Diversification with Equity Traded Products is a good logic if approached systematically. An ideal ETF Portfolio should be able to generate maximum alpha with the minimum Beta on portfolio [preferably lower than one] no matter what the market conditions are.
In simpler terms, although ETFs are a must have to enjoy high yields but these investment decisions should be backed with strategies that are battle - ready against the basic market forces like Economic Performance, State Policies and the speculative volatility that arises out of Investor Sentiment and Behavior.
A balanced ETP exposure is important because First World Economies may take more than a few business cycles to get on track and the growth driven emerging economies cannot answer to all the economic woes. As a result returns procured from conventional Bonds and Cash Markets will remain low for an extended period and it is a known fact that amid volatility, equity markets too become untouchable to general investors; a partial exposure to broader markets in form of an ETF Portfolio can cater to your choices and your financial needs in a market where well above thousand Equity Funds are available, out which most don't even strictly follow their respective benchmarks.
Within the equity space, one is confronted with a plethora of investment ideas and options are available to invest in the foreign exchanges especially popular are the products from the emerging South East Asian region.
Commodity ETFs will also give choices to suit all metal-wise preferences and even offers exclusive exposure to selective sectors like Gold Explorers or the Copper Miners. These commodity driven funds may or may not be physically backed, but the basket methodology used by the issuers ensures lower risk volatility when compared to the direct investments in the notorious commodity exchanges.
High Yield Bond ETFs and Cash Funds are more centric on the Fixed Income and Regular Payouts for the investors and enough choices are available in the American Markets. These funds basically invest with the likes of Treasuries to entice the yield greedy investors but are not insured as per the Federal norms thus may result in the loss of principal as well. Other than the pay-out frequency, it is the higher liquidity feature that also compels the participants in adding Bond and the Money Market funds to their ETF Models.
The biggest challenge for investors lies in careful fund picking and in deciding as to on which asset they should outweigh their investments. A desire for equity like returns should be well matched with a higher risk tolerance and similarly if safety is your prime concern, yielding bond funds will be your first choice where lower returns are standard. Making these choices is easier when you are sure about your own outlook on the markets, life stages when you may require surplus cash and eventually your solvency period for the investment.
A Model ETF Pool that is built around your benefits will try to encompass all of this and much more as valid forecast data and historical market movements are also considered pre investing, whether you achieve this through self study or professional help, always have point blank clarity on your vested period and generate investment pool though systematic investment plans [SIPs].
The market traded funds are a fairly new idea in the markets and unavailability of enough historical performance data has been the biggest hindrance cause among conventional investors who argue that even the indices that these funds follow are only relying on hypothetical derivations of forecasted numbers and not the actual performance of the stocks or the funds.
Toroso Investments LLC is a SEC accredited Investment Advisory firm based in New York, USA. They offer services in designing ETF Models for Private Wealth Management, for Advisors and Institutional Investors and ETF Portfolios that focus on Retirement solutions. The company claims that their diligent research work and the propriety investment solutions are the biggest winners for their clients.