ITA Wealth Management

In the November issue of the American Association of Individual Investors Journal (AAII) James B. Cloonan provides an interesting portfolio built around the follow ETFs.  They are: FDM (16%), PRF (16%), RFV (16%), RZV (16%), ICF (16%), GWX (5%), RWX (5%), VEU (5%), and VWO (5%). I’m very familiar with ICF, RWX, VEU, and VWO, but the rest are ETFs I have not used or checked their expense ratios.

What I did was run a QPP on this portfolio and here are the results.

• The projected annual return is 11.8%.  I assume this to be only for the next year.  I want this to be at least 10% and preferably 12% or higher.  Eleven percent is acceptable.
• The Standard Deviation is 15.5%.  I prefer this to be lower than 15%, so it is close.
• The Diversification Metric is 49% or an acceptable figure.
• The Portfolio Autocorrelation is 47.2% or a tad on the high side.  I find it difficult to pull this number into the lower figures so this number is acceptable.

A number of these ETFs have a low correlation with the S&P 500, a desirable feature.

Before purchasing any ETFs, be sure to check on the expenses and compare them with what Vanguard charges as Vanguard has the lowest fees.

Lowell Herr

Photograph: Elan Gallery - West Linn, Oregon

Similar QPP analysis is provided for several portfolios on Premium Content.  Subscription is $6.99 per month.