Strategy: Basic ETF Portfolio for May (BND, DBC, VEU, VNQ, VTI)

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 11.48% including dividends.  The strategy for the portfolio is simple: purchase the top 3 ETFs with the highest 3, 6, and 12 month returns.  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 April of the 5 ETFs listed above. This month the holdings are VNQ, VTI and DBC (3-6-12 strategy).  This combination of ETFs is the same as last months list and has not changed for 2011. Therefore, there has been no turnover in the portfolio year to date.  BND’s momentum also continues to significantly lag the other four ETFs.  

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.  

Symbol Name Quarterly Half Year Year Average 200 Day SMA
(BND) Vanguard Total Bond Market ETF 1.47% 0.16% 5.40% 2.34% 1.22%
(DBC) PowerShares DB Commodity Index Tracking 13.56% 26.39% 30.52% 23.49% 20.73%
(VEU) Vanguard FTSE All-World ex-US ETF 9.13% 12.92% 21.72% 14.59% 12.64%
(VNQ) Vanguard REIT Index ETF 10.39% 15.44% 22.63% 16.15% 14.49%
(VTI) Vanguard Total Stock Market ETF 7.84% 17.70% 18.41% 14.65% 13.57%

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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