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ETF
Market Sector Funds Allocation
4-week YTD Performance Trend
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Overview: this
portfolio has been developed to provide an alternative to my
original model of an all index fund allocation. Here I focus on a
very diversified allocation using only sector ETFs. To achieve
optimal diversification, I have chosen for my model portfolio the best trending
3 to 4 out of 12
sectors ETS. While 3 sector ETFs are the minimum for smaller
portfolios, the maximum number for larger ETFs should not exceed
4 sector diversified fund ETFs.
Allocation:
a portfolio may be funded with 5-6 equally
allocated positions (no more than 35% of your portfolio should be
invested in 1 sector). I like to buy in increments to see how the market is behaving. The objective is to hold
positions as investment as opposed to swing or day trading.
All sector positions should be rebalanced once or twice a year
because, sectors with exceptional performance seldom continue in the
same pace.
Sector Rotation:
every 3-6 weeks I compare the performance of
each sector ETFs (see chart below). The least performing sectors are
swapped out and replaced with a better performing sector. |
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Sector
Diversified Exchange Traded
Funds (ETFs)
4-Week Price Performance Trend
more... Active Sector Savvy ETF Portfolio
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Trend analysis explained
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Sep. 3,
2010 ~
the week ended with some changes on the up side.
As of this date, Real Estate (IYR), Industrial (XLI), and
Discretionary (XLY) are the performance leaders Year-to-date.
Gold Trust (GLD) continues it's up-trend.
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(XLY)
Discretionary -
auto, appliances,
retail, leisure, homebuilding, media (81
Stocks, Yield 1.2%)
(XLP)
Staples -
food & drug retailing,
tobacco, household products
(41 Stocks,
Yield 2.6%)
(XLE)
Energy -
energy equipment, oil & gas
exploration, refining, storage (40
Stocks, Yield 1.7%)
(XLF)
Financials -
banks, financial services,
insurance (79 Stocks, Yield 1.2%)
(XLV)
Healthcare -
managed care, medical
products, drugs, biotech (51 Stocks,
Yield 1.7%)
(XLI)
Industrial -
capital goods, building,
defense, aerospace, transportation (59
Stocks, Yield 1.8%)
(XLB)
Materials -
metal, mining, forest &
paper products, chemicals (31 Stocks,
Yield 1.5%)
(IYR)
Real Estate
-
real estate investment
trust , non-REIT (75 Stocks, Yield 3.5%)
(IYW)
Technology -
hardware, software, telecom equipment, consulting
(168 Stocks, Yield 0.4%)
(IYZ)
Communications
-
telecommunications,
fixed Line, mobile (31 Stocks, Yield
3.5%)
(XLU)
Utilities -
electric, gas, water
(35 Stocks, Yield 4.1%)
(GLD)
Gold Trust
- physical gold bullion
*** Yields &
Holdings as of April 2010 |
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Re-balancing Portfolio:
the portfolio may be re-balanced every 6-12 month. However with
positions being swapped in and out, the portfolio should stay
equally divided most of the time.
Buy & Sell:
both my portfolios use the same buy and sell
strategy to manage positions.
Brokerage Account:
I suggest, you open a separate account just for speculation. You
can track easily your trading skills and monitor your portfolio's
performance.
Questions & Answers
How to buy equity positions?
I like to buy equity positions in 2
increments.
When to buy inverse (
"short") ETF? I buy the inverse ETF after it has
crossed the moving average. For example, the market is in a down
trend and I want to protect some or all of my long positions. Again don't use it to hit a home run - use inverse ETFs responsibly.
When to use leveraged
ETFs? Buying a leveraged ETF at an inopportune time can
set your portfolio back real quick. Timing is a key component for
investing in general, and investing in leveraged ETFs in particular.
I don't buy leveraged ETFs when the market goes through a
consolidation or sideways, because it's difficult to spot a
sustained market direction. Leveraged ETS gain twice as fast but
also lose twice as fast.
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