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Model ETF Portfolio Versus Benchmark: More Diversification, Similar Returns

by James B. Cloonan

Model ETF Portfolio Versus Benchmark: More Diversification,
Similar Returns Splash image

The Model Exchange-Traded Fund (ETF) Portfolio is now five years old.

The portfolio’s performance has been very close to that of our benchmark, although we have done somewhat better since we filled out our holdings three years ago.
Figure 1 and Table 1 show the performance of the Model ETF Portfolio through March 31, 2011.
It is worthwhile to note that we have an 18% commitment to real estate while our benchmarks do not. Without

real estate our returns would have been higher, but I feel that real estate is an essential part of an investment portfolio. It is unfortunate to have a 75% pullback during a short five-year holding period, but real estate’s previous performance, as well as its recovery from its low, support the desirability of its place in a long-term portfolio.
Table 2 on page 36 provides insight into the year-by-year performance of the Model ETF Portfolio and its benchmark.

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James B. Cloonan is founder and chairman of AAII.


Discussion

Charles from Virginia posted over 2 years ago:

I am heading into retirement within the next two years, can you recommend a more conservative % for each of the ETFS listed in the model portfolio incorporating less equities and more bond or higher yielding choices


Mary from California posted over 2 years ago:

we have retired and have 30%invested in high yielding stocks (12% yearly)
60 % IBM, GE and MRO HD,NOK,PFE
10% cash
I need $ 50,000 a year to live on without touching my capital.
Am I doing OK.I have a about $500,000 total
How safe are those hi yielding stocks ARR-CIM- NLY-CYS-TWO????


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