Income and Growth Portfolios (2/16)

ETF PM Expands Investable Benchmarks with
Two New Income and Growth Portfolios

Income & Growth 2x and 3x designed to enhance portfolio performance

THOUSAND OAKS, CA; February 22, 2016– ETF Portfolio Management (ETF PM) today announced that it has launched two new Income & Growth Portfolios – Income & Growth 2x, and Income & Growth 3x. These new portfolios are designed to help investors enhance their performance using leveraged asset class ETFs. The firm now offers five passive investable benchmark portfolios.

“Many high net worth investors employ material leverage on their real estate investments, yet refrain from using any leverage on their liquid, long-term investment assets,” said David Kreinces, ETF PM’s founder and portfolio manager. “Investors will be very surprised to see the incredible performance history from the disciplined use of leverage on efficiently balanced portfolios.”

Income and Growth Portfolios

Over the past decade, the Income & Growth investable benchmark portfolio has been an optimal investment solution, using leading ETFs from Vanguard and iShares. ETF PM is now adding two dynamically modified income and growth asset allocations, using leading leveraged ETFs from ProShares and Direxion:

  • Income and Growth (I&G) – a portfolio of five ETFs with 42% global equities (VT), 8% US REIT Index (VNQ), and 50% Treasury Bonds (7% IEF, 8% TIPs, and 35% TLT).
  • Income and Growth 2x (I&G 2x) – a portfolio of three ETFs with 42% S&P 500 2x (SSO), 8% Dow Jones U.S. REIT Index 2x (URE), and 50% Long-Term Treasury Bonds 2x (UBT).
  • Income and Growth 3x (I&G 3x) – a portfolio of three ETFs with 42% S&P 500 3x (UPRO), 8% US REIT Index 3x (DRN), and 50% Long-Term Treasury Bonds 3x (TMF).

Over the past decade, we estimate that these dynamic Income and Growth Portfolios delivered net annualized returns of 7% to 19%, or total returns of 96% to 483%. In addition, these leveraged portfolios often provided important downside protection, including returns of -8% to +2% in the market crash of 2008.

Over the trailing 16.1 years, we conservatively estimate that the Income and Growth Portfolios produced net annualized returns of 7% to 14%, or total returns of 189% to 790%. “Overall, the Income and Growth Portfolios performed extremely well, aside from a large cumulative drawdown in I&G 3x from ’01 – ‘02,” remarked Kreinces. “Given the performance uncertainty associated with leveraged ETFs, these portfolios may require additional risk control efforts at times.”

ETF PM charges an ultra-low-cost advisory fee of 0.25% for the Income and Growth Portfolios, and their expense ratios range from 0.16% to 0.98% per annum.

Absolute Return Strategies

ETF PM also specializes in disciplined ETF trend following. The firm offers a dynamic range of strategies that seek to deliver positive returns in all market environments. The firm’s trend following strategies delivered gains in the crash of 2008, and ETF PM focuses investor attention on hybrid portfolios that combine trend following with indexing.

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