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ETFInvestor (94.85)

ETFInvestor's Model Portfolio

Recs

8

November 20, 2008 – Comments (1) | RELATED TICKERS: IWC , GWX , IYR

Ok...time to rumble.  Below is a model ETF portfolio I developed based on the discussions in the previous blog posts.  I started with $1,000,000 to simplify things (if only I had this much in my real portfolio...).

My annual rebalancing date will be November 20, 2008.  At the time I will reblance my investments to meet the targets identified below, selling off some shares from the asset classes that have appreciated and buying those that have fallen.   

I entered these investments into the Bloomberg portfolio tracking tool and can now track my returns on a regular basis.   

Asset Class          Percentage        Allocation     Ticker

S&P 500              13.5%                135,000        SPY
US Large Value     8.0%                 80,000          VTV
US Small              8.0%                 80,000          VB
US Small Value     8.0%                 80,000          VBR
US Microcap         3.5%                 35,000          IWC
International Large 19.5%               195,000         EFA
International Small  2.5%                 25,000        GWX
Emerging Markets 10.0%               100,000        EEM
US REIT                3.5%                 35,000         IYR
International REIT   1.5%                 15,000        RWX
Domestic Bonds    17.0%               170,000       AGG
International Bonds  3.0%                30,000         BWX
Cash                      2.0%                20,000         -

Total                                            1,000,000

So now what can I do?  Well, at this point I don't have to do anything until November 20, 2009.  I can turn of the financial news media and read poetry or watch my favorite sports teams.

But I'm not going to do that with this model portfolio.  Instead I'm going to dig deeper into what is happening with the assets, keep an eye out for new ETFs that track asset classes that I don't currently cover, evaluate whether or not I have the best ETFs in a particular asset class, and explore the possibility of doing some tax-loss harvesting.  

So, Fool, what do you think of these ETFs?  Have I picked the best ones for a particular asset class or are there better options?  Why? 

1 Comments – Post Your Own

#1) On November 22, 2008 at 5:03 PM, katinga (85.41) wrote:

Thanks for starting the blog.

Critique: There's no commodities or ETFs that trade in commodities in your portfolio. DBC might be a choice, though I am not happy that it takes a 10% position in gold. Through some sort of magic, it even pays a dividend once a year.

Also, I have read that it is better to set trigger points for when one asset goes out of balance too far, and rebalance on the basis of the trigger points instead of annually. My trigger points are whenever an asset class reaches 27% of the portfolio on the up side, or 15% down, that is, a quarter of starting value gained or lost.  

My allocation:

Bonds: 20%

US Stocks: 20%

Foreign Stocks: 20%

REITs: 20% (like you, US and foreign, though I am heavier on the foreign part--about a third)

Commodities: 20% Half in DBC, quarter in energy company ETFs, quarter in natural resources (non-energy) ETFs.

I am ten years from retirement. So I am thinking that, once the recovery starts, I'll start accumulating cash in the form of a CD or bond ladder until it gains an equal weight with the other classes.

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