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Wednesday, August 1, 2012

July ETF Performance Results

By carefully selecting ETFs, the DIY investor can construct a well-diversified, low-cost, low-maintenance portfolio.  He or she will have a portfolio that in the past has outperformed most professional portfolios and, combined with a carefully thought-out asset allocation strategy, avoids the number one enemy of investors - emotion.

An important part of the  process is tracking performance.  Here is a resource from ETF Trends that reports returns on ETFs:

CLICK TO ENLARGE   Note that the table includes returns for 2011 and year-to-date 2012 through July - 2 periods investors have found challenging, especially hedge funds and state pension funds, as detailed in previous posts.

One feature I really like about the report is that it groups ETFs by asset category.  For the example, as shown, it has numerous fixed income ETFs grouped together so that it is easy to see how various parts of the bond market have performed.

Source:, p. 4

From this list, an investor can quickly  begin researching the expense ratios and characteristics of the underlying index by entering the ticker symbol into the quote box at Morningstar, for example.  The list includes ETFs indexed to various parts of the Treasury yield curve, high grade and low grade corporate ETFs, emerging and high-quality international and muni ETFs.

For the investor who can't resist trying to predict short-term performance on various market sectors, this is an excellent resource also with which to carry out this exercise on paper.  Just pick an ETF from various sectors and rank them.  For example, you might have SPX (large cap), VB (small cap), IEV (Europe), SDY (dividend), DBC (commodity), IAU (gold), and AGG (bonds).  Rank the sectors from 1 to 7, and next month you'll easily begin to see if you have any prognosticating talent.

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