Their comment was felt that Geoff's article used data mining to make its point and they note their belief that "ETFs may offer the best available option for efficient asset allocation without negative-alpha risk and with low expenses."
The XTF website shows the composition of three different all-ETF portfolios. I guess the product is new because the results provided are back tested.
The portfolio I looked at is called Tack 80 and was comprised as follows on March 31;
Large Cap SPY 36%
Mid Cap VO 20.40%
Small Cap IWM 12%
Foreign EFA 27.6%
REITs VNQ 1.65%
Short Term Bonds SHY 0.30%
Intermediate Bonds IEF 0.30%
Long Term Bonds TLT 0.45%
Corporate Bonds AGG 0.30Cash 1%
I don't know how it has done since 3/31 nor did I even count if it adds up to 100%. Whatever the strategy is here the back test numbers are very good, they soundly beat the S&P 500 for the last five years. I did not read enough to get a feel for their process but the back test shows it can be done with just ETFs.
It does seem like there are many parts of the market missed with such a narrow selection. XTF is not wrong but the approach is not right for me. Is such a narrow list right for you is what is important. I have written countless times about my belief of tying in numerous themes to make a diversified portfolio. I think it makes the ride smoother and the job easier.
I have had help with returns from some fairly narrow things. In the second quarter of 2005 Statoil (long time holding) went from $14 to $21 in about ten minutes (intentional hyperbole). This happens a fair bit where some country or forgotten sector adds a lot to the portfolio. This element is clearly not going to happen in the above portfolio. A narrow theme like Norway does not have enough weight in EFA to matter.
Again this is about different mousetraps not right and wrong. Only time will tell whether the actual returns will measure up to the back test but you have many schools of thought here (XTF, Geoff and me) to try to make what you do better and that really is the most important thing with this.