With the first month of the year now passed, we reflect in this post on the returns of our January premium portfolios. With over 2,000 ETFs analyzed, we expected greater opportunity for growth from a diversified portfolio. This past month of January 2020, we realized this opportunity.
The premium portfolios
At the close of Monday, January 6th, we purchased two optimal portfolios. The first used a taxable account at a moderate risk level. Then, the second used a Roth IRA using an aggressive risk level. We describe moderate and aggressive risk portfolios in our portfolio construction process.
These portfolios, published on ETFMathGuy on Sunday, January 5th, appear below.
The returns from the premium portfolios
Thus, there were 19 daily returns, from January 7th through January 31st. Over that time, the moderate portfolio returned 4.6% and the aggressive portfolio returned 5.72%. Over that same time period, stocks (measured by the S&P 500 ETF, ticker IVV) returned -0.6% and bonds (measured by the Barclay’s Aggregate Bond ETF, ticker AGG) returned 1.5%. Therefore, these results are consistent with previous academic research.
“The conclusion of the research clearly advances the case of ETFs. Individual investors cannot afford to ignore these potential portfolio enhancing instruments. This is in part because of the fact that some of the ETF-only strategies are made possible by providing exposure to asset classes previously virtually unavailable…”
DiLellio and Stanley (2011), “ETF trading strategies to enhance client wealth maximization”, Financial Services Review. Vol 20, pp. 145-163.
In conclusion, the January 2020 returns from the premium portfolios exceeded their benchmarks. But, will this excess return persist? Please watch for future posts which will continue tracking the performance of the ETFMathGuy premium portfolios in 2020.
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