Best And Worst All-ETF Portfolios In 2012

by on January 2, 2013 | ETFs Mentioned:

Major equity indexes clinched gains during what many would characterize as a “roller coaster” year; the S&P 500′s upward trajectory was interrupted on several occasions by everything from Greek debt drama to post-election fiscal cliff fears. With 2012 in the history books we take a moment to recap the best and worst performing all-ETF model portfolios during a year characterized by resurfacing debt drama on both sides of the Atlantic Ocean and signs of improving economic recovery [Download Free 7 Simple & Cheap All-ETF Portfolios].

Below we highlight the best performing strategy among our retirement, regional and themed categories from 2012, as well as the worst performing ones from each group, noting the inherent differences across each one (please note that returns are as of December 28, 2012) [see 50+ All-ETF Model Portfolios]:

Best Retirement: Aggressive ETFdb Portfolio, Up 15.25%

Although it seems that pessimistic headlines circulated on the regular, “risk on” sentiment was surely the driving force behind markets in 2012. Our Aggressive Portfolio was well-positioned to thrive as economic growth expectations were revitalized throughout the year; this strategy maintains an equity-heavy profile, which allowed it to capture big gains as buyers returned to the U.S. stock market despite looming uncertainties [see 101 High Yield ETFs For Every Dividend Investor]. 

Worst Retirement: Ready To Retire ETFdb Portfolio, Up 8.35%

On the other end of the spectrum, our Ready To Retire strategy lagged behind thanks to its bond-heavy composition. Fixed income securities posted respectable gains in 2012 for the most part, however, they ultimately lagged behind equities, which saw inflows encouraged by steady improvements in the domestic labor and housing markets. 

Best Regional: Emerging & Frontier Markets ETFdb Portfolio, Up 17.98%

This strategy struggled in the first half of the year as investors were hesitant to return to foreign markets given the looming uncertainties at home and in Europe. Nonetheless, optimism prevailed and investors slowly rotated back into higher-risk asset classes in an effort to favorably position themselves for the coming recovery. Our Africa-Centric ETFdb Portoflio was neck and neck with this strategy throughout the last quarter, although it ultimately finished in third place with a respectable 17.19% gain on the year [try our Free ETF Country Exposure Tool]. 

Worst Regional: Easy-As-ABC ETFdb Portfolio, Up 5.90%

This was our worst performing regional portfolio as lackluster performances from core holdings like the ABC High Dividend ETF (ABCS, n/a), the IQ Australia Small Cap ETF (KROO, C) and the IQ Canada Small Cap ETF (CNDA, C+). This portfolio managed to clinch gains on the year, which is by all means respectable, however, it ended up far behind top-performing strategies from this group, which posted much more impressive double-digit gains. 

Best Themed: 2012 ETFdb Portfolio, Up 17.87%

A welcome surprise, the 2012 ETFdb Portfolio came out on top, pulling ahead of more well-known strategies that also favored “risky” assets. One holding in particular did wonders for this portfolio; the Daily Inverse VIX Short-Term ETN (XIV, B+) posted gains upwards of 140% on the year as uncertainty seemingly evaporated from Wall Street, helping to propel this portfolio to the number one spot [see 13 Rapid Fire ETF Ideas For 2013]. 

Worst Themed: GLD-Free Gold Bug ETFdb Portfolio, Down 3.46%

Gold kicked off the year with a massive gain only to succumb to brutal profit-taking pressures at the start of March that dragged it back under $1,600 an ounce. Despite managing to rebound higher during the second half of the year, gold’s “safe haven” reputation lost a bit of its luster as it failed to provide much of a defense from fiscal cliff woes, dragging down gold miners along with it. 

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Disclosure: No positions at time of writing.