6 ETF Model Portfolios You Can Use – Updated through 6/21/2011

Ulli Model ETF Portfolios 2 Comments

This week’s rebound helped 5 of our 6 ETF Model Portfolios to move higher, while the Income Portfolio (#5) retreated. That’s no surprise since its holdings were cut by 50% as two of the trailing sell stops were triggered during the recent slide. If momentum continues upward, I will re-instate these positions.

This caused a changing of the guards in terms of YTD performance. The top of the pecking order is now lead by the Aggressive Portfolio (#3) with the Trend Tracking Portfolio (#1) in close pursuit.

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

[Click on any table to enlarge, copy and print]

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 remain far more stable than the S&P 500 index.

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 +4.28% vs. +4.72% 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 +2.83% vs. +3.33% 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 crawl back into the #1 spot.

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 +4.79% vs. +5.25% 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 continues to trail my Trend Tracking Portfolio by a small margin.

Last week, this portfolio was up YTD +4.01% vs. +4.21% as of today.


5. ETF Income Portfolio

This is as simple as it gets, but due to a reduction of half of its holdings, this portfolio has slipped into the #5 spot. During the recent sell-off, it dropped in value quickly due to no offsetting bond positions and now shows only a 50% invested balance. Be sure to use a 7% sell stop on the remainder of these holdings.

Last week, this portfolio was up YTD +4.89% vs. +4.09% 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 +3.80% vs. +4.49% 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:

6/15/11 Model Portfolio

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 2

  1. Hi Ulli:

    I’m following your model portfolios closely and I thank you once again for your valuable insight. Could you review your criteria for reinstating an ETF? For example, at what level would you re-purchase VWO?

    Thanks so much,

  2. John,

    At this point, my renetry point would be at 50.71, which was the high from which the sell stop was calculated. If you are more aggressive, yuo could use a re-entry point that is 3% higher than your sell price of 46.77.


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