Past Performance of My All-ETF Portfolio and A Little Modification

Yesterday, I posted an all-ETF portfolio that I’d like to have if I have to start all over again to build my investments. What I want to achieve with that portfolio are:

  • Diversification: I want to have key asset classes included in the portfolio so it will provide balanced risk-reward with relatively high growth potential;
  • Low cost: Compared to their mutual fund counterparts, ETFs already have the advantage on expenses, and I am still looking to reduce the overall cost of ownership.

As I mentioned in my previous post, I didn’t pay much attention to the performance of the fund I selected, except that I picked a couple of popular ones. Then today, I got a email from Sean Muir from SogoTrade, who back tested my portfolio for the past three years for those funds that have been around long enough:

WPS, BIV and BWX haven’t been around yet for three years so I put your for full 10 percent for REITs into VNQ and distributed your 10 percent for bonds between SPY and EFA.

The verdict?

Over the last three years the portfolio earned a 26.54 percent return, beating the S&P 500 (even though it was in the portfolio) by 16.59 percent. It would have even approached 50 percent in September of last year. This of course doesn’t include your periodic readjustments and their related costs. But on a $10,000 portfolio, you would be looking at a $2,654.24 return (minus the $12.00 commission to buy into the four ETFs.)

The screenshot of the 3-year performance of my all-ETF portfolio is attached (click to enlarge).

All ETF portfolio

Though the performance doesn’t reflect exactly what I have in the portfolio because of the absences of several fund, it Isn’t too bad, is it?

As far the costs of the ETFs I chose, here are their expense ratios:

  • SPDRs [[SPY]]: 0.08%
  • iShares MSCI EAFE Index [[EFA]]: 0.34%
  • Vanguard REIT Index ETF [[VNQ]]: 0.10%
  • iShares S&P World ex-U.S. Property Index Fund [[WPS]]: 0.48%
  • SPDR Gold Shares [[GLD]]: 0.40%
  • Vanguard Intermediate-Term Bond ETF [[BIV]]: 0.18%
  • SPDR Lehman International Treasury Bond [[BWX]]: 0.50%

Actually, I am considering making a small change on the domestic stocks fund. My current choice is SPY, which is a large-cap fund. But I also like small-cap a lot, despite the recent lackluster performance of this category. In the long-term, the small-cap has shown to proivde better return than the large-cap. What I want to change is reducing SPY’s allocation to 30% and adding Vanguard Small Cap Value ETF [[VBR]] to the mix with a 10% allocation.

What do you think?

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4 Responses to “Past Performance of My All-ETF Portfolio and A Little Modification”

  1. Mat |  Aug 14, 2008 at 3:14 pm

    I think adding a small cap value would be a good choice. Do you enjoy using sogotrade?

  2. Moneymonk |  Aug 14, 2008 at 6:21 pm

    The Asset mix is great, not sure why it will make a huge difference to have two Bond funds