Tag Archives: portfolio

Momentum Portfolio Update

In 2011, Scott’s Investments began tracking a momentum portfolio which ranks a basket of ETFs based on price momentum and volatility. In 2014, I also introduced a pure momentum system, which ranks the same basket of ETFs based solely on 6-month price momentum. The first portfolio was previously called the “ETFReplay.com Portfolio”, but going forward, it will be called the “Conservative Momentum Portfolio” (or “6/3/3 strategy”) to reflect some changes in the portfolio and tracking methodology for both portfolios detailed below. In previous years, the Conservative Momentum Portfolio began with a static basket of 14 ETFs. The basket of 14 ETFs will be reduced to 10 ETFs. This change is being made in order to further simplify the portfolio. The 10 ETFs are listed below: RWX SPDR Dow Jones International Real Estate ETF PCY PowerShares Emerging Markets Sovereign Debt Portfolio ETF EFA iShares MSCI EAFE ETF EEM iShares MSCI Emerging Markets ETF VNQ Vanguard REIT Index ETF TIP iShares TIPS Bond ETF VTI Vanguard Total Stock Market ETF GLD SPDR Gold Trust ETF TLT iShares 20+ Year Treasury Bond ETF SHY iShares 1-3 Year Treasury Bond ETF The ETFs will still be ranked by 6-month total returns (weighted 40%), 3-month total returns (weighted 30%), and 3-month price volatility (weighted 30%). The top 3 will be purchased at the beginning of each month, and if a holding drops out of the top 3 at the next month’s rebalance, it will be replaced. Previously, the portfolio purchased the top 4 ETFs and only sold when a holding dropped out of the top 5. In addition, ETFs previously had to be ranked above the cash-like ETF ((NYSEARCA: SHY )) in order to be included in the portfolio. This requirement will be removed, so the top 3 ETFs will be held regardless of proximity to SHY. Pure Momentum System The pure momentum system previously ranked ETFs based solely on 6-month price momentum. For 2015, the strategy will rank ETFs based on 5-month price momentum. There is no cash filter in the pure momentum system, volatility ranking, or requirement to limit turnover. Previously, the strategy bought the top 4 ETFs each month – going forward, the top 3 ETFs will be purchased. The portfolio and rankings are posted on the same spreadsheet as the 6/3/3 strategy. The portfolio names are dropping “ETFreplay.com” because the strategy can be tracked on multiple website. ETFReplay.com is still an excellent choice for tracking and backtesting the strategies detailed. However, a formidable free option for backtesting these strategies has emerged at Portfolio Visualizer . The current top 3 ETFs are listed below for each strategy: Conservative Momentum TIP iShares Barclays TIPS Bond Fund SHY iShares Barclays 1-3 Year Treasry Bond Fund TLT iShares Barclays 20 Year Treasury Bond Fund Pure Momentum PCY PowerShares Emerging Markets Bond TLT iShares Barclays 20 Year Treasury Bond Fund VNQ Vanguard MSCI U.S. REIT The current portfolios are below: Conservative Momentum Position Shares Avg. Purchase Price Purchase Date TIP 38 111.2 2/1/2016 TLT 32 126.67 2/1/2016 SHY 49 84.36 12/31/2015 Pure Momentum Position Shares Purchase Price Purchase Date PCY 117 27.65 8/31/2015 TLT 25 126.67 2/1/2016 VNQ 40 79.89 10/30/2015 Current signals can be viewed on Scott’s Investments here . Disclosure: None.

The V20 Portfolio Week #17: It’s Difficult To Be Different

The V20 portfolio is an actively managed portfolio that seeks to achieve an annualized return of 20% over the long term. If you are a long-term investor, then this portfolio may be for you. You can read more about how the portfolio works and the associated risks here . Always do your own research before making an investment. Read last week’s update here ! Current Allocation *Only available to Premium Subscribers Planned Transactions *Only available to Premium Subscribers ————- In the first weekly update of 2015, I stated that history may be repeating itself. Now that a month has gone by, it is evident that the V20 Portfolio is again experiencing the pain it had to endure in January 2015. Over the past week, the V20 Portfolio declined by 5.2% while the S&P 500 appreciated by 1.7%. Year to date, the V20 Portfolio declined by 16.3% and the S&P 500 declined by 5.0%. This compares to a 15.5% loss and 1.3% decline in January 2015 for the V20 Portfolio and the S&P 500, respectively. Portfolio Commentary Despite the ongoing volatility in the portfolio and the broader market, our holdings (for the most part) have been incredibly boring. There were no surprise developments or unexpected setbacks (at least on a company level). Last week I talked about how the meltdown in the junk bond market affected Intelsat (NYSE: I ), these things are completely out of our hands, but unfortunately, we must live with the short-term consequences. Despite the lack of excitement, the V20 Portfolio dramatically underperformed in the first month of 2016. While I am not very concerned, I am sure some of the readers may not feel the same way. While investing in the most undervalued companies will deliver the best return over the long-term, investors will inevitably face periods like the one we are experiencing today. Despite their transitory nature, there is no easy way to deal with short-term losses. It may be disheartening to see your holdings decline in value after spending so much effort doing research, but when you come to terms with the fact that the market can be irrational (and stay that way), the “losses” become more digestible. As I’ve mentioned in the introduction to the V20 Portfolio, the portfolio seeks to achieve long-term gains . Whether a stock goes up or down in a particular month, day, or even a year, is irrelevant to us. Most of the time, undervalued companies eventually converge to their fair value as temporary negative sentiment fades away. Unfortunately, there is no set timeline for this convergence. Ultimately the valuation of the business is not impacted by the stock price. If a business is well-run, it will continue to create value even when the stock price is declining (cyclicality aside), meaning that the discount will grow larger, making it more attractive. There is no telling where the market will trend in the coming months. But irrespective of the result, the V20 Portfolio will continue to have an unwavering focus on the fundamentals. Performance Since Inception Click to enlarge

MLPs: A Great Opportunity In The Near Future, Just Not Yet

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