Commission Free ETF Portfolios Monthly Update

I track 3 "commission free" ETF portfolios on the right hand side of Scott's Investments. Not all of the ETFs are truly commission free but I did my best to include as many as possible in each portfolio depending on what is available from each broker. The brokers highlighted are TD Ameritrade, Vanguard, and Fidelity.

I do not track hypothetical portfolio returns, but instead track the 10 month simple moving average for each ETF. The objective is to track when each ETF is above or below its 10 month moving average. The signals update daily (as opposed to just at the end of the month). Thus, it is possible to get "whipsaws", where an ETF make cross above and below the moving average on a frequent basis. It is up to each individual on how to use the data, how frequently to check the signals, and which system works best for you.

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For the full strategy background, click here. Investors can use the monthly moving average to determine when to invest in the index or ETF. When the ETF is above a moving average, invest in the position. When it is below its moving average, sell the position and hold cash. The objective is to participate in the index or ETF when the long-term trend is positive, and avoid the index when the trend is negative. Mebane Faber has shown in his The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets

how this strategy has historically done a good job of reducing portfolio drawdown and volatility.

Currently, bond ETFs TIP, BND, and AGG are above their 10 month moving average, which is the same as the end of last month. However, unlike last month, DBC, DJP, and DBA, all commodity ETFs, are now below their 10 month moving average. The full signals are below, as of September 30th. All other ETFs in the portfolios remain below their 10 month SMA.

Please note the data source is Yahoo Finance and I use the dividend adjusted closing price to calculate the moving average. It is possible to get different signals if using unadjusted closing prices to calculate moving averages.

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TD AMERITRADE	Symbol	ETF	Position (determined by current 10 month SMA)
	DJP	iPath DJ-UBS Commodity Index TR ETN	Cash
	DBC	PowerShares DB Commodity Index Tracking	Cash
	RWX	SPDR DJ International Real Estate ETF	Cash
	VNQ	Vanguard REIT Index ETF	Cash
	TIP	iShares Barclays TIPS Bond	Invested
	BND	Vanguard Total Bond Market ETF	Invested
	VWO	Vanguard Emerging Markets Stock ETF	Cash
	VEU	Vanguard FTSE All-World ex-US ETF	Cash
	VB	Vanguard Small Cap ETF	Cash
	VTI	Vanguard Total Stock Market ETF	Cash

VANGUARD	Symbol	ETF	Position (determined by current 10 month SMA)
	DBA*	PowerShares DB Agricultural Commodities	Cash
	DBC*	PowerShares DB Commodity Index Tracking	Cash
	VNQI	Global ex-U.S. Real Estate	Cash
	VNQ	Vanguard REIT Index ETF	Cash
	TIP*	iShares Barclays TIPS Bond	Invested
	BND	Vanguard Total Bond Market ETF	Invested
	VWO	Vanguard Emerging Markets Stock ETF	Cash
	VEU	Vanguard FTSE All-World ex-US ETF	Cash
	VB	Vanguard Small Cap ETF	Cash
	VTI	Vanguard Total Stock Market ETF	Cash

Fidelity	Symbol	ETF	Position (determined by current 10 month SMA)
	DBA*	PowerShares DB Agricultural Commodities	Cash
	DBC*	PowerShares DB Commodity Index Tracking	Cash
	VNQI*	Global ex-U.S. Real Estate	Cash
	IYR	Dow Jones US Real Estate	Cash
	TIP	iShares Barclays TIPS Bond	Invested
	AGG	Barclays Aggregate Bond	Invested
	EEM	MSCI Emerging Markets	Cash
	EFA	MSCI EAFE	Cash
	IWM	Russell 2000	Cash
	IWB	Russell 1000	Cash

*commissions may apply

Disclaimer: No current positions in stocks mentioned. Please note that Scott's Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott's Investments.

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