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A Pro's All-ETF Portfolio - Take two - Can we do better?

Recs

3

May 28, 2009 – Comments (3) | RELATED TICKERS: PHO , GDX , RJA

I wonder if you'll forgive this repost, and if fools want to talk a little more about it.

Particularly, does anybody want to take a stab at comment #2 below?
-solaris
************* 

Interesting concept. Anybody want to take a crack at it?
http://finance.yahoo.com/special-edition/active-investor/......

    Don't worry, this is not another one of my 'contest', though i am real interested about the strategy.

Here's the portfolio:

• Vanguard Total Stock Market ETF (VTI): 30%
• SPDR S&P Dividend Aristocrat (SDY): 18%
• SPDR S&P World ex-US (GWL): 9%
• iShares iBoxx Invesment Grade Corp Bond (LQD): 20%
• Vanguard Total Bond Market ETF (BND): 20%
• SPDR Gold Trust (GLD): 3%

The article basically disagrees with it. I sure would like to hear what you fools have to say.

Water, Oil, Dividends, Food. Health Care, ?   ?   ?  I know some of you fools specialize in this type of stuff.

Rec this post ? if you want some good All ETF advice?

-solaris

4 Comments – Post Your Own#1) On May 28, 2009 at 3:21 PM, portefeuille (99.98) wrote:

• Vanguard Total Stock Market ETF (VTI): 30%
i hate buying "the market"
• SPDR S&P Dividend Aristocrat (SDY): 18%
i hate "dividend" stocks (I like some even though their dividends are high)
• SPDR S&P World ex-US (GWL): 9%
i hate buying "the market"
• iShares iBoxx Invesment Grade Corp Bond (LQD): 20%
i prefer non-"Investment Grade" (junk)
• Vanguard Total Bond Market ETF (BND): 20%
i hate buying "the market"
• SPDR Gold Trust (GLD): 3%
i prefer silver

Report this comment #2) On May 28, 2009 at 3:35 PM, AllStarPortfolio (78.15) wrote:

portefeuille Will you, for fun, Thow out an all etf portfolio, and a minimum investement? and strategy?

Like $20,000 minimum investment seperated into 4 buys 6 months apart, These 12 etfs, these weights, etc.

I know it's not that simple, just askin'

-solaris

Report this comment #3) On May 28, 2009 at 3:44 PM, speedybure (55.30) wrote:

I could compile a decent etf portfolio

ENY: Canadian Oil Trusts

GDX: Mining ETF

RJA: Replication of jim rogers agriculture index (although an etn) comprised of futures. hes been buying it, so he claims.

PUA: Good asian etf (australia, new zealand, hong kong, japan)

EEM: Emerging markets, except for gazprom, more heavily weighted toward brazil and china (the next economic superpower) 

Report this comment #4) On May 28, 2009 at 4:17 PM, Bays (99.64) wrote:

Good picks speedy....  I like PUA, and I own XTR.TO which is a canadian royalty trust ETF.

A portfolio like that is what I would recommend to anyone who doesn't have any investing experience, and doesnt mind the "get rich slow" approach.  

It's conservative, but effective. 

 

3 Comments – Post Your Own

#1) On May 28, 2009 at 9:27 PM, SuperPicks (29.06) wrote:

Great question, and I'm sure you will get a variety of answers with different viewpoints & weightings.

A good article on the subject is here.  It hammers the case in for having a diversified asset portfolio for the long term & the resulting increase in efficiency of higher returns. 

The article says 25% in each of four main categories:

25% US Stocks

25% Foreign Stocks

25% REIT

25% Commodities

 

Remember, ETFs are already well-diversified, if you compose any portfolio made up of more than 5-6 ETFs, you're most likely wasting your time/money/& applying overlap reducing your diversification.

I would say to do the following with ETFs:

25% Total Developed World Stock

25% Emerging Market Stock

25% Commodities

25% Alternate Asset pick (for example either World Bond Fund, or REIT, or Preferred Share ETF-remember NOT to pick a dividend fund here because that will be insane overlap of either of the first two above)

Before selecting & settling with your ETF, look up its stats on both Morningstar & yahoo finance.  Ensure it has the right country weights you desire, a nicely diversified industry weighting (i like to ensure no one industry has mroe than 20% invested & that the top sector isn't over 45% invested), a decent market cap holding (you may want to avoid funds that only invest in the giant billion dollar market caps), and decent portfolio valuations (ie observe dividend yield, P/B, P/Cash Flow, P/E). 

As far as your referenced ETFs above: 

makes no sense holding any more than 1 of the 3 stock funds listed :

VTI, SDY, GWL has plenty of overlap & correlation. 

LQD/BND is personal preference on the alternate asset preference I mentioned above (i think bonds are a great idea-the question is, what country/regions?).  Again there's overlap since they're both fixed income products.

GLD or any single commodity is a non-diversified bet.  GCC is a better commodity play IMO. 

Remember, any stock ETF pick you make, there's an equivalent dividend fund to go with it (ie there's dividend focused world stock ETF, a dividend focused emerging market ETF, etc).  So there's no need to have a separate allocation for a dividend fund if you already have any other stock ETF in the portfolio.

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#2) On May 28, 2009 at 9:42 PM, SuperPicks (29.06) wrote:

It hammers the case in for having a diversified asset portfolio for the long term & the resulting increase in efficiency of higher returns.

I meant to say illustrates how reducing portfolio volatility increases capital gains.

If you want my absolute personal flavor of the moment weighting, I warn you its exotic, different, and risky:

20% World Stock (ETF w/relatively higher dividend & still well diversifed)

20% Emerging Market (ETF w/relatively higher dividend & still well diversifed)

35% Fixed Income - Emerging Market Bonds

15% Commodities

10% Volatility Index

(15%) Personal Short picks across the world or short fund

 

I like FAX for fixed income emerging mkts (there's more region accessible funds like PCY or JEM)

I like GCC for commodities

I like VXX for volatility

the 15% short acts as a cash portion of your portfolio, that cash will be denominated in your home currency, which is US dollars, due to this & what the portfolio above does - i see no need for a US Fixed Income fund in the portfolio, especially if you're still earning your $$ in USD$ from work.  As traditionally bond funds historically haven't correlated with the markets, so shorting provides you with opposite correlation to market (depending on how your pick does that is). 

Again, this post is my personal flavour, against the grain, exotic option. 

 

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#3) On May 28, 2009 at 9:45 PM, TMFUltraLong (99.95) wrote:

Did someone say ETF? =)

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