6 ETF Model Portfolios You Can Use – Updated through 5/3/2011

As announced last Sunday, I have added the Ivy ETF Portfolio in this line up. It’s indentified as Portfolio #6.

All portfolios held pretty steady during the past 5 trading days, but came off their highs made last Friday, the last day of April. The S&P 500 gained 0.74% for this period.

With a little bit of weakness having set in during the first two trading days of May, especially in the metals, it remains to be seen if this current resistance continues. As far as the 6 portfolios are concerned, your main criteria should be your own risk tolerance when making a decision as to which might be suitable for you.

Let’s review the first one (click on any table to enlarge):

1. ETF Trend Tracking Model Portfolio

This is the portfolio allocation I predominantly use in my advisor practice. Given current market conditions, and an ever growing number of global hotspots, I like the concept of having a solid core holding in PRPFX.

Around this fund, I have added 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.

This is exactly what happened early in March, when the double natural disasters struck Japan. While the S&P 500 lost all of its YTD gains, and dropped into negative territory, this portfolio stayed positive.

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.

Last week, this portfolio was up YTD +7.74% vs. +7.55% as of today.

 

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.

Last week, this portfolio was up YTD +5.55% vs. +5.85% as of today.

 

3. Aggressive ETF Growth Portfolio

What makes this one aggressive is the 15% allocation to bonds. This portfolio is leading the bunch on a YTD basis, because we are in a bullish period. When a correcion occurs, this one will lose value faster than all of the others.

However, 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 risk will be.

Last week, this portfolio was up YTD +9.06% vs. +9.08% as of today.

 

4. Moderate ETF Growth Portfolio


I call this one moderate growth, because of the higher allocation to various bond ETFs (26%) than in the aggressive set up above. It is also more diversfied domestically, but as the YTD return shows, that does not seem to matter much as it slightly trails my Trend Tracking Portfolio.

Last week, this portfolio was up YTD +7.54% vs. +7.61% as of today.

 

5. ETF Income Portfolio

This is as simple as it gets, but in the current market environement, this portfolio still ranks #2, just behind the aggressive version. Howver, when a market set back occurs, this one could drop in value quickly due to no offsetting bond positions. Be sure to use a 7% sell stop on all holdings.

Last week, this portfolio was up YTD +8.28% vs. +9.23% as of today.

 

6. The Ivy ETF Portfolio

If you missed last Sunday’s 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 trendline 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 stabilty in the past.

So far, the Ivy ETF Portfolio is right in line with all others.

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.

This will help to sidestep whipsaw signals on occasion, which are caused by temporary market pullbacks followed by a subsequent resumption of the previous up trend.

I will update these portfolios every Wednesday and inform you via email that the updated versions have been posted.

Quick Reference:

4/26/2011 Model Portfolio

4/20/2011 Model Portfolio

4/13/2011 Model Portfolio

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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