Muy Interasante

That is Spanish for muy interesting (humor attempt).

On March 29 I posted an article about the changes Tim Middleton was making to his all ETF portfolio. My conclusion was that he was making a huge bet on energy (huge relative to energy’s weight in the SPX) and that he would either lag or beat the market by a lot.

His proxy for energy was the iShares Goldman Sachs Natural Resource (IGE). In the month since that article IGE is down 6% and the SPX is down 2% (I know, I can’t believe it is only 2% either but that is according to

He also had a heavy weighting in EFA which is down about 3% in the same time period so I imagine his portfolio has lagged a little in this too short of a time frame but I have not calculated. It is clear to me (from the stand point of not limiting yourself to only one product) that having a few low beta, high yielding, foreign stocks instead (sound familiar?) would have helped. EFA only yields 1.51%.

This is stuff I have been trying to convey for a long time. In looking at the big picture a month ago or two months ago or whenever, I think the current environment was predictable, I’ve been predicting it all along and I assure you I am not gifted. If you are ETFs only you have a tougher time capturing yield.

I’m sure my regular readers who are ETF proponents will post later, intelligently refuting this so you can get both sides.

Submit a Comment

Your email address will not be published.

WP-SpamFree by Pole Position Marketing