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| ETF Ready-to-Go Portfolios Outperform in 2007 |
| By, Ron DeLegge |
| Jan 02, 2008 |
| Good news! Five of our Six Portfolios beat their benchmark |
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How did your investment portfolio do last year?
Here at ETFguide.com, we’re proud to report that five of our six exchange-traded fund (ETF) portfolios outperformed their respective benchmark in 2007.
How did we do it?
Even though it sounds boring, our feat of going five for six in 2007 was accomplished mainly through discipline, a good investment plan and a few opportunistic moves. Despite unstable credit markets, a falling U.S. Dollar and higher inflation, we maintained our cool even when many investors did not.
The problem with most ETF investors is they’re focused on the wrong ball. Instead of building a rock solid portfolio that can withstand the test of time, they kill themselves by trying to pick the one or two winning funds. As a result, they end up chasing performance, self-destructing and getting badly burned. It’s a vicious cycle that repeats itself far too often.
Background on ETFguide’s Portfolios
ETFguide’s Ready-to-Go Portfolios is our attempt at helping investors to “reverse the curse”. Essentially, they are six different ETF portfolios, each with a different and unique investment strategy. For a low monthly subscription cost, subscribers get to follow along with our every move. They get to see our current asset allocation, updated daily performance, and they get access to our telephone hotline. Also, our subscribers get to have the final say in all their own investment decisions because ETFguide.com doesn’t manage their money, we just provide them with valuable portfolio data.
Long ago we realized that getting the right mixture of ETFs inside an investment portfolio has always been the key to success - that’s why we invented our simple ETF portfolio service. Our goal was to transfer our extensive knowledge of the ETF marketplace to others. We’re accomplishing that objective every single day by giving people an inside view of how ETF portfolios are built and managed.
In 2007, the S&P 500 rose 3.53%, the Dow Industrials was up 6.4% and the MSCI EAFE index increased by 8.62%.
Here’s a quick snapshot of each portfolio we offer and the performance results from 2007:
Contrarian Fox (+17.31%)
This was our best performing ETF portfolio in 2007, which means that it sometimes pays to be a contrarian. Among our best performing holdings was gold (Ticker: GLD). In retrospect gold doesn’t seem like such an out-of-favor pick, but for the first half of the year, gold was dead money. Instead of jumping out, we held on and were handsomely rewarded.
Strategic Balanced (+2.96%)
This was the one ETF portfolio that underperformed in 2007. As a true balanced portfolio, we attempt to have exposure to the major asset classes at all times. Exposure to U.S. and international real estate stocks dampened the performance of this portfolio, but it still ended the year with gain.
Capital Defense (+7.78%)
This ETF portfolio takes a defensive posture by focusing on areas or asset classes that think will do well even if the financial markets decide to act up. Some of the areas that contributed to our success has been the Select Sector Utilities SPDRs (Ticker: XLU), which was one of the top performing S&P 500 industry sectors last year.
Generation Growth (+9.14%)
The simple goal of this ETF portfolio is to grow money and that’s what it did in 2007. Rising commodity prices boosted many of our holdings including the iShares S&P GSCI Commodity Indexed Trust (Ticker: GSG).
Sector Savvy (6.56%)
Rotating into good performing industry sectors while exiting the bad ones is easier said than done. We can't always be right about every ETF selection, but over the past 52-weeks we've been more right than wrong. The UltraShort Real Estate ProShares (Ticker: SRS) was one of the best ETFs inside the Sector Savvy portfolio. Also, we avoided imploding sectors like banking and homebuilders.
World Traveler (+15.10%)
This ETF portfolio keys in on foreign or overseas investment opportunities. Aside from owning Chinese equities (Ticker: FXI), the more diversified Vanguard Emerging Markets ETF (Ticker: VWO) was one of our strongest gainers.
Even though the number of so-called ETF experts has become a crowded cesspool, the truth is that most are gunslinging gamblers making huge bets on a few single funds. We aren’t.
Our philosophy has always been to own our ETF selections, not to trade them. In some cases, our best moves are the ones we never make.
Transaction costs due to hyperactive trading can be the worst of enemies. This is something many unsuccessful investors have yet to learn.
For 2008, we hope to repeat our recipe for success that served our subscribers so well over the past year. It won’t be easy, but we’re up for the humbling challenge.
P.S. I manage three of ETFguide’s portfolios, Simon Maierhofer Co-Founder of ETFguide.com, manages the other three. Sign up for ETFguide’s Ready-to-Go Portfolios TODAY and get a FREE 30-day Trial Offer! >>>Click here.
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| Author Profile |
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Ron DeLegge |
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ETFguide |
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Editor |
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Ron is the Editor of ETFguide.com and voice of the Index Investing Show, a weekly syndicated radio program. He's frequently quoted in the financial media on matters related to investing and he's made appearances on CNBC.
Ron served as a financial advisor for 11 years and he grew up in Chicago. |
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http://www.etfguide.com |
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