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Articles on VXF

  • Initiating Tracking of US Subclasses

    02/22/2011

    We are initiating weekly tracking of the nine different styles or subclasses in the US Equity asset class. We use ETFs to represent each sub-class. We track returns over 1, 4, 13, 26, and 52 weeks and aggregate them to get a trend score. We then track the trend score to see the direction of each representative ETF in the subclass. By using an ETF from the same provider, we are attempting to normalize out performance of the ETF over the performance of the subclass.

     

    Assets Class

    Symbols

    02/18
    Trend
    Score

    02/11
    Trend
    Score

    Direction

    Russell Smallcap Growth

    IWO

    20.85%

    19.88%

    ^

    Russell Smallcap Index

    IWM

    18.7%

    17.58%

    ^

    Russell Midcap Growth

    IWP

    18.3%

    18.8%

    v

    Russell Smallcap Value

    IWN

    17.28%

    16.08%

    ^

    Russell Midcap Index

    IWR

    16.68%

    16.74%

    v

    Russell Midcap Value

    IWS

    15.91%

    15.66%

    ^

    Russell Largecap Growth

    IWF

    14.31%

    14.08%

    ^

    Russell Largecap Index

    IWB

    13.44%

    13.04%

    ^

    Russell Largecap Value

    IWD

    13.27%

    12.67%

    ^

    The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).

    We note that most of the of the sub-classes are positive as the US bull market continues. We also note that Midcap is dropping in comparison to Smallcap - Midcap has been at the top of the list but is starting to be replaced by Smallcap. Finally we note that the order within a sub-class is Growth, Index (Blend), Value.

     

    Although the entire top three dropped compared to the prior week, the smalcaps dropped less than the midcap stock. The continuing bull market is moving investors away from the relative safety of large cap to the small cap stocks. The midcap, which had been a nice midway point, is being supplanted by the smallcap options as investors seek to maximize returns.

     

     

    The large cap stocks are solidly at the bottom of the table as investors look for higher returns. We note that the Largecap Value has the best performance in the short term even though it has had the poorest return over the longer time horizon.

     

    We would expect to see this picture to remain for some time unless the unrest in the Middle East and North Africa causes investors to look for safer US equities.

     

    Symbols:VCR,VDC,VIG,VWO,VDE,VEA,VGK,EDV,VFH,VEU,VSS,VUG,VHT,VYM,VIS,VGT,BIV,VCIT,BLV,VCLT,VGLT,VAW,MGC,MGK,MGV,VO,VOT,VOE,VMBS,VPL,VNQ,BSV,VGSH,VB,VBK,VBR,VOX,BND,VTI,VT,VPU,VTV,IJK,VBK,QQQQ,MDY,IWO,IJT,IJH,VB,VXF,IWP,IJR,VO,VOT,IWR,IJJ,VBR,IJS,IWN,RSP,IWM,IWS,VOE,VTV,IWC,SCHA,VTI,DIA,VUG,IWF,SPY,IWB,SDY,IVW,VIG,IVV,IWD,OEF,IVE,DVY,

     

    Disclosure:

    MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

     

     

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  • RSP Leads US Large Cap Blend Equities

    02/14/2011

     

    ETFs are becoming ubiquitous and there are increasing numbers that "do the same thing." ETFs are much more accessible to the general public and with increasing numbers of brokers offering low or no commission trades provided they are held for a month or more, it may be hard to know which ETF to select.

    MyPlanIQ has recently completed a major review of all the leading ETFs in the US Equities asset class and we are going to dig a little deeper to determine which ETFs would provide the highest returns. We start with the large cap blend ETFs.

    The first thing to note is that none of the large cap blend ETFs come in the top ten list of the US equity ETFs. RSP is 19th, VTI is 26th and SPY is 30th.

    Ticker

    Description

    5 Yr AR%

    3yr AR%

    1yr AR%

    RSP

    Rydex S&P Equal Weight

    3.45%

    3.58%

    27.38%

    VTI

    Vanguard Total Stock Mkt

    2.12%

    0.59%

    23.75%

    SPY

    SPDR S&P 500

    2.07%

    -0.11%

    21.68%


    The second thing to note is that RSP has a clear win against VTI and SPY. There is a great deal of debate about whether equal weight equities make sense but, in pure returns terms, they clearly perform better.

     We observe that RSP has more volatility and does better in good times and worse in bad times. We also observe that VTI and SPY have similar performance characteristics.

    When we go back to performance of all ETF's in the US asset class we note that the top ten comprises four small cap, five mid cap and one large cap ETFs.

    Being equally weighted means that the smaller companies (albeit in the large cap class) have a larger percentage of the portfolio in RSP than in VTI and SPY. Therefore, it leans more towards mid cap behaviors.

    In times of financial stress, the larger caps are going to be preferred which would favor SPY and VTI but when things are recovering, the smaller company leaning RSP is going win out and that is what happens.

    When it comes to expenses, RSP is the most expensive to own. Their cost is 0.4% whereas Vanguard is 0.07% and Spyder is 0.0945%. This makes RSP a relatively expensive ETF to own but the returns are there as the returns reported are net of management fees.

    If your investment strategy is to fire and forget then maintaining some large cap equities is going to be important to get through future financial heavy weather that will come sooner or later -- RSP and VTI.

    If you are going to have regular reviews and be willing to move from mid cap to large cap, then RSP is a reasonable hedge but you might decide to leave out large cap blend subclass all together for now.

     

    Symbols:IJK,VBK,QQQQ,MDY,IWO,IJT,IJH,VB,VXF,IWP,IJR,VO,VOT,IWR,IJJ,VBR,IJS,IWN,RSP,IWM,IWS,VOE,VTV,IWC,SCHA,VTI,DIA,VUG,IWF,SPY,IWB,SDY,IVW,VIG,IVV,IWD,OEF,IVE,DVY

    Tags, ETFs, US Equity, Portfolio Construction

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