Real Estate Holding Distinguishes ETF Model Portfolio From Benchmark

by James B. Cloonan

Real Estate Holding Distinguishes ETF Model Portfolio From Benchmark Splash image

There is little more to say that hasn’t already been said about the stock market. As I write this, the market appears to be stabilizing—but we have been fooled before in this extended downturn.

As you can see in the performance data in Table 1, AAII’s Model ETF Portfolio, at –19.3% year-to-date, is underperforming its benchmark, which is at –11.2% year-to-date (the ETF benchmark is a weighted portfolio that is invested 80% in the iShares Dow Jones U.S. Index and 20% in the iShares MSCI EAFE Index). This underperformance is due largely to our holding in real estate (the iShares Cohen & Steers Realty Majors Fund).

In our last performance review of the ETF Portfolio (November 2008), the model portfolio was beating the benchmark over various time periods primarily due to this same real estate holding.

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James B. Cloonan is founder and chairman of AAII.


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