2011 has been a generally rough year for investors, as the recovery that took root in 2009 and 2010 has not continued. In fact, fears about a double dip recession have intensified considerably. Since the downgrade of U.S. credit quality in August, stock markets from around the globe have taken investors on a wild ride. Volatility has been a dominant theme across all corners of the market, and even traditional safe havens like gold have faced nasty headwinds. Investor confidence has further deteriorated thanks to continuing instability in the debt-stricken Euro zone. Investors have been hesitant to dip both feet back in the stock market as clouds of uncertainty still loom over Wall Street.
Amidst the uncertainty, performances across asset classes have been far from homogeneous; some securities have thrived on the chaos while others have struggled mightily, losing more than half their value. For those that developed a well diversified portfolio, the damage wasn’t nearly as bad as uncorrelated assets helped to soften the blow immensely allowing many investors to moderate losses in this difficult environment. In light of this trend, below we highlight three of the best ETFdb Model Portfolios in terms of year-to-date performance in 2011 (as of 10/14/2011, note that some of the portfolios available to ETFdb Pro members have not been around all year):
- Simple (But Effective) Safe Haven Portfolio is Up 6.84%: This themed portfolio is leading the way higher thanks to its defensive investment approach, which has served it well for locking in gains during periods of market turmoil. This portfolio is designed with risk-averse investors in mind, as all of its holdings give the portfolio exposure to “safe haven” asset-classes, which tend to perform well during times of economic uncertainty. Tactical allocations to dividend paying companies and precious metals are just a few of the reasons for why this portfolio has been able to thrive amidst the chaos.
- The Sky Is Falling Portfolio is Up 4.18%: Not much of a surprise here, as you may have already figured it out, this is an ultra-defensive portfolio that has been able to profit as investor confidence has been deteriorating. The investment strategy behind this portfolio is intended for investors who are worried that equity markets are due for a serious correction. Stock markets plunged over the last two months and this portfolio’s strategy allowed it to maximize exposure to asset classes that generally perform well during downturns.
- Ready To Retire Portfolio is Up 2.67%: This is the third strongest performer from the bunch, and the top performer amongst our Retirement ETFdb Portfolios. Thanks to its heavy tilt towards “safer” fixed income holdings, this portfolio has been able to appreciate as investors have re-allocated capital to the bond markets, fearful of the volatility and uncertain outlook plaguing the equities. This portfolio is designed for investors who are at or near their retirement date, maintaining a conservative allocation of roughly 40% in equity and 60% towards fixed income.