A Beginner’s Tactical ETF Portfolio for June (DBC, BND, VEU, VNQ, VTI)

June 7, 2011 9:28pm NYSE:BND NYSE:DBC

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: Vanguard Total Bond Market ETF (NYSE:BND), Powershares Commodity Index (NYSE:DBC), Vanguard FTSE All-World ex-US ETF (NYSE:VEU), Vanguard REIT Index ETF (NYSE:VNQ), Vanguard Total Stock Market ETF (NYSE:VTI). 

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.

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%

Written By Scott’s Investments   Disclosure: No positions

Scott’s Investments focuses on several different ETF portfolio strategies ranging from Basic, Individual, Country, US Sector, and Global Sector ETF portfolios.

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