I made ten (really eleven) predictions on show MMM-092: Predicting the Future for 2008. Prediction #8 was:
8. A one-stop-shop ETF portfolio fund will appear that gives complete exposure to risk, reward, and diversification all for a low fee. It will include all of the SMILER components as well as some bonds, commodities, and even private equity and possibly even some selected shorts (A short of a bear fund, perhaps??)
That prediction came true today as I learned from IndexUniverse.com that PowerShares announced three “ETFs of ETFs“, their so-called “Autonomic” portfolios. All of the SMILER components (Small, Micro, International, Large, Emerging Market, and REIT) are in these plus some bonds and commodities. Even currencies, gold and oil funds are in these. These are the laziest possible portfolios; buy one ETF and you’re done! (Hmmm, maybe I’m not really recommending that. We’ll see…)
The total expense ratios for each of these funds include the expenses of each of the component ETFs plus another layer of management fees and are 0.82% for PAO, 0.75% for PCA, and 0.86% for PTO. Yeah, you might be able to do it cheaper if you bought each of the ETFs yourself. Then again, maybe not with all the trading costs.
The table below shows the percentage of each of the ETFs that are included in each of the new ETFs.
|PowerShares Dynamic Developed Intl Optys||PFA||22.18||7.19||14.69|
|PowerShares Dynamic Large Cap Portfolio||PJF||13.03||4.45||8.92|
|PowerShares Dynamic Europe Portfolio||PEH||7.78||14.84||13.67|
|PowerShares Dynamic Asia Pacific Optys||PUA||4.62||4.61||4.62|
|Vanguard Emerging Markets ETF||VWO||4.55||3.89||4.05|
|ISHARES MSCI E.M.I.F||EEM||4.51||1.81|
|PowerShares Dynamic Large Cap Value||PWV||4.47||4.18||4.31|
|PowerShares Dynamic Mid Cap Growth||PWJ||4.38||2.94||3.74|
|PowerShares Dynamic Large Cap Growth||PWB||4||4.16||4.03|
|PowerShares Dynamic Small Cap Value||PWY||3.51||3.02||3.45|
|Vanguard Europe Pacific ETF||VEA||3.03|
|PowerShares Dynamic Small Cap Growth||PWT||2.86||1.46||1.94|
|PowerShares Dynamic Mid Cap Value||PWP||2.54||2.21||2.57|
|Vanguard REIT ETF||VNQ||2.39||3.11||3.12|
|DJ Wilshire REIT ETF||RWR||2.36||3.08||3.08|
|Vanguard European ETF||VGK||2.02|
|PowerShares Emerging Markets Sovereign Debt||PCY||1.75||2.78||2.46|
|ISHARES GS Invest Grade Corp Bond||LQD||1.52||8.05||4.4|
|PowerShares 1-30 Laddered Treasury Portfolio||PLW||1.35||4.51||3.98|
|SPDR Lehman International Treasury Bond||BWX||1.29||5.19||4.01|
|PowerShares Zacks Micro Cap Portfolio||PZI||1.25||0.8||0.97|
|iShares Lehman MBS Fixed-Rate Bond Fund||MBB||0.92||6.5||2.69|
|ISHARES LEHMAN TIPS||TIP||0.82||3.57||2.51|
|PowerShares DB Gold Fund||DGL||0.54||0.83||0.75|
|PowerShares DB G10 Currency Harvest Fund||DBV||0.53||1.28||1.04|
|PowerShares Dynamic Mid Cap Portfolio||PJG||0.5|
|PowerShares DB Oil Fund||DBO||0.48||0.64||0.57|
|ISHARES LEHMAN 20 YR||TLT||0.25||1.33||0.8|
|ISHARES LEHMAN 1-3YR||SHY||0.05||1.21|
I intend to track these funds to see how well they compare against our Lazy Portfolios. I may even try to backtest a portfolio of the individual ETFs to see how well it would have done in the past, including the average annualized returns and Sharpe Ratio. The problem will be that some of the ETFs themselves aren’t that old.
I’ll be talking about this on show 112 and letting you know more as I know more. This is fun. By my count, that is 4 down, 6 to go. (Predictions #3, 4, 5, and 8.) I still stand by the rest. And we’ll see if Apple announces a tablet PC on June 9th for prediction #2.
And since I’m here, have you noticed that Jim Cramer has been talking more about “portfolios” recently? His “Kevlar” and “Stability” portfolios come to mind. This makes prediction #1 even more likely. #7 is a slam dunk. And hey, for #9 there are more international stars in MLS this season too. Go Beckham!