Model ETF Portfolio: Beats Benchmark, But Total Recovery Not Yet Complete
by James B. Cloonan
Our model portfolio of exchange-traded funds (ETFs) is benefiting handsomely from the positive movement in the stock market this year.
As of the end of the third quarter, the AAII Model ETF Portfolio is having an excellent year. The year-to-date return is 38.2%, compared to a return of 22.7% for our ETF benchmark.
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The longer-term results can be seen in Table 1 and Figure 1. The portfolio remains slightly behind the benchmark over the complete time period since it was started. However, the primary reason for the difference in long-term performance is that the benchmark does not have a real estate component.
The Model ETF Portfolio’s real estate components are iShares Cohen & Steers Realty Majors (ICF) and SPDR DJ Wilshire International Real Estate (RWX). While these two funds continue to lag, they seem to be catching up. Long-term real estate has proven to be an important part of a portfolio for both return and risk reduction.
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