My ETF Portfolio is Crushing the Market This Year. Here's How - Cabot Wealth Network

My ETF Portfolio is Crushing the Market This Year. Here’s How

I have put together an ETF portfolio constructed of what I call "undiscovered" funds. So far, it's handily beaten the market. Here's how.

The Undiscovered ETF Portfolio within my Cabot ETF Strategist advisory is delivering exactly the kind of return we’d hope to see in a down market, with half of the funds showing gains as of Friday morning.

Undiscovered Symbol Date
Bought
Price
Bought
Price on
6/17/22
Dividends Gain/
Loss %
Allocation
Invesco Dow Jones Industrial Average Dividend ETF DJD 04/08/22 46.35 41.64 0 -10.1% 0.4
VanEck Morningstar International Moat ETF BTAL 04/26/22 19.86 21.44 0 7.9% 0.3
Direxion Daily S&P 500 Bear 1X Shares SPDN 02/18/22 15.27 17.63 0.018 15.5% 0.2
Invesco S&P SmallCap Energy ETF PSCE 03/28/22 10.05 9.27 0.01358 -7.7% 0.1

So what do each of these asset classes mean, in terms of the allocations?

  • Anchor: 40% Base equity position to build around
  • Tilt: 30% Tactical position to supplement the Anchor
  • Hedge: 20% Main defensive position to provide balance
  • Wildcard: 10% Rotating position in a more volatile ETF

As you can see, there’s no traditional asset allocation in the sense that we’re adding funds to track a specific market cap, region, sector or theme. Instead, we’re looking at each slot to play a particular role.

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For example, for the 40% slot, we’re choosing from a wide number of ETFs, some dividend-oriented, but others not.

In the 30% slot, we want a supporting position with a tilt toward another asset class showing an upward trajectory across multiple time frames.

The 20% slot, as noted above, is to allow for an ETF that’s not highly correlated with the broader equity market. Currently, the S&P 500 inverse ETF serves that purpose. This serves as a control for volatility and market correction.

The 10% slot allows us to capture returns from an ETF with a higher risk profile. Here, you see that we’re capitalizing on the upside risk inherent in the small-cap energy sector.

How My Undiscovered ETF Portfolio Has Succeeded

The ETF Strategist gives readers the trades to make. You are not responsible for poring over charts and indicators to determine buys, sells and holds. We do that for you.

However, many readers have asked for a little background on how these decisions are made.

While we don’t make trades in this ETF portfolio on some kind of pre-determined basis, we do use an algorithm based on various moving averages, such as the 20-day and 50-day lines.

We also evaluate how an ETF is performing over shorter time frames, since the market tends to move very fast these days. Short time frames, such as hourly vs. daily, can show you institutional buying and selling in nearly real time.

Trend lines also help us evaluate whether a trade has the potential to overcome resistance, or whether it appears more likely to break support and crater.

The Undiscovered Portfolio, constructed with lesser-known or smaller ETFs, gives you an opportunity to nab gains regardless of what the market is doing, as it’s not based on traditional asset-allocation principals.

If you want access to all four of my ETF portfolios (we also have an “Aggressive”, “Moderate Growth” and “Conservative” portfolios), and to learn the names of all my current and future fund recommendations, you can become a Cabot ETF Strategist subscriber by clicking here.

Do you have an ETF portfolio of your own? Or do you own any little-known ETFs that have performed well of late? If so, tell us about them in the comments below.

Kate Stalter

Smooth Your Risk and Capture Gains

Kate Stalter, Chief Analyst of Cabot ETF Strategist, is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies.

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