According to Morningstar I came very close on the sector weighting. That is not surprise given way that ETFs are structured, you know what you are getting.
The portfolio misfired on almost every other aspect of trying to mimic my model portfolio.
The most disappointing was the dividends. The portfolio only yields 0.9% which is way below the S&P 500. The cap size of the portfolio missed as well coming in at only $18 billion vs. closer to $35 billion but I might be able tweak that with a broad based market cap ETF.
Foreign was only 21% of the portfolio. With a little bit more tweaking I could work in more foreign, but that might upset the sector applecart.
The performance of the allocation clearly beat the market over the last 12 months which is encouraging but it would have been better with a decent yield.
All of that said, the portfolio is listed below with the weightings. Perhaps this can be a collaborative effort to make the improvements that are so desperately needed. To be 100% clear this is not a portfolio I would implement for anyone, it is too flawed. This was nothing but an academic exercise.
Financials
StateStreet Bank (KBE) 8%
iShares Australia (EWA) 3%
iShares UK (EWU) 3%
StateStreet Capital Market (KCE) 2%
Tech
iShares Global Tech (IXN) 8%
PowerShares Semiconductor (PSI) 2%
iShares Taiwan (EWT) 2%
Health
iShares Global Health (IXJ) 10%
iShares Medical Device (IHI) 2%
StateStreet Biotech (XBI) 2%
Staples
iShares Consumer (IYK) 8%
PowerShares Food (PBJ) 5%
Discretionary
PowerShares Leisure (PEJ) 5%
Industrials
Industrial Sector SPDR (XLI) 5%
PowerShares Water (PHO) 2%
iShares Defense (ITA) 3%
iShares Transportation (IYT) 1%
Energy
iShares Global Energy (IXC) 5%
PowerShares Alt Energy (PBW) 1%
PowerShares E&P (PXE) 2%
PowerShares China (PGJ) 2%
Materials
Gold (GLD) 3%
iShares Brazil EWZ (2%)
StateStreet Miners (XME) 2%
Utilities
Vanguard Utilities (VPU) 4%
Telecom
Vanguard Telecom (VOX) 3%
Emerging Market Telecom (ETF) 2% this is a closed end fund
REITs
StateStreet REIT (RWR) 3%
6 comments:
Haven't you recreated the S&P Mid-Cap Index (MDY) the hard way?
OG
Since this is 21% foreign, probably not but from every other aspect could be and I will study that.
As far as the hard way, maybe so. There is real demand for this sort fo thing, but I think this demand is misplaced. Hopefully the conclusion from this will be support what I have felt all along which is all-anything portfolios are a bad idea. Investors should no limit themselves to one type of product.
Here is an etf portfolio that I have come up with. It is more modeled after the wilshire 5000 and yields about 1.2%.
ishares canada 4.62%
ishares eafe 13.99%
ishares emerging markets 13.13%
ishares pacific ex-japan 5.19%
ishares russell 1000 10.74%
ishares russell 2000 13.87%
powershares biotech & genome 4.7%
powershares dynamic market 13.68%
powershares dynamic midcap growth 6.99%
streettracks morgan stanley tech 7.2%
vanguard value vipers 5.9%
Gentlemen a few questions...Re: weightings: Where do you derive the weightings? Are you beginning with allocations of a broad mkt index and then finding the best of the etfs to execute these allocations? Rationale of the weightings and choice of sector etfs?
Re: portfolio management. Under what conditions would you change the weightings? How active vs passive is this portfolio?
Re: Performance comparison. I'd much prefer a whole mkt reference. The Wilshire 5000 comes to mind, but that is flawed too....no foreign representation nor bonds. Wilshire is still farrr better than S/p.
Roger..this venture is quite interesting...appreciate your focus and disclosure.
An ETF portfolio better than mine?? NEVER!!
Joke Joke Joke. You did not note the performance. The extra yield would be nice if it did no worse than a 30 basis point lag to mine (the diff between the yields of the two) and for all I know the perf of your might blow away what this one did.
I have closer to a 3% yield in accounts I manage because I think I need it that much yield to do well in this market. THere could be a 100 variations much better than mine but I would like to solve the dividend issue. Higher divs means I don't have to be as right with the rest of the portfolio. This has merit for anyone.
to the reader asking about changes in weightings; I will devote a post to this. I have a full plate today so it may be tomorrow, please check back.
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