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Pure Momentum ETF Strategy Performance

My ETF momentum strategy gained 1.18% in February giving it a 2.2% return year-to-date and 4.7% 12-month return. Of particular note is how much volatility has dropped off since late November.

 

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Why I Haven’t Posted Much Lately

Early this year, I was asked to join a new band as the acoustic guitarist. Over the past six months we have recorded an album with fourteen original songs. We aren’t full-time musicians so the recording was done as all five members could find time. The album, Sweet Little Thing by Somebody Famous, has just been made available on Spotify and our first gig is at The Gathering in Burlington next month.

I’d love to hear your feedback on the album. If you don’t have a Spotify account you can sign up for a free one.

Somebody Famous

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Performance of Pure Momentum Models YTD

January wasn’t kind to investors and my momentum models both suffered setbacks that month. That said, both Pure Momentum (ETF model) and Pure Momentum II (US stock model) both rebounded in February and March. The strategies are down 2.7% and 3.7% respectively year-to-date.

PURE MOMENTUM

Pure MomentumPURE MOMENTUM II

Pure Momentum IIPure Momentum can be followed on Collective2 here and Pure Momentum II can be followed here.

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Short Term Performance Results Will Vary

I have become less active here lately as I was invited to join a project that has nothing to with investing but is very interesting from a personal point of view. Another reason for my lack of frequent posts can be understood from an excellent post by Larry Swedroe at ETF.com.

The post discusses how stock investing strategies which have stood the test of time for many decades will have periods of underperformance. We can expect the duration of underperformance to last as much as ten years. This expectation of underperformance is fundamental to understanding why it is so difficult for us investors to stick with a proven strategy – we hate underperformance and are likely to change strategies when a given strategy underperforms for as little as one year never mind ten years.

With January being such a terrible month for most investors, including me, I went on a financial media diet. I intentionally abstained from watching or reading financial media as much as possible. While the markets tossed and turned, I sat on my hands and not once checked on the performance of my strategies. I wanted to see if I could do that for a month as I hadn’t done it before and it wasn’t difficult at all.

I strongly encourage you to read Swedroe’s article. It is one that I plan to read at least annually.

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2015 Passive Global ETF Portfolio Peformance

By now you are well aware that 2015 was a tough year for investors and I expect most had a negative performance last year. I like to refer to a global passive portfolio constructed with seven ETF’s as a benchmark. The global portfolio is constructed as per the weights for the ETF’s noted in the table below.

Passive Global Portfolio

The global passive portfolio declined by 2.1% based on monthly rebalancing in 2015.

Global Passive ETF Portfolio Chart

As can be seen in the above chart, the global portfolio is essentially unchanged from where it was at the end of 2013. What lays ahead of us for investment returns is anybody’s guess. Despite what you see in the financial media, that’s all it is, a guess. In my opinion, the best you can do as an investor is use one or more of the proven factors such as size, momentum or value in a rules-based trading strategy to your advantage. To that end, I have just initiated a third momentum strategy focusing on small cap US stocks. For my own account, I have allocated funds to each of my three strategies (all Pure Momentum strategies can be found on Collective2) with a goal of outperforming the global passive portfolio in 2016.

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