Taxable ETF Portfolio
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Created by ryanmichelking
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Date updated:08-01-2007

A Collection of ETF in a Zecco Account.

Charted Here:
http://icarra.com/viewPortfolio.php?id=1452

I love the diversity ETF have allowed consumers. But I feel that the frequency that many "investors" move in and out is over the long run going to significantly undermine their returns. Zecco has done an excellent job at removing one of the main things mutual funds had over ETF, the transaction cost.

I have what I feel is an interesting portfolio that I have run through many statistical checks for correlation etc. I would love to hear what people think:

Bonds 20%

Domestic Equity 20%

International Equity 20%

Independent Movers 20%

REITS 20%

Bonds:

BND and TIP make up this allocation (equal parts) and provide reliable income as well as in TIP's case an inflation hedge.

Domestic Equity:

RSP makes up 50% of this portion with the remaining 50% allocated to RZV. I am a believer in long term value investing I also firmly believe that small value stocks will out perform over decades. Hence the allocation to the Smallest/Most Valuable small cap value ETF on the market today.

International Equity:

I allocate 6% of this portion to VGK and 4% to VPL as I believe that attempting to guess what countries will prosper year to year is becoming increasingly difficult. 5% of the remaining allocation goes to GWX the Smallest Cap International ETF as it has a much lower correlation to the Domestic Equity portion than VPL or VGK. An Additional 5% goes to VWO as I believe emerging markets have the best potential for growth in the coming years.

Independent Movers (Commodities/Currencies/Timber/Water):

This is where I get to have a bit more fun in my portfolio. The rest of the portfolio is a rather well diversified Index of ETF's that follow the market trends well. It is here that I place those ETF’s/Stocks that have incredibly low correlation and excellent returns that are sector specific. In order to qualify I have to firmly believe that the sector is fundamentally uncorrelated to the rest of the portfolio. At the moment I have Between 1.5% and 3% of the total portfolio allocated to the following:

DBA, DBB, DBE, DBP - I believe the commodities market has a fundamental negative correlation to inflation and, depending on the commodity, to the stock market.
DBV - I believe currency also has a negative/low correlation to inflation and to the stock market
RYN, PCL - Timber stocks have typically done well regardless of what the general economy is doing. Lumber is a relatively inelastic good. Sometimes you just need wood.
CGW, PIO - I think that no matter what is going on in the world access for fresh drinkable water will be in demand.

These are just some examples I have also had Health Care, Consumer Staples and Energy in here at times.

REITS:

While I believe REITS maybe over bought at the moment; they certainly have given me a great ride; I am no market timer. I believe that individuals have the best chances of becoming wealthy through Dollar Cost Averaging, Sticking to Asset Allocations, Re-Balancing, and Properly diversifying by checking correlations between assets. REITS can provide stock like returns and are excellent diversifiers. Ever since reading David Swensen's book (a must-read) years ago I have placed an allocation into REITS. I will continue to do so. Plus now with ETF's I can even invest internationally in real estate! RWX and VNQ make up this part of the portfolio in equal parts.

Thanks for reading. Let me know what you think.

symbol name last price % change open
  • +
  • BND
    Vanguard Ttl Bd M
  • $79.73
  • -0.05%
  • $79.77

General Bond Exposure at a Low Cost

People owning BND also tend to own: DBCEFARWXSPYVWOBIKC

TheStreet.com Rating: No Rating What is this?

  • +
  • TIP
    Ishares Barclays
  • $105.66
  • 0.00%
  • $105.72

Inflation Protected Bond Exposure

People owning TIP also tend to own: EPIQJNJCUTDBCEEMEFAFXY

TheStreet.com Rating: No Rating What is this?

  • +
  • RSP
    Rydex Etf Rdx S&p
  • $37.83
  • -0.50%
  • $37.80

Equal Weight Large Cap Exposure

People owning RSP also tend to own: AMFAPFBDTBLNEWJEWUGF

TheStreet.com Rating: No Rating What is this?

  • +
  • RZV
    Rydex S&p Sc 600
  • $29.84
  • 0.00%
  • $29.91

Smallest Most Value Oriented Small Cap Value ETF out there.

People owning RZV also tend to own: DESDEWDFEDIMDLSDTHIEO

TheStreet.com Rating: No Rating What is this?

  • +
  • CGW
    Claymore S&p Glob
  • $17.93
  • -0.28%
  • $17.83

I believe in Water Investing

People owning CGW also tend to own: BWTRDSCMFIWHSOALOWMWAPHO

TheStreet.com Rating: No Rating What is this?

  • +
  • PIO
    Ps Glb Water Prtf
  • $17.74
  • -0.56%
  • $17.74

I Believe in Water Investing

People owning PIO also tend to own: ABXDXDDXFXAGEXGLDMAD.VMOO

TheStreet.com Rating: No Rating What is this?

  • +
  • PCL
    Plum Creek Tim Re
  • $34.20
  • +0.12%
  • $33.92

I Believe in Timber Investing

People owning PCL also tend to own: AAEPAIZAPDBOHCMAEIX

TheStreet.com Rating: B- What is this?

  • +
  • DBE
    Powershares Db En
  • $25.78
  • -0.62%
  • $25.86

I Believe in Commodities Investing

People owning DBE also tend to own: DBADBPEMUEWAGMOPIDSTO

TheStreet.com Rating: No Rating What is this?

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