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I am an independent investor writing at Scott's Investments (http://www.scottsinvestments.com). My site is dedicated to discussing and publicly tracking historically successful investments strategies and sharing free investment resources. I emphasize empirical, historical, and quantitative... More
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Scott's Investments / Stock Loon LLC
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Scott's Investments
  • A Beginner's Tactical ETF Portfolio for June 0 comments
    Jun 3, 2011 10:55 AM | about stocks: BND, DBC, VEU, VNQ, VTI
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    In July 2009 I profiled a momentum based ETF portfolio. I track this portfolio (and others) monthly on Scott's Investments using Google Docs. 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. Year to date the portfolio is up 7.35% including dividends.  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.
    Despite only being 5 ETFs, one could take multiple approaches to the portfolio, from buying and holding to actively managing it; or an investor could use a combination of different approaches or trading strategies.
     Listed below are the month end results for May of the 5 ETFs listed above. This month the holdings are VNQ, VEU and DBC.  This combination of ETFs differs from last months list, the first change of 2011. The strategy is sending a sell signal for VTI and a buy signal for VEU.  The momentum difference between the 2 ETFs is minimal - VEU had less than a .5% 3-6-12  momentum lead over VTI at month end.  Nevertheless, commitment and discipline to a strategy is critical once you have decided a strategy is right for you.
    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,  and Google Finance.  No positions



    TickerCompanyPerformance (Quarter)Half YearYearAverage Return200-Day SMA
    BNDVanguard Total Bond Market ETF2.56%1.88%5.37%3.27%2.15%
    DBCPowerShares DB Commodity Index Tracking0.27%19.52%40.37%20.05%11.41%
    VEUVanguard FTSE All-World ex-US ETF3.13%12.91%34.04%16.69%7.05%
    VNQVanguard REIT Index ETF8.71%18.69%34.10%20.50%13.43%
    VTIVanguard Total Stock Market ETF3.98%14.99%29.85%16.27%9.77%

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