've seen some folks build some models solely on market capitalization, as well (the famous/infamous "9 square" model), which is also a fine study, albeit difficult to keep appropriately tuned.]]> http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110169 110169 Mon, 14 Jan 2008 09:41:31 -0500
I enjoyed the article, and use something like this in place of TSM for part of my domestic portfolio. I divide the total by 11, and double weight technology and financials because they have historically made up high percentages of the total. We're both of us greatly overweighting industries like materials and utilities, if I remember correctly.

I wonder if your case would be significantly stronger if you simply used sector SPDRs for all of your industry ETFs? Why DIA and IYG when there are SPDRs available? Your comparison is to S&P 500, but you are vulnerable to criticism for including ETFs that reach outside the 500.]]> http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110165 110165 Mon, 14 Jan 2008 09:18:25 -0500 http://seekingalpha.com/article/60028-an-etf-package-that-outperforms-the-s-p-500?source=feed#comment-110144 110144 Mon, 14 Jan 2008 08:30:20 -0500