As the days get shorter and 2020 comes to a close it is a great time to do some portfolio housekeeping. I recently went through my long-term, low-cost ETF accounts and cleaned up some positions making sure that each holding had a specific role in each account. Over time it is easy to be a collector and just let investments sit there even if they become sub-optimal for you as time moves forward. That's not very Meta ...after all, this isn't Pokémon; the number of holdings in your portfolio isn't relevant to completing your investment goals. How does an investment become sub-optimal? Well, this goes back to one of the core principles of investing; control what you can control. Did a new ETF come out with the exact same objective but with lower costs? If you invest in $QQQ then that is exactly the case. For 5 basis points less you can get the exact same exposure to the NASDAQ 100 from the same provider, $QQQM. Liquidity and taxes aside (since you are putting your highest growth investments in your Roth IRA anyways, right?) This is a move in the right direction. ETF vendors are always dropping the expense ratios on their products to stay competitive, you have to check in and see if you have the best of breed holdings ever so often.
![]() So what's out there to help you review your ETFs? I found a new web platform called Logicly that works for this. There were a couple holes in my ETF research game that Logicly is really great at fixing. The first is fund flows. We have all seen how the ‘retail investor’ tends to buy at the top of market runs and sell in a panic near cycle bottoms. Analyzing fund flows helps an investor quantitatively review those trends. The picture above is just an easy dashboard to review this data. Side note, the Value vs. Growth and the Small Cap vs. Large Cap inflow trends from September 2020 are still in place. You can also see that there are outflows on the NASDAQ 100, momentum factor and minimum volatility factor funds. Allocate accordingly ......and do so before the next round of balance changes! As with all metrics, this is not a perfect science but if you have a some extra dry powder, you can deploy it when you screen is flashing all red with a bit more confidence. ![]() One other data point Logicly presently nicely is when you are reviewing the stock holding concentration of the ETFs you own. Below is a screen of $TSLA position size in ETFs sorted by highest weighting. Concentration isn’t inherently a four letter word in regard to portfolio construction. As Allocators, we are usually seeking diversification but that doesn’t ALWAYS have to be the case. Have you ever used most of your Stardust on your best Pokémon? You will be one sided in battle but if you are conscience of that shortcoming and are monitoring that weakness closely, this strategy can be substantially profitable in the short and long term. Will you win every battle choosing one strategy over the other? No chance. And honestly, that reality will test your resolve more than anything else. The Meta right now is a three-leg combo: find your risk tolerance, make tactically sound decisions, and don't waiver from that. You’ll level up in no time young Pokémon Trainer. Music bed provided by Deadmau5
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