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  • How About An All ETF Portfolio Model? 0 comments
    Apr 20, 2013 9:12 AM

    An all ETF exposure is an emerging trend which is empowering the investors to design their portfolios around their financial needs and time horizons with a complete allocation to various benchmark bound ETFs available today.

    The idea revolves around the five basic asset classes and a customised All ETF Model ensures that the weight age to each is as per the various investors' preferences that may vary from his risk appetite, a suitable time frame when he may actually require the money and even to an extent of his natural affinity to certain asset classes.

    ETF critics often reason that lack of historical data puts a question mark on the credibility of these funds, but are time and again silenced with the year on year performances of the various ETFs trading on the streets.

    Thus whether it is about the Private Wealth Management or the Retirement solutions, a good ETF consultant's job is to churn up a fund kitty which is exclusive to the investors' needs and likings and yet enables an exposure that works well even in a plummeting market.

    The ETF market itself has exploded in the United States and industry which was close to a $500 million in early 2009 is now posting volumes more than $1500 million on the American exchanges.

    The variety too is vivid and more than 1200 equity funds are available in America that are attuned to bona fide benchmarks and rather than out performance, the fund managers are more focussed on being a pure play to their respective benchmarks.

    An all ETF Model may use a simplistic approach where equities and bond share a 70 / 30 relationship. Although it sounds like a lot of research to track historical data of equities and calculating the various bond yields but in an ETF world a single fund can expose you to the top equities from the American, emerging and other developed markets from around the world and then there are others that track the World Bond markets.

    The model works well for the minimalistic lot, as owning as little as two or three funds will suffice in achieving a wide spectrum exposure that spans continents but simultaneously is easier to track and trade with.

    A radical approach to an All ETF Portfolio Model may include being heavy on the emerging markets products or even commodity funds for that matter. Being overweight to small cap equity is another option if you are sure about growth of a particular local economic sector or even if the notion is to bet on the small companies of the emerging nations, an ETF Model is available which will provide just the right exposure that one is looking for.

    Folks who are seeking fixed incomes and regular yields will also find enough choices in the form of Super Dividend funds and Cash funds that bet on the fluctuation of the local currency rates in the emerging brigade such as China, Brazil and India.

    Keeping it Simple
    Apart from the gains to be made from the movements of these dynamic asset classes, these funds score high on liquidity and over exposure does not lead to depletion of the principal as the approach is systematic and standardised through a wide asset basket and a strategy that only tries to derive gains from the median of the results.

    When designing your ETF Portfolio, one must intentionally stay away from the potential pain areas such as the European and Japanese equities where problems are more than just cyclic.

    Rather a progressive ETF Model will bear more interests in the upcoming segments of the EM stocks owing to the value growth that they offer and even sector wise vestment treasury and mining funds may seem apt for long term investors.

    Toroso Investments is a SEC recognised and New York based investment advisory firm. The strategists on board take pride in their "Point of View Investing" style which works around the benefit of their clients. Apart from the general Advisory services and Private Wealth Management through exclusive ETF Investment strategies, the company also gives assistance in creating ALL ETF Portfolio Model for ones seeking Retirement Solutions and for the Institutional Investors.

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