Revised Model Fund Portfolio: Combining Mutual Funds and ETFs

by James B. Cloonan

Revised Model Fund Portfolio: Combining Mutual Funds And ETFs Splash image

In the August 2006 AAII Journal, we began a Model ETF Portfolio.

We indicated that it was an experimental portfolio meant for the examination of exchange-traded funds (ETF), which were quite new at the time. While ETFs are still relatively new—few have a 10-year history—we feel we can make some judgments and integrate ETFs into an overall fund portfolio.

While it is handy to keep traditional mutual funds, ETFs and closed-end funds separate when listing them or reporting on them, an effective fund portfolio should combine them to take advantage of the strengths of each. That is exactly what we have done by making major changes to our Model Fund Portfolio.

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James B. Cloonan is founder and chairman of AAII.


Earl Coming from Nevada posted about 1 year ago:

I need a good explanation of how to use this aaii information.

Ron Compton from Missouri posted about 1 year ago:

Do you have any thoughts about using a stop loss/ re-entry in conjunction with the model portfolios? Would it have proved beneficial on balance and not just in 2008 to have done so?

James Cloonan from Arizona posted about 1 year ago:

I am not a big fan of stop losses in general especialy for micro caps since a slow day can result in a 10% move in both directions due to wide bid/ask spread. In addition a down move does not violate any of our sell rules and may indicate more reason to buy than to sell. James Cloonan

Maureen Oster from Wisconsin posted about 1 year ago:

Well thought out. Particuarly note the thinking on international. From time to time international, notably emerging markets, may afford trading opportunities when these stocks get very cheap, I.e. after the EM debacle in 1998.

George Pettiford from Illinois posted about 1 year ago:

Parts of the table 1 was not visible on my screen.

Prakash Navare from New Jersey posted about 1 year ago:

I need to know how do you define long term for people over 65 who have money to invest and have steady income so that they do not need to touch their investment in any major way.

Joseph Competiello from Massachusetts posted about 1 year ago:

I have the same questions as Earl from NV and Prakash from NJ. Also would like advice on when to sell individual stocks you recommend such as KTTC, or am I on my own with information overload? Thank you, Joseph

Jorge Caicedo from Louisiana posted about 1 year ago:

Hello Mr Cloonan, I have $5k to invest in a Roth IRA and was wondering which were best for income and yield: REIT's, Bond funds or Utilities..I plan on w/drawing the money in 30 yrs..

Douglas Jackson from California posted about 1 year ago:

Question for Mr Cloonan: Fund Portfolio

CGMRX is closed to new investors- do you suggest we substitute another- if so ,what is your recommendation?
Doug Jackson

Ann Hyman from Florida posted 8 months ago:

I have $5,000 to invest. Where can I put it?

Charles Rotblut from Illinois posted 8 months ago:


We cannot give personalized investment advice.


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