October ETF Review
Many investors are likely disappointed by the price action in October, as the S&P 500 fell sharply. They started the month strongly, posting a new all-time high, but then fell the last three weeks. Stocks are still up a lot in 2026 and on track to have an increased price for the 4th consecutive year.
The Market
The markets were acting very differently before the last week of the month, as I discussed in last week's weekly newsletter, and this week extended this action. With the pullback, SPY ended the month with a negative return of -0.9%. AGG rose 2.3%. It had begun the year with two monthly positive returns but fell sharply in March and bounced only modestly in each month in Q2. It tanked in July and fell a lot in September. Even with the big bounce in October, bonds as measured by AGG are losing money this year.
For the month, the big winners in the ETF space that I track included three S&P 500 sector ETFs that returned more than 10%, including Energy, the winner, Consumer Staples and Utilities (which I did call out!). The five double-digit decliners included Silver, Semiconductors (SOXX and SMH), Technology (XNTK) and Gold Miners. Silver and Gold (and the gold miners), which were soaring early in the year are all showing negative year-to-date returns now. The semiconductors have pulled back sharply but are up a lot still year-to-date and over the past few years.
As I have written about recently, small-caps, which started the year very strongly, had been suffering relative to large-caps, but this was more than overcome in October. Here is the IWM vs SPY chart, with RSP included too:
Equal weight performed very strongly during the month compared to market-cap weighted, and small-caps bounced in the second half of the month to actually end higher. Year-to-date, RSP is beating SPY now, and IWM is back ahead too:
In 2026, the S&P 100 has returned less than the S&P 500, and S&P 400 has done about the same.
An interesting way to look at the market is to see how much off the high certain sectors are, and we are nowhere close to a correction (a 10% move lower) for the S&P 500, but we were there for the Russell 2000:
SOXX is 28% below the all-time high set in June, and XLK is 11% below its very recent all-time high.
Here are the returns and a lot of other information about the 90 ETFs that I now follow closely sorted by return for October:
I am attaching my data for the ETFs that I follow sorted alphabetically (readers can change the sort if they download the file):
The Model Portfolio
With an emphasis on TIPS, which have not performed well, and a focus on smaller stocks, the model portfolio had a tough month and a bad quarter. The year-to-date performance was modestly worse than the benchmark a month ago, but it recovered very sharply this month and is ahead by a lot now:
In October, the index did increase slightly as bonds rose and stocks fell. The balanced index increased by 0.3%. The model portfolio rallied by 4.8%.
A month ago, the ETF held three equity ETFs and two fixed-income ETFs. It did include an additional 2 equity ETFs during the month that I exited (XLU and VBR), and I exited another one that I held at month-end (NOBL). Had I just held the portfolio and done no trades, the portfolio would have been worth $111,141 instead of $111,412. So, trading did help, but not by much.
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