Last month, we put together a theoretical portfolio of 10 exchange-traded funds we liked from a coverage universe of nearly 200.
Overall, our picks have performed as we had hoped, with the theoretical $10,000 portfolio returning 4.3% in November, compared with 2.7% for the S&P 500.
As the following chart shows, the energy and emerging markets and REIT ETFs in our model momentum-portfolio were the three leading contributors to performance in November, while the laggard holdings included utility, global financial and large cap-value ETFs.
(To qualify for this portfolio, the selected ETF had to have an overall score in the top 30th percentile from our ratings model, which takes into account the total return to shareholders, the timeliness of the investment, and price volatility. We chose investment styles based on the number of highly rated funds in the group and recent performance trends.)So what changes are we suggesting for December? Quantitatively speaking, more of the same. Skeptics will say that one month does not a trend make, and rightly so. But rather than specific recommendations, this theoretical portfolio is designed to help you make better investment decisions. This month we are increasing exposure to broader international markets and currencies, selling iShares MSCI Spain (EWP) and buying iShares MSCI Value Index (EFV). This is a short-term shift. While our interest in the Spanish economy has been sparked by acquisition talks, it is likely that this deal-driven market may cool off over the next few months. We suggest adding the MSCI Value Index because it provides exposure to Japan and United Kingdom through its holdings in HSBC (HBC), Toyota (TM) and Royal Bank of Scotland (RBS-PP).
|The Long ETF Portfolio's Performance in November
Energy, emerging markets and REITs were biggest contributors
|ETF||Ticker||Units||Amt||11/31/06 Price||End Value||Gain/Loss (%)|
|iShares MSCI Spain||EWP||19||956.65||53.1||1,008.90||5.50%|
|streetTRACKS Gold Shares||GLD||16||981.76||64.39||1,030.24||4.90%|
|iShares Russell Mid Cap Value||IWS||7||984.34||146.2||1,023.40||4.00%|
|iShares S&P Global Financials||IXG||11||946.66||87.94||967.34||2.20%|
|iShares S&P Global Telecom||IXP||16||970.24||62.18||994.88||2.50%|
|iShares Dow Jones US Energy||IYE||10||956.4||104.73||1,047.30||9.50%|
|iShares Morningstar Large Value||JKF||12||962.28||82.15||985.8||2.40%|
|Vanguard REIT ETF||VNQ||13||984.75||79.99||1,039.87||5.60%|
|Vanguard Emerging Markets ETF||VWO||14||986.86||75.72||1,060.08||7.40%|