On our most recent radio broadcast, we focused on a subject that sounds complex, but is rooted in a very basic practice - asset allocation. Asset allocation is the process of getting the right mix of investments in your portfolio given your particular situation. You take into account factors such as your age, risk tolerance, and financial goals and then work to invest in the right asset classes in a manner which will ideally allow you to meet those financial goals. At The ETF Store, it's our belief that the performance of your investment portfolio, over the long-run, isn't determined by picking the next hot mutual fund manager or some high flying tech stock, but instead, your returns are based on proper asset allocation decisions - you want the right mix of stocks, bonds, alternative assets, and even cash in your portfolio. There was a landmark study that concluded over 90% of the variability of long-term investor returns can be attributed to asset allocation. So while the concept of asset allocation is fairly straightforward, its importance cannot be overstated.
On our show, we explained how ETFs have completely changed the game for investors by allowing them to invest in a wide range of asset classes that were previously unavailable or difficult to access - investments like gold, commodities, real estate, and emerging market stocks and bonds. ETFs have provided investors a way to easily and cost effectively express asset allocation decisions. We also delved into how investors can attempt to optimize returns and reduce risk through proper asset allocation in their investment portfolios.
In our weekly market update, we looked at the top 10 ETF asset gainers so far in 2013 and offered some thoughts on why these ETFs have attracted investor dollars. In our weekly ETF Spotlight segment, we examined a broad based US Real Estate Investment Trust, or REIT, ETF (Vanguard REIT Index ETF - ticker symbol VNQ) and explained how real estate investments can offer yield, an inflation hedge, and some diversification benefits. Learn more about VNQ at www.etfbuzz.com.