Macro ETF Portfolio - Monthly Portfolio Update (Feb 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.

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 weeks 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 +1.8% in the past month, bringing the cumulative return to 31% since its inception in October 2023.

• Top Performers: The portfolio's best-performing ETFs are Bitcoin, up 242%, and $QQQ (Nasdaq), up 44%.

• Recent Transactions: Initiated 3 new positions, and closed 1 positions in the past month.

• Current Allocation: The portfolio is 96% allocated across 21 positions, with 48% in equities, 3% in bonds, 22% in commodities, 23% in Crypto, and the remaining 4% in Cash. Last month, I increased exposure to Equity and Commodity.

My Take:

Last month, I made significant changes to the portfolio, doubling the number of holdings by expanding its scope and adding sector-based ETFs. So far, the adjustments have worked well, though I never love entering positions mid-cycle.

As a consequence of the changes, I've increased my exposure to both equities and commodities, with the latter gaining momentum recently. The portfolio is now nearly fully invested, with high allocations to equities and crypto, both mostly consolidating in recent weeks. While we've seen some frustrating volatility, we're trading close to all-time highs, and I see no immediate reason to worry. That said, whether it happens now or later this year, I do expect a deeper correction at some point. How the market digests that pullback and its ability to bounce will be key in determining how much more upside this bull cycle has left.

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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 +31%, while the leveraged 3x version has delivered +52%. Over the past month, the portfolio increased by 1.8%.

3. Portfolio Composition

The Macro ETF Portfolio is currently 96% actively invested across 21 positions, with the top performers being Bitcoin (+242%) and $QQQ (+44%).