6 ETF Model Portfolios You Can Use – Updated through 6/14/2011

Ulli Model ETF Portfolios 6 Comments

The continued sell-off, saved by yesterday’s rebound, caused a shift in YTD performance of our various portfolios. The income portfolio (#5) moved back into the #1 spot with a gain of +4.89%, which was followed by the #3 portfolio with +4.79% and the #1 portfolio +4.28%.

VEU (Foreign Large Blend) triggered its trailing sell stop and was sold on 6/13/11. This affected the holdings in portfolios #2, #3 and #4. With the markets showing continued weakness, I will wait before replacing this position.

We also came close to liquidating our holding in VDE (Energy), which had clearly pierced its 10% trailing sell stop. Thanks to yesterday’s rally, we dropped back below it and lived another day to talk about it.

Again, the idea behind these models is not for you to be invested in the top performer but in a portfolio that represents ‘your’ personal risk tolerance – and not someone else’s.

Take a look at this week’s numbers:

1. ETF Trend Tracking Model Portfolio

This is the portfolio allocation I predominantly use in my advisor practice. Given current market conditions, and an ever growing number of global hotspots, I like the concept of having a solid core holding in PRPFX, although with the recent slide, it slipped as well but managed to stay fairly stable.

Around this fund, I have added what I call boost components consisting of ETFs that can produce higher returns than my core holding, at least during bullish periods. When a market pullback occurs, the core holding should add an element of stability.

This is exactly what happened early in March 11, when the double natural disasters struck Japan. While the S&P 500 lost all of its YTD gains, and dropped into negative territory, this portfolio stayed positive.

Nevertheless, as you know from my writings, anything I invest in involves the use of trailing sell stops, which are shown and tracked on the upper right of the table.

Last week, this portfolio was up YTD +4.84% vs. +4.28% as of today.


2. Conservative ETF Growth Portfolio

This portfolio, as are the following ones, would be typical of what is being used in the buy-and-hold community, as you can see by the 40% allocation to various bond ETFs. If you are conservative, this simple combination could work for you, but I still recommend the use of the trailing sell stops during these uncertain times.

Last week, this portfolio was up YTD +3.50% vs. +2.83% as of today.


3. Aggressive ETF Growth Portfolio

What makes this one aggressive is the small 15% allocation to bonds. This portfolio was leading the bunch on a YTD basis, but with the recent correction, it came off its high very quickly but managed to hold steady around the #2 spot.

However, if you have an aggressive streak in your personality, you could consider this one. If you use my recommended sell stop discipline, you know exactly ahead of time what your downside risk will be.

Last week, this portfolio was up YTD +5.66% vs. +4.79% as of today.


4. Moderate ETF Growth Portfolio

I call this one moderate growth, because of the higher allocation to various bond ETFs (26%) than in the aggressive set up above. It is also more diversfied domestically, but as the YTD return shows, that does not seem to matter much as it is pretty even with my Trend Tracking Portfolio.

Last week, this portfolio was up YTD +4.87% vs. +4.01% as of today.


5. ETF Income Portfolio

This is as simple as it gets, but even in the current market environement, this portfolio ranks #1 again. During the recent sell-off, it dropped in value quickly due to no offsetting bond positions but still has maintained balance. Be sure to use a 7% sell stop on all holdings.

Last week, this portfolio was up YTD +5.24% vs. +4.89% as of today.


6. The Ivy ETF Portfolio

If you missed the recent post about the Ivy portfolio, you can read it here.

This is a simple 5-asset class portfolio with each individual component being bought when it crosses its respective trendline to the upside. Each component is being sold once it crosses its trend lines to the downside again, according to the author’s rules.

I have made 3 adjustments:

1. I apply a 39-week Simple Moving Average (SMA) to generate the Buys, while the authors use a 45-week SMA.

2. As mentioned in the blog post, I prefer using my trailing sell stop discipline for my exit strategy.

3. Personally. I favor using BND (as opposed to IEF) as my bond component, since it has shown more stabilty in the past.

This portfolio was also affected by the sale of DBC. I will re-enter this position once it has taken out its old high of 31.92 to be sure that any rebound is not just another headfake.

Last week, the Ivy portfolio was up YTD +4.76% vs. +3.80% as of today.

To repeat, the key to selecting a portfolio from the above list is not just performance. Personally, I’d rather lag a little on the upside but have some assurance that I will also lag when the downside comes into play.

This will help you to sidestep whipsaw signals on occasion, which are caused by temporary market pullbacks followed by a subsequent resumption of the previous up trend.

I will update these portfolios every Wednesday and inform you via email that the updated versions have been posted.

Quick Reference:

6/8/11 Model Portfolio

6/1/11 Model Portfolio

5/25/11 Model Portfolio

5/18/2011 Model Portfolio

5/11/2011 Model Portfolio

5/3/2011 Model Portfolio

4/26/2011 Model Portfolio

4/20/2011 Model Portfolio

4/13/2011 Model Portfolio

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Comments 6

  1. Anon,

    My preference is to follow my trailing sell stops rather than guessing the next directional move in the markets.


  2. I have been following your model portfolios which issue on Wednesdays. However, I don’t usually get it until Thursdya. How can I get it earlier on Wednesday? Is there a web or e-mail address I can go to ?

  3. Anon,

    The ETF model portfolios are posted every Wednesday around 6 am PST, and the email notice goes out later that day. Please check the blog at that time. There is no earlier listing anyplace else.


  4. Doug,

    Yes it does. It has come off its high by only -3.81%, so it has a ways to go.


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