7 ETF Model Portfolios You Can Use – Updated through 5/22/2012

Ulli Model ETF Portfolios 2 Comments

Thanks to Monday’s dead cat bounce, if that’s what it was, the S&P 500 only leaked to a loss of some 1% since last week’s Model ETF Portfolio update.

Initial euphoria in regards to “Fallbook’s” IPO last Friday has vanished, and it now appears that the masses have been slaughtered as the IPO price from 3 days ago remains nothing but a dream.

Questionable news from around the world’s hotspots makes me believe that the downside has not played itself out and there is more to come. Nothing goes down in a straight line, so we are bound to see the occasional dead cat bounce.

With the International TTI being stuck on the bearish sided of the line, the Domestic TTI heading in that direction, although it’s still stuck on the bullish side, how do you set up a new portfolio from the below models?

I think the best way is to start allocating only the bond portion of each portfolio and then wait to see where equities are headed. Should they go further south, chances are good that bonds will rally, as the hunt for safety will be on. That’s how I deal with new money in these market conditions.

Here’s the latest update:

1. ETF Trend Tracking Model Portfolio

[Click on any table to enlarge]

This is the portfolio allocation I have used predominantly in my advisor practice during the first half of 2011. Given those market conditions, and an ever growing number of global hotspots, I liked the concept of having a solid core holding in PRPFX, although we got stopped out in 2011 as a result of the wild market swings along with a sharp pullback in the metals.

Around this fund, when in buy mode, I add 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.

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.


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.


3. Aggressive ETF Growth Portfolio

What makes this one aggressive is the small 15% allocation to bonds. 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.


4. Moderate ETF Growth Portfolio

I call this one moderate growth, because of the higher allocation to various bond ETFs (27%) than in the aggressive set up above. It is also more diversified domestically.


5. ETF Income Portfolio

This is as simple as it gets, but during last year’s sell-off, it dropped in value quickly due to no offsetting bond positions and showed a 0% invested balance by August 2011.

It’ll be interesting to see if this simple combination can withstand the vagaries of the market place in 2012.


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 trend line 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 stability in the past.

Currently, only 4 out of the 5 components are positioned above their respective long-term trend lines and therefore in bullish territory. Should upward momentum improve, we may get to a 100% invested position.


7. The ETF Equivalent of PRPFX

As posted recently, I have created and back tested the ETF equivalent of my favorite mutual fund, PRPFX, which is a core holding in my #1 Portfolio. If you missed it, you can read the announcement here.

Take a look at the combination of ETFs:

Since these 8 ETFs represent only one fund, namely PRPFX, we can to apply a different exit strategy. For that purpose, I will not track the high points made for each ETF, as with the other 6 models, but measure my 7% drop from the high point this entire portfolio has made. Alternatively, you can sell this entire portfolio once our domestic TTI has crossed into bear market territory or hold on to only those positions that are maintaining upward momentum. That solves the issue of “what to buy” if you had liquidated 100%.

(ETF trading costs are not included in these portfolios demonstrations. They are intended to show market effects on different scenarios only as an educational tool)

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.

I will update these portfolios every Wednesday.

Quick Reference:

5/15/12 Model Portfolio

5/8/12 Model Portfolio

5/1/12 Model Portfolio

4/24/12 Model Portfolio

4/17/12 Model Portfolio

4/10/12 Model Portfolio

4/3/12 Model Portfolio

3/28/12 Model Portfolio

3/20/12 Model Portfolio

3/13/12 Model Portfolio

3/6/12 Model Portfolio

2/28/12 Model Portfolio

2/21/12 Model Portfolio

2/14/12 Model Portfolio

2/7/12 Model Portfolio

1/31/12 Model Portfolio

1/25/12 Model Portfolio

1/18/12 Model Portfolio

1/11/2012 Model Portfolio

1/4/2012 Model Portfolio

12/28/11 Model Portfolio

Disclosure: I may have client holdings in some of the funds/ETFs discussed above

Contact Ulli

Comments 2

  1. Ulli,

    I appreciate your efforts in providing both your blog and newsletter and have enjoyed them for quite sometime. Thank you.

    I notice in the Tuesday, May 22nd posting you stated: “I mentioned Friday that our VTI holding was scheduled to be sold today (as it had triggered its trailing sell stop point), unless we saw a strong rebound. Well, the rebound ensued, and I held on to VTI for the time being. It will be now interesting to see if the G8 jawboning produces any results (I doubt it) helping the markets higher, of if this was simply a one-day dead cat bounce.” I assume that was based on Monday’s market (May 21st).

    Today’s model portfolio post indicates the VTI positions were sold on May 18th.

    Do you use different criteria for the blog information versus the model portfolios?

    Thank you again for all the information you provide.


  2. Mike,

    It’s very close, but sometimes I hold on to some positions for an extra day to make sure a potential whipsaw can be avoided. Sometimes that delay works in my favor and sometimes it does not.


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