AI
Wednesday, July 30, 2014 9:08:44 AM
Hi Steve, This was the first portfolio of ETFs I constructed and modeled using AIM. It started in mid 2000 and continues to this day. In MorningStar it allows you to build a portfolio and then do all the transactions. While time consuming, it was instructive to do so with this "old" ETF model. It consists of 13 domestic ETFs; 10 business sectors plus small cap value, small cap growth and mid cap value. There's essentially no overlap among the ETFs so is truly diversified.
Here's what MorningStar's analysis looks like in two images. One includes the cash portion of the AIM basket and the other excludes it.
Exclusive of the Cash component:
The trading done by AIM over time has kept the "invested" portion of this portfolio generally ahead of the MS US Stocks Index for the last 10 years and since inception. Note the "draw downs" and the "gains" on a yearly basis are nearly the same.
When we add back in the cash this is how it looks:
While the cash (which apparently doesn't earn any interest in MS's analysis) helped performance in the first example, it holds back performance in this one. Even so, as you see, it basically equaled being 100% invested in the U.S. Equity market. So, it offered the same performance with significantly less risk. "Draw downs" and "gains" are different in the second image as the cash acts both as an anchor and as a cushion. Still, performance is pretty good considering the various time frames and the history.
With something like 2500 companies represented, this is a very broadly diversified domestic portfolio. The AIM settings for each component are the same at 10% Buy SAFE, 0% Sell SAFE, and using 5% of Portfolio Control as a minimum trade size. Sequential buys are kept to just one per 30 day period. I-Shares was the first ETF family to have ALL of these components available and so it was chosen when they first became available in 2000.
The ten business sectors were all equal weight at the start. The three style funds were also equal, but the portfolio was divided 60% to the 10 sectors and 40% to the style funds. No attempt was made to keep the weights the same as the start. Each has been AIM'd separately and seeks its own level.
Best regards,
Here's what MorningStar's analysis looks like in two images. One includes the cash portion of the AIM basket and the other excludes it.
Exclusive of the Cash component:
The trading done by AIM over time has kept the "invested" portion of this portfolio generally ahead of the MS US Stocks Index for the last 10 years and since inception. Note the "draw downs" and the "gains" on a yearly basis are nearly the same.
When we add back in the cash this is how it looks:
While the cash (which apparently doesn't earn any interest in MS's analysis) helped performance in the first example, it holds back performance in this one. Even so, as you see, it basically equaled being 100% invested in the U.S. Equity market. So, it offered the same performance with significantly less risk. "Draw downs" and "gains" are different in the second image as the cash acts both as an anchor and as a cushion. Still, performance is pretty good considering the various time frames and the history.
With something like 2500 companies represented, this is a very broadly diversified domestic portfolio. The AIM settings for each component are the same at 10% Buy SAFE, 0% Sell SAFE, and using 5% of Portfolio Control as a minimum trade size. Sequential buys are kept to just one per 30 day period. I-Shares was the first ETF family to have ALL of these components available and so it was chosen when they first became available in 2000.
The ten business sectors were all equal weight at the start. The three style funds were also equal, but the portfolio was divided 60% to the 10 sectors and 40% to the style funds. No attempt was made to keep the weights the same as the start. Each has been AIM'd separately and seeks its own level.
Best regards,
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
