This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ETF Players Shouldn't Go All In

A reader was kind enough to pass along this Mark Hulbert story (free registration required) from The New York Times that indicates that all-ETF portfolios tracked by his service have "turned in disappointing results."

Hulbert notes that his research sample size might be too small, but the results are what they are. The reader wanted my opinion on the outcome. I would tie this in to what I have been writing all along about all-ETF portfolios and investment products in general: They all have flaws that need to be understood and possibly mitigated through prudent portfolio management.

I first touched on this idea about a year and a half ago on my blog, but it's worth repeating: An all-ETF portfolio is not a great way to go.

The biggest flaw with ETFs is that they often yield less than common stocks. I said back then that the consequence is that an all-ETF portfolio has a much heavier reliance on price appreciation, and in a flat market like we have had recently, all-ETF portfolios will lag a stock portfolio that includes stocks with large dividends.

Another issue that could account for Hulbert's results might be that most all-ETF portfolios use what I believe are the wrong ETFs. Most of the products I have seen rely too much on cap size and style ETFs and very rarely do they use sector and single-country ETFs.

I have disclosed before that I use a lot of ETFs to assemble some client portfolios, but none of them are 100% ETFs, even if they do have a lot, and only in extenuating circumstances do I use any style or cap-size ETFs.

For these accounts I use sector ETFs and weight them the way I weight sectors in regular accounts.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs