At the beginning of November, we assembled a hypothetical $10,000 portfolio consisting of 10 exchange-traded funds we selected from a field of almost 200 that we track. Our portfolio had a nice start out of the gate; however, December slowed our momentum a little.

The trend portfolio declined 0.49% for the last month of the year, falling behind the

S&P 500

's gain of 0.79% during the same period. Overweighting energy-related issues has clearly worked against the ETF trend portfolio. Last month, we replaced the

gold ETF

(GLD) - Get Report

position with a higher sensitivity to energy and natural resources in anticipation of cold weather. Since then, Brent crude oil prices dropped 15% from a high of $65 to $55 over the last month because of a worldwide warming trend this winter. No doubt they can recover somewhat -- if the weather gets colder.

The recent drop in energy prices had a negative impact on

iShares MSCI Canada

(EWC) - Get Report

, which was down 4.77%, and also on

iShares Dow Jones U.S. Energy Sector Index Fund

(IYE) - Get Report

, which fell a more dramatic 7.78%.

In addition to the energy malaise, the

Vanguard REIT

(VNQ) - Get Report

ETFalso slid 5.07% on news of falling home prices and fewer mortgage applications. Fortunately, this decline was partially cushioned by the December dividend distribution, which brought the net return to a 3.19% loss for the month.

Things were not all bad for the portfolio last month.

iShares S&P Global Telecom

(IXP) - Get Report

did well on news of the completion of the Bell South acquisition by

AT&T

(T) - Get Report

. The ETF was up 2.27% from the beginning of December, and total return with year-end dividends was 4.73%.

Another positive contributor to the portfolio was

iShares S&P Global Financials

(IXG) - Get Report

, which was up 2.05% since the beginning of December and generated a 3.45% total return, including year-end dividends.

To qualify for this trend portfolio, the selected ETF had to have an overall score in the top 30% of funds, considering total return to shareholders and low price volatility -- the core factors in our ratings model. We chose investment styles that our fund model says are working, based on the number of high ratings in the group and recent total return performance trends. To limit the selections further, the timeliness of each security is considered.

As the following chart shows, global telecommunications, global financials and value stocks were the three leading ETF positions with positive contributions during the most recent monthly period. The laggards included energy and REIT ETFs.

There is one suggested change to the portfolio for January, and that is to swap out of energy and invest in the Pacific region. We suggest selling iShares MSCI Canada and buying

iShares MSCI Ex-Japan

(EPP) - Get Report

. But swapping out of the Canada ETF is a tough call.

Fundamentally, the Canadian economy is doing well. Unemployment hit a 30-year low of 6.1% last month, and new job creation had its best showing since 2002.

Another positive is that this ETF includes several great stocks with nonenergy names, such as

ManuLife Financial

(MFC) - Get Report

and

Research In Motion

( RIMM), both of which are buy-rated by our stock model.

The leading swap candidate, iShares MSCI Ex-Japan, has two-thirds of its stock from Australia, 20% from Hong Kong and the rest from Singapore and other Pacific countries. The main sector exposure is primarily banking and real estate, which accounts for almost 40% of the portfolio.

This ETF also provides a 4.25% yield, for long-term investors looking to add income to their overall portfolios. But note that this distribution was at year-end, not a quarterly one as is more common with U.S. index ETFs, such as

S&P 500 SPDR

(SPY) - Get Report

.

More-aggressive investors may find the highly rated

iShares FTSE/Xinhua China 25

(FXI) - Get Report

to be attractive since it gives more exposure to mainland China.

This can also unfortunately be a negative if the Chinese stock markets correct. For more-conservative portfolios looking to add a little more income, the

iShares FTSE Australia

(EWA) - Get Report

, with its 4.85% indicated dividend yield, may be more appealing.

The table below shows what the rebalanced theoretical portfolio would look like. To see how the portfolio performed last month,

click here.

Rudy Martin is the director of research for TheStreet.com Ratings. In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Martin cannot provide investment advice or recommendations, he appreciates your feedback;

click here

to send him an email.