Thursday, March 03, 2011 4:23:00 PM
Hi Lisa, Re: FVL and history with the Value Line based ETFs.....
While I've only had FVL since last July (after PowerShares changed from Value Line's index) I'd owned the PHY (Timely stocks in timely industries from Value Line) for a few of years before that.
I own this ETF in my retirement account as one of ten positions in that portfolio. It did okay coming out of the 2009 lows, but didn't do as well as Small and Mid Cap Value type holdings. 2010 turned out to be a very good year for it, especially after August. Through most of 2010 it outperformed many of the small and mid cap value funds. I think the lag is due to the Value Line #1 Timely stocks being somewhat more of the "growth" nature and growth was out of favor for a year after 2009 lows.
As you can see by the trading, it does move around enough for it to be interesting for AIMers. It has an annual cost of around $0.70/$100, so it's not the cheapest index fund around. However, Value Line takes a cut of that, too, for their index license and name rights.
The FVL ETF follows the 100 stocks ranked by Value Line as #1 in Timeliness for ownership and freshens their inventory of stocks once a quarter. So, in general it will be following the group #1 stocks as seen in this graphic from Value Line:
This shows the 2010 returns for Group 1 when re-structured once a quarter for rank changes:
The results compare favorably to FVL's 2010 gain of about 28.3% for the year. So, quarterly reconstitution doesn't seem to hurt the performance. Weekly reconstitution doesn't improve things much as the #1 Timely stocks list doesn't change very quickly.
Because Timeliness #1 Stocks tend to be "momentum" driven, they can take a serious wallop when markets turn ugly. Therefore, AIM with a healthy cash reserve is a great management tool. It's nice to think we'll be participating in a near 14% per annum average gain on the invested side and then adding value with AIMing on top of that over many cycles.
I hope your investing continues to do well.
Best regards,
Tom
While I've only had FVL since last July (after PowerShares changed from Value Line's index) I'd owned the PHY (Timely stocks in timely industries from Value Line) for a few of years before that.
I own this ETF in my retirement account as one of ten positions in that portfolio. It did okay coming out of the 2009 lows, but didn't do as well as Small and Mid Cap Value type holdings. 2010 turned out to be a very good year for it, especially after August. Through most of 2010 it outperformed many of the small and mid cap value funds. I think the lag is due to the Value Line #1 Timely stocks being somewhat more of the "growth" nature and growth was out of favor for a year after 2009 lows.
As you can see by the trading, it does move around enough for it to be interesting for AIMers. It has an annual cost of around $0.70/$100, so it's not the cheapest index fund around. However, Value Line takes a cut of that, too, for their index license and name rights.
The FVL ETF follows the 100 stocks ranked by Value Line as #1 in Timeliness for ownership and freshens their inventory of stocks once a quarter. So, in general it will be following the group #1 stocks as seen in this graphic from Value Line:
This shows the 2010 returns for Group 1 when re-structured once a quarter for rank changes:
The results compare favorably to FVL's 2010 gain of about 28.3% for the year. So, quarterly reconstitution doesn't seem to hurt the performance. Weekly reconstitution doesn't improve things much as the #1 Timely stocks list doesn't change very quickly.
Because Timeliness #1 Stocks tend to be "momentum" driven, they can take a serious wallop when markets turn ugly. Therefore, AIM with a healthy cash reserve is a great management tool. It's nice to think we'll be participating in a near 14% per annum average gain on the invested side and then adding value with AIMing on top of that over many cycles.
I hope your investing continues to do well.
Best regards,
Tom
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