Macro ETF Portfolio - Monthly Portfolio Update (Jan 2025 Edition)

Dear readers,

Welcome back to My Weekly Stock, where in-depth market analysis meets proven momentum-based trading strategies. My mission? To help you win in the markets with unbiased, data-driven insights you can act on.

Over the years, I've developed a proprietary momentum-based approach, enabling me to ride strong trends confidently. Every week, I dedicate hours to researching, analyzing, and curating data—I do all the hard work so you don't have to.

This mid-week update is about my Macro ETF Portfolio! In this post, I’ll cover my long-term investing strategies, including portfolio performance, recent adjustments, and my outlook for the months ahead. Stay tuned to learn how my macro approach connects strategy to long-term market trends.

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SUMMARY

This month's update at a glance:

• Performance: The Macro ETF Portfolio returned -4% this month, bringing the cumulative return to 29% since its inception in October 2023.

• Top Performers: The portfolio's best-performing ETFs are Bitcoin, up 256%, and $QQQ (Nasdaq), up 41%.

• Recent Transactions: Initiated 2 new positions, and closed 3 positions in the past month. This week I am adding 9 new positions as part of a portfolio revamp.

• Current Allocation: The portfolio is 69% allocated across 10 positions, with 30% in equities, 0% in bonds, 16% in commodities, 22% in Crypto, and the remaining 31% in Cash. Last month, I increased exposure to Commodities and reduced in Bonds.

My Take:

This month’s update is particularly significant, not only because it’s the first of the year but also because I’m implementing substantial changes to my portfolio. Over the past year, I’ve managed two research portfolios: one focused on S&P 500 sectors and another exclusively on crypto. While both have value, I see greater benefits in merging them into the Macro ETF Portfolio to provide a more holistic, segment-based perspective. Sector-based ETFs offer differentiated diversification and growth opportunities, and I’ll include a broader universe for enhanced diversification. As for crypto, while I believe it has a clear role to play in a portfolio, a standalone crypto portfolio lacks sufficient diversification.

The result? A robust portfolio with 26 tickers on the watchlist, covering equities (broad indices and industry-specific), bonds, commodities, and crypto. Additionally, I’m expanding the scope of these monthly updates by including a detailed momentum analysis of each individual ticker. The goal remains to connect strategy with insights and ultimately drive informed portfolio decisions. These updates and the portfolio are also inherently educational, offering valuable insights across various market segments, which, I am convinced, are of value even for those who don’t trade ETFs.

What’s not changing? My long-term approach, rooted in weekly chart analysis and fueled by momentum research. Making changes of this magnitude during a bull market carries short-term performance risks, but I’m confident this shift is the right move for the portfolio’s long-term success and for delivering even greater value to my readers. Check out the recent transactions section later in this post, as I’m adding nine new tickers to the portfolio this week!

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1. APPROACH

This Macro ETF Portfolio is a long-term strategy, but it's not a "buy and hold forever" approach. On average, holdings will last 12 months, but positions may be shorter or longer depending on market conditions. I actively manage the portfolio and am willing to sit in cash during periods of weak momentum.

The goal of this strategy is threefold:

1. Achieve diversification across asset classes and market segments.

2. Safeguard capital during downturns.

3. Maximize gains during risk-on periods.

Beyond performance, this portfolio has an inherent educational value, offering insights into the long-term trends of various market segments.

Every successful investing approach has three key ingredients:

1. A process to screen stocks and build a watchlist.

2. A set of rules for entering and exiting positions.

3. A system to manage risk.

Watchlist

My Macro ETF Portfolio is crafted around 26 ETFs, each tracking different segment of the market. The components include:

Equity Index (30-40%):

• $SPY (SPDR S&P 500 ETF) – S&P500

• $QQQ (Invesco QQQ Trust) – Nasdaq

• $IWM (iShares Russell 2000 ETF) – U.S. small-cap

• $EEM (iShares MSCI Emerging Markets ETF) – Emerging markets

Industry Themes (20-30%):

(1) Growth:

• $FDN (First Trust Dow Jones Internet Index Fund) – Internet/digital economy

• $IGV (iShares Expanded Tech-Software Sector ETF) – Software

• $SMH (VanEck Semiconductor ETF) – Semiconductors

(2) Cyclical:

• $KBE (SPDR S&P Bank ETF) - Banks only

• $IYT (iShares U.S. Transportation ETF) - Transportation

• $VIS (Vanguard Industrials ETF) - Broad U.S. Industrials

• $XRT – (SPDR Retail ETF) - Retail

• $VNQ Vanguard Real Estate ETF – Real estate

(3) Defensive:

• $VDC (Vanguard Consumer Staples ETF) – Consumer staples

• $VHT (Vanguard Health Care ETF) – Healthcare

Fixed-Income (10-15%):

• $BND (Vanguard Total Bond Market ETF) – U.S. investment-grade bonds

• $TLT (iShares 20+ Year Treasury Bond ETF) – Long-term U.S. Treasuries

• $UUP (U.S. Dollar Index) – U.S. dollar currency exposure

Crypto (10-15%):

• BTCUSD (Bitcoin)

• ETHUSD (Ethereum)

• SOLUSD (Solana)

Commodities (10-15%):

• $USO (United States Oil Fund) – Crude oil

• $UNG (United States Natural Gas Fund) – Natural gas

• $URA (Uranium ETF) – Uranium

• $GLD (SPDR Gold Trust) – Gold

• $SLV (iShares Silver Trust) – Silver

• $DBA (Invesco DB Agriculture Fund) – Agriculture

This portfolio is my interpretation of the 60/40 allocation, but with a twist:

• 60% in equities, spread across broad indices and sectors.

• 15% in bonds.

• 25% in alternative investments, such as commodities and crypto.

The allocation is meant as a guideline, not a rigid rule, as exact weightings will fluctuate based on market conditions. In an ideal "everything bull market," these percentages would serve as a target. However, since markets are rarely perfect, I often start with higher allocations during the early stages of a cycle and trim later to lock in gains.

For those seeking higher growth, I've created an alternative version of the portfolio that uses 3x leveraged ETFs across the same segments. While this approach has the potential for higher returns, it comes with increased risk and volatility.

Entry and Exit Rules

My approach is to buy on strength. Signals are derived from weekly charts, focusing on a crossover between the 9-week and 30-week Exponential Moving Averages (EMAs) to identify trend reversals. Rather than chasing exact highs or lows—often more luck than skill—I wait for confirmed signals of a trend reversal to capture significant portions of the move.

Risk Management

Risk is managed primarily through active position management. I never add to losing positions. I actively manage positions during uptrends, trimming after substantial gains to lock in profits. Remaining positions are allowed to run until the trend shows signs of exhaustion.

These principles serve as guidelines, but I adapt my approach based on the unique characteristics of each asset, chart setup, and prevailing market conditions.

2. Performance

While my back-testing and research have shown promising results, I prioritize full transparency by reporting performance only from the portfolio’s initiation on Savvy Trader in October 2023. Since then, the Macro Portfolio has achieved a cumulative return of +29%, while the leveraged 3x version has delivered +51%. Over the past month, the portfolio decreased by 4.1%.

3. Portfolio Composition

The Macro ETF Portfolio is currently 69% actively invested across 10 positions, with the top performers being BTC (+256%) and QQQ (+41%).