6 ETF Model Portfolios You Can Use – Updated through 5/31/2011

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Four straight up days in the markets supported all of our model portfolios. To be fair, out of the 4 higher closes in a row, only yesterday’s rally was significant enough to make a difference. On the other hand, looking at a market that’s been struggling throughout the month of May, I welcome any gain, no matter how small.

Looking at the pecking order of our 5 model portfolios, leadership changed this week and the Income Portfolio (#5) took top billing with a YTD gain of +8.61%, which was followed by the Aggressive Portfolio (#3) +7.98% YTD, and the Trend Tracking Portfolio (#1) +7.10% YTD.

To be clear, the idea is not to be invested in the top performer but a portfolio that represents ‘your’ personal risk tolerance – and not someone else’s. With the markets trending higher during the past week, aggressive portfolios will benefit more, while in the prior week, which was marked by sell-offs, the conservative approach paid off.

Nevertheless, portfolios #2 and #4 also gained nicely, as the tables show:

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Mutual Funds On The Cutline – Updated as of 5/27/2011

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A rising tide lifts all boats, and that was the case in some sectors. Despite the weak overall equity market conditions, a few funds in the technology and financial sector recovered and headed back above the cutline.

Here are the movers in the financial sector:

ICFSX Financial (ICFSX) from -17 to +1

T. Rowe Price (PRISX) from -5 to +13

In technology, we saw the following position changes:

Fidelity Select (FSCSX) from -20 to +2

Jennison (PTYAX) from +1 to +16

In the Pacific Asia area, ICON funds (ICARX) recovered from -16 to +17.

While these are nice moves above the cutline, it does not mean those funds are in a buy mode due to their predominantly negative momentum numbers and large DrawDown (DD%) figures. You want to see blue numbers all the way across and a low percentage number in the DD% column. From the funds listed above, however, one comes very close.

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New Russell 2000 High Beta ETF (SHBT) Started Trading

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The ETF Daily News reports that “Russell To Begin Trading The Russell 2000 High Beta ETF (SHBT) Friday, May 27:”

Russell will begin trading its new “Russell 2000 High Beta ETF” (NYSE:SHBT) Friday May 27, 2011. The Fund seeks investment results that closely correspond to the total return of the Russell-Axioma U.S. Small Cap High Beta Index.

Total Annual Fund Operating Expenses: 0.69%

Principal Investment Strategies of the Fund

The Fund is an index-based exchange-traded fund that seeks investment results that closely correspond to the total return of the Russell-Axioma U.S. Small Cap High Beta Index (the “Index”). RIMCo uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the Index it tracks and does not seek temporary defensive positions when markets decline or appear overvalued. The Fund seeks to gain exposure to the factor exhibited in its Index. The Fund’s investment objective and the index upon which the Fund seeks to track its performance may be changed without shareholder approval.

…

The Index is designed to deliver exposure to stocks that are predicted to have a high beta as determined by a screening and ranking methodology applied to the output of the Axioma U.S. Equity Medium Horizon Fundamental Factor Risk model. Beta is a measure of the sensitivity of a stock’s price to a change in the broad market price level, as represented by the Russell 2000® Index (an index comprised of U.S. small capitalization stocks). High beta stocks are considered to have a higher risk profile than the overall market and can be used by investors to adjust beta exposure in a portfolio.

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ETFs On The Cutline – Updated through 5/27/2011

Ulli ETFs on the Cutline Contact

With the market’s early sell off, followed by a partial come back and a close to the downside, some of the equity ETFs around the cutline meandered as well with no convincing moves either way.

While weakness prevailed, the Latin American ETFs bucked the trend, came out of hibernation and did an about face, at least for this moment in time:

Latin America (GML) from -13 to +13

Latin America (ILF) from -17 to +7

Brazil (BRF) from -20 to +5

Slipping to the downside where the following:

Financial sector (XLF) from +10 to -4

China (PGJ) from +1 to -16

Diversified Emerging Markets (EEB) stayed below the line but improved from -19 to -7

Again, it’s important for me to point out that, as I posted in “How do I use the ETF Cutline Table to make a Buy decision,” just because an ETF rallies above its trend line, does not mean it’s a buy. If you missed it, take a look at the link for details on what to look for before making a decision.

Here’s this week’s report:

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Last Week In Review: ETF News And Blog Posts

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In case you missed it, here’s a summary of the topics that I posted to my blog during week ending on 5/27/2011.

The markets slowly climbed back after Monday’s sell-off but still ended up closing slightly to the downside.

My published Cutline tables and Model ETF Portfolios can give you an assist by indentifying weakness and strength in various market segments so that you can make better investment decisions by avoiding overexposure in those areas that are trending down.

This week, we covered the following:

“Mutual Funds Rush To Join The ETF Movement Via Active Offerings”

“ETF Leaders And Laggards – For The Week Ending 5/27/2011”

“Is There Such A Thing As A ‘Reliable’ And ‘Safe’ ETF?”

“ETF/No Load Fund Tracker For Friday, May 27, 2011”

“Weekly StatSheet For The ETF/No Load Fund Tracker – Updated Through 5/26/2011”

“High Volume ETFs On The Cutline – Updated Through 5/25/2011”

“6 ETF Model Portfolios You Can Use – Updated through 5/24/2011”

“Mutual Funds On The Cutline – Updated as of 5/23/2011”

“Major Market ETFs Succumb To Bearish Pressures”

“ETFs On The Cutline – Updated through 5/20/2011”

Mutual Funds Rush To Join The ETF Movement Via Active Offerings

Ulli ETFs on the Cutline Contact

The WSJ reports in “Mutual Funds Race to Join ETF Fray” (subscription required) that mutual fund companies are accelerating their efforts to join the spreading ETF movement:

After watching the exchange traded fund industry streak past $1 trillion of assets recently, a host of mutual-fund companies are stepping up their efforts to get into the game—with a more active but pricier product for investors.

Fund giants from Eaton Vance to Blackrock iShares have gotten regulators’ approval to roll out what the industry calls more actively managed ETFs. Janus, AllianceBernstein and Dreyfus have sought permission. Last month, Pimco said it would launch an ETF version of its $240 billion Total Return fund.

They are seeking to join the still-small group of actively-managed ETFs: funds that trade all day long on an exchange like stocks, but with underlying investments that are chosen, and traded, by a pro. Companies tout their market-beating potential—and charge more for the promise of added returns.

Fans say the new breed of ETFS will give investors a chance to juice returns at a still relatively low price.

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