Jason Vavra's  Instablog

Here is the monthly update to the very basic ETF tactical model that I wrote about in September. Actually, this will be a two month update since I did not give an update in November.

To recap, the basis is the model will utilize 60% equity, 30% fixed income and 10% alternatives allocation target. The model will be tactically rebalanced monthly on the last day of the month based on the corresponding ETF’s 200 moving day average (The buy in price will be the opening price on the first trading day of the next month). The tactical decision making process will be if the ETF is trading above it’s 200 day moving average, we will stay in that asset class and if it is below its 200 day moving average, we will move that asset class to a money market.

The prior 2 months would have had us fully invested. As of 12/1/2009, the hypothetical portfolio would have returned (excluding dividends and money market interest) 6.89% since inception versus the S&P 500's 7.79%.

This month, our model would have us again fully invested in all of our asset classes.

AS OF 12/1/2009	TARGET %	ABOVE MA?	TACTICAL %
EQUITY
VTI	40%	Yes	40%
VEU	20%	Yes	20%
FIXED INCOME
BND	30%	Yes	30%
ALTERNATIVE
VNQ	5%	Yes	5%
DJP	5%	Yes	5%
Money Market	0%	n/a	0%

Here is the monthly update to the very basic ETF tactical model that I wrote about last month.

To recap, the basis is the model will utilize 60% equity, 30% fixed income and 10% alternatives allocation target. The model will be tactically rebalanced monthly on the last day of the month based on the corresponding ETF’s 200 moving day average. The tactical decision making process will be if the ETF is trading above it’s 200 day moving average, we will stay in that asset class and if it is below its 200 day moving average, we will move that asset class to a money market.

The prior month had us fully invested except for our commodities exposure. The portfolio returned (excluding dividends and money market interest) 5.13% versus the S&P 500's 5.92%. Reminder this portfolio is designed, over the long term, to outperform the S&P 500, with less risk and volatility.

As a side note, my model that contains more asset classes had me out of the broad based commodity index and into the gold ETF. That worked out very well as DJP went up 3.18% and the GLD went up 5.27%.

This month, our model has us fully invested in all of our asset classes.

AS OF 9/1/2009	TARGET %	ABOVE MA?	TACTICAL %
EQUITY
VTI	40%	Yes	40%
VEU	20%	Yes	20%
FIXED INCOME
BND	30%	Yes	30%
ALTERNATIVE
VNQ	5%	Yes	5%
DJP	5%	Yes	5%
Money Market	0%	n/a	0%

AS OF 9/1/2009	TARGET %	ABOVE MA?	TACTICAL %
EQUITY
VTI	40%	Yes	40%
VEU	20%	Yes	20%
FIXED INCOME
BND	30%	Yes	30%
ALTERNATIVE
VNQ	5%	Yes	5%
DJP	5%	No	0%
Money Market	0%	n/a	5%