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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
|Ticker||Company||Performance (Quarter)||Half Year||Year||Average Return||200-Day SMA|
|BND||Vanguard Total Bond Market ETF||2.56%||1.88%||5.37%||3.27%||2.15%|
|DBC||PowerShares DB Commodity Index Tracking||0.27%||19.52%||40.37%||20.05%||11.41%|
|VEU||Vanguard FTSE All-World ex-US ETF||3.13%||12.91%||34.04%||16.69%||7.05%|
|VNQ||Vanguard REIT Index ETF||8.71%||18.69%||34.10%||20.50%||13.43%|
|VTI||Vanguard Total Stock Market ETF||3.98%||14.99%||29.85%||16.27%||9.77%|