Additionally, I felt that commodities and emerging markets would continue to benefit from the world situation, and that the US dollar would continue to be under pressure - thereby adding to investments denominated in something other than US$. I suggested positions in a total of six ETFs, at values of 7.5% to 25% of the portfolio, with most around the 20% range.
When we reviewed this portfolio on June 17 2007, we found it had outpaced SPY by 5.4% over the 14 months since inception. It's now been 14 months or so since that review, and the market has changed notably over that time frame; let's check in with our model portfolio to see how it has performed.
Since then, SPY has dropped by 15.5% and is now priced at $129.37. Let's see how our own simple ETF-based portfolio, which looks like this, performed:
- 20% weighting to a broad-based international ETF - EFV - $78.92 - ishares product tracks the MSCI EAFE Value Index, which tracks European, Australian, and Far Eastern markets. This ETF closed at $58.96 on Friday August 8, 2008, for a 25.3% loss.
- 18.6% weighting to small company - IWN - $85.11- ishares product tracks the Russell 2000 Value Index (US small cap). This ETF closed at $68.84 on August 8 2008, for a 19.1% loss.
- 25.7% weighting to emerging markets - EEM - $44.14 (adjusted for a 3 for 1 split) - a broadly-based (for emerging markets) ishares product tracks the MSCI Emerging Markets Index. This ETF closed at $41.16 on August 8 2008, for a 6.7% loss.
- 19.4% weighting to the value portion of the S&P 500 - IVE - $83.78 - an ishares product tracking the value portion of the S&P500. This ETF closed at $65.90 on August 8 2008, for a 21.3% loss.
- Commodity-oriented countries: The Canadian ETF (EWC; 7.6% weighting) - $30.58- and a Brazilian ETF (EWZ; 9.1% weighting) - $62.66. The EWC closed at $29.35, for a 4.0% loss, and EWZ closed at $74.61, for a 19.1% gain.
Last year, both this portfolio and the SPY were up, although this portfolio beat the SPY by 5.4%.
So this year, both SPY and this portfolio are down, although this portfolio did beat the SPY by 2.4% which is still pretty significant outperformance.
The relative gains and losses on the portfolio aren't sufficient enough to warrant a re-balancing yet, so here are the relative portfolio balances going forward:
- EFV -19.5%
- IWN - 18.5%
- EEM - 26.0%
- IVE - 19.1%
- EWC - 7.8%
- EWZ - 9.1%