11/9/08

ETF Portfolio Underweighting US November Update

October was another volatile month, and the ETF portfolio lost another 10%. The S&P did even worse, losing almost 12% over the same period. As of 11/7/08, the ETF portfolio is down 23.4%, while the S&P 500 is down 24.78%.

As last month, the portfolio has been weighed down by the souring economies abroad. International TIPs (WIP) are down 21.58% since August, for example. Inflation was a major concern when the portfolio was started. How long ago that seems.

Although only 56% stocks, the portfolio has trailed the S&P 500 for much of the last four months. Only on a few occasions did it outperform. Were I to start it today, I might have allocated less to TIPs and more to short term domestic bonds, purchasable through the ETFs SHV and SHY. The portfolio might now be down far less had these ETFs been among its holdings.

Nevertheless, since I still believe that most of the world's growth will be abroad one, two, three decades from now, I'm not going to change its allocations. When foreign economies get back on track, I have a feeling the portfolio will outperform the S&P 500 by a good amount. Until then, I'm content getting more shares at a lower price. Let's see if this pays off.

The Model ETF portfolio's original description and list of holdings is here. All updates, like this one, are available here.

Dividends received and reinvested:

BND $0.30 * 6.73 = $2.019 [74.60]
BND $0.2687 (October) * 6.73 = $1.80835 [74.60] 0.0513 more shares
BWX $0.126 * 17.274 = $2.173122 [49.62] 0.0439795 more shares
WIP $0.208 * 14.2224 = $2.66438 [44.58] .05276 more shares

Fresh $500 invested:

VTI $69.07 total 1.4979397 shares at 46.11 1737.05/27.57397 = $62.996

VWO $140 total 5.62927 shares at 24.87 1486.18/42.46127 = $34.883

RWO $140.93 total 5.296 shares at 26.61 1024.16/26.052199 = $39.31184

RJI $150 total 20.71823 shares at 7.24 1321.92/123.139732 = $10.73512



SPY $500 total 5.327083 shares at 93.86 11500/92.166083 = $124.77475

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