Dogs of the ETF Universe - Backtest 2010 - 2023

Here are the Dogs of the ETF Universe backtested all the way back to 2010. The strategy is explained here. There is also an interactive tool where you can test different scenarios here.

As you can see, the dogs (a.k.a. buying the year's 3 worst performing ETFs and holding them for a year) lead to a significant outperformance of the S&P 500 over the time period. During this time the US markets hugely outperformed most other markets, so the dogs strategy would have easily outperformed the FTSE 100 or the indices from other developed markets.

To be honest the strategy might just have got lucky. On the other hand there really is no luck in trading. Where the Dogs really shone was in 2023. They went all in on 2022's beaten down tech sector, which lead to enormous gains in Crypto and Bitcoin Miners, not to mention the beaten down Ark Innovation fund. The huge outperformance in 2023 was also helped by the strategy pretty much buying all three funds at the bottom, and holding until they subsequently peaked.

So is the Dogs a reliable strategy? Personally I believe that buying funds at 52 week lows is a far better strategy. This also buys beaten down funds, but attempts to improve the timing of when they're bought, rather than just buying them on the first trading day of January. I have also backtested this and it has an outstanding record of delivering very good returns while minimising downside risk.