Moving Averages of the Ivy Portfolio and S&P 500: August 2026

This article provides an update on the monthly moving averages we track for the S&P 500 and the Ivy Portfolio after the close of the last business day of the month.

The Ivy Portfolio 10-month simple moving average maintained a single cash position with the IEF bond ETF closing below its average. The S&P 500 gained 2.6% in August, reversing a two-month losing streak for the index. The S&P 500 closed August above its 10-month simple and exponential moving average, as well as its 12-month simple moving average.

The Ivy Portfolio is based on the asset allocation strategy used by endowment funds from Harvard and Yale. It is an equally weighted portfolio constructed with 5 ETFs that feature a mix of different asset classes. By allocating across different asset classes, diversification is achieved, and risk is reduced. The different asset classes and their corresponding ETFs are below. Domestic stocks, represented by Vanguard Total Stock Market ETF (VTI) International stocks, represented by Vanguard FTSE All-World ex-US Index Fund (VEU) Bonds, represented by iShares 7-10 Year Treasury Bond ETF (IEF) Real estate, represented by Vanguard Real Estate ETF (VNQ) Commodities, represented by Invesco DB Commodity Index Tracking Fund (DBC)

The process of using the Ivy Portfolio is quite simple. First, compose a diversified portfolio from each of the major asset classes held in equal weight (see above). Then, compute a moving average of closing prices over the prior 10 months for each fund (or desired time frame). Lastly, observe the portfolio at the end of each month. If a fund closes out the month below the level of its moving average, sell it and hold cash, repurchasing only when it closes back above its moving average at the end of any subsequent month. Similarly, if a fund closes out the month above the moving average, hold it.

The table below details the 10-month simple moving average (SMA) for the five Ivy Portfolio asset classes. As of month-end August, the signal shows a single “cash” position as the iShares 7-10 Year Treasury Bond ETF (IEF) closed just below its 10-month SMA. To assist with trend monitoring, the table also includes the percentage by which each fund sits above or below its moving average. Positions highlighted in yellow indicate a fund is within 2% of its signal, flagging a potential reversal in the coming month.

For a broader perspective, the following table displays the 12-month simple moving average (SMA) signals. As of month-end August, four of the five Ivy Portfolio ETFs closed above their respective averages. Similar to the 10-SMA strategy, the iShares 7-10 Year Treasury Bond ETF (IEF) is currently highlighted in yellow, indicating it finished the month within 2% of their moving average, only this time it closed below.

The S&P 500 closed out August with a monthly gain of 2.6%, reversing a two-month losing streak. But let’s examine the index through the lens of moving averages. Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the top or back in at the bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal), which was seen most recently in 2020. Nevertheless, a 10- or 12-month simple moving average (SMA) strategy would have ensured participation in most of the upside pri...