Covestor model manager Kevin Shine’s Asset Allocation model holds positions from many different asset classes including REITs, stocks, commodities and currencies—but they are all purchased through ETFs.
One of the top holdings in the Asset Allocation model is iShares Barclays MBS Bond Fund (MBB). MBB is designed to mirror the performance of the Barclays Capital U.S. MBS index. The fund is invested heavily in the Federal Home Loan Mortgage Corporation (FHLMC) and Fannie Mae (OTCQB:FNMA) and is trading (as of July 20, 2010) at a slight premium to NAV. While 90% of the fund’s assets are invested in assets shared by the model index, the fund also invests in bonds, futures, money markets and other investments that are not in the index but should help the returns mimic the index’s performance.
Another top holding is PowerShares DB Precious Metals Fund (DBP), a fund created to mimic the performance of the Deutsche Bank Liquid Commodity Index - Optimum Yield Precious Metals Excess Return. The fund currently holds futures contracts for gold and silver and was trading above NAV as of July 20, 2010.
Moving into the energy sector we have JPMorgan Alerian MLP Index ETN (AMJ), which is a fund designed to perform like the Alerian MLP Index. The Alerian MLP Index has 50 of the most prominent energy Master Limited partnerships, which means that buyers of the AMJ fund are buying into traded limited partnership units.
The final top holding we’ll take a look at is the PowerShares DB Agriculture Fund (DBA). This fund is modeled after the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return and is filled with futures contracts on commodities like corn, soy beans and sugar. While these commodities are widely traded, this was the only fund which was trading at a discount to NAV today—July 20, 2010.