One ETF Strategist’s Recent Scorecard

January 04, 2016

Even Midcaps Must Come Down

March 12, 2015

Results: iShares Russell Top 200 (IWL | A-100) trounced the iShares Russell Mid-Cap (IWR | A-92) by 7.80%. (Positive)

Commentary: This recommendation has more room to run. Valuations still favor mega caps, and increasing interest rates favor the type of companies listed in the Russell 200.

ETFs Helped By Midterm Election Changes

Nov. 25, 2014 (Annualized Performance)

Results: The three recommended ETFs/indexes – Vanguard Information Technology (VGT | A-92), DJ U.S. Airlines Index (no ETF at the time) and iShares U.S. Medical Devices (IHI | A-92)—outperformed the comparison group of the iShares U.S. Aerospace and Defense (ITA | A-84), iShares Russell 3000 (IWV | A-100) and iShares U.S. Healthcare (IYH | A-95) by 5.12%. (Positive)

Commentary: The likely policy actions have been mixed. Technology was recommended for a possible cut in the corporate tax on cash held overseas. No action yet, but it is still a likely part of any reform. Airlines were favored over manufacturers because the Export-Import Bank of the United States faced defunding. It ultimately was defunded, but funds were reinstated in the budget deal passed by Congress this month.

Medical device makers were expected to benefit from a reversal of the tax cut on medical devices in the Affordable Care Act. The recent budget deal delayed that tax for two years. I recommend investors continue to favor technology and medical devices. Export-import funding looks safe, so unwind the airline-manufacturer recommendation.

The Importance Of Currency-Hedged ETFs

Sept. 12, 2014 (Annualized Performance)

Results: The Deutsche X-trackers MSCI EAFE Hedged (DBEF | B-72) bested the iShares MSCI EAFE (EFA | A-93) by 10.00%. (Positive)

Commentary: The default recommendation from the article remains: Hedge overweight international positions as a default. The period of large gains for the dollar is over, but I still favor hedging about 10% of the strategic allocation to international and any allocation above the benchmark.

Why Asia Is Again A Hot Investment Theme

Aug. 12, 2014 (Annualized Performance)

Results: While the iShares MSCI All Country Asia ex Japan (AAXJ | B-93) bettered the iShares Core Emerging Markets (IEMG | A-99) by about 6%, AAXJ lagged the iShares S&P 500 (IVV | A-98) by -16.75%. (Negative)

Commentary: Asian valuations still look attractive. Chinese growth has declined, putting pressure on its export partners. Emphasize targeted allocations to China and India over regional exposure.

Don’t Assume US Bond ETFs Are US Focused

July 16, 2014 (Annualized Performance)

Results: PowerShares’ Fundamental Investment Grade Corporate Bond (PFIG | C-76) outpaced the iShares iBoxx $ Investment Grade Corporate Bond (LQD | A-77) by 0.20%. (Not Applicable)

Commentary: This article was focused on letting investors know how many international issuers can be found in U.S. bond funds. Some “domestic” bond ETFs are up to 40% international. Investors should take these allocations into account when figuring how much to allocate to international bonds.

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