All ETF Portfolio

Tim Middleton has maintained an all ETF portfolio and he posted an article today that talks about the changes he is making for the second quarter. He is increasing his weight in energy stocks. He believes that oils stocks will continue to do well because he says demand in the second quarter is usually high. His proxy for energy is the iShares Goldman Sachs Natural Resource (IGE) which has a 82% weight in energy. IGE makes up 7.5% of the portfolio.

The other components of the portfolio are S&P SPDR (SPY) 10%, iShares Dividend Index (DVY) 18%, iShares EAFE (EFA) 20%, iShares Russell 2000 (IWM) 5.9%, QQQQ 5.4%, iShares Emerging Markets (EEM) 5.1%.

Equity based ETFs make up 71.6% of assets in the portfolio. By my calculation energy makes up 14.3% of the equity component, factoring in the energy weightings of all the funds. The energy weight in the SPX is 8.7%. Whether he realizes it or not he is making a huge bet on energy, in my opinion. I would think this portfolio will either lag the market by a lot or beat it by a lot. We'll see.

Huge, unrealized weightings are very common in these types of portfolios. Since Tim did not mention it I have to assume he does not realize. There will be flaws in any type of all anything portfolio. This is why I believe in making use of different types of tools.

I will email this to Tim and see if he responds.