Randall Forsyth was on the Consuelo Mack show on PBS and offered the following all ETF portfolio.
Total Stock (VTI)
MSCI EAFE (EFA)
Emerging Market (EEM)
REIT (VNQ)
Aggregate Bond (AGG)
No percentages were given.
This is a very typical type of mix we see put forth. If you have been reading this site for any length of time you might guess I am not a huge fan of this simple of a mix. I would encourage anyone wanting to manage their own portfolio without making it a full time job to explore a few things than just five ETFs.
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12 comments:
My portfolio is not too much different, but I do have a few other items in the mix:
VTV
VUG
VBK
VBR
EFV
EFG
VWO
DLS
IAU
IWC
VNQ
Am I missing any important asset classes?
well you do have style and cap size nailed down.
I prefer to construct portfolios by building sector allocations and I prefer country investments instead of going as broad as you do with foreign.
I can't tell you your way is wrong but as I prefer a very different way it would be tough to resoundingly say it covers all the bases.
If it works for you though, my opinion probably doesn't matter a whole lot.
Roger, Interesting write up on DEF. Almost suggestive of having a momentum strategy that is all weather. ?
So much talk about merger and acquisition. My take is that I wonder if money managers have run out of ideas and so they are taking a page from w.buffet...just go buy a company, take it private, then bring it back public. I can tell you first hand that a small cap company I have follwed for ten years schemed with a hedge fund to do just that, but first by driving down stock price. The common share holder is far from protected. But rather than vent my paranoic rage, is there an etf/cef that participates in mergers and aquisitions?
Doesn't VTI cover "style and cap size" in of itself?
Along with those five ETF's in the model portfolio one might add some energy plays like IXC for international exposure, and IYE for US energy.
And if you would like to cover all the bases GLD should do the trick. I don't know if I would gamble on any plays on the dollar though other than gold.
As a side note Roger, what do you think of short ETF's such as DOG, SH, DXD, or SDS given the present inverted yield curve?
That DEF, which is the Claymore Defender ETf that I wrote about on TSCM, could be thought of as momentum does not seem like it is a 100% fit but now that you say it I think it helps explain the fund, preceptive.
There is at least one Merger OEF; MERFX. There is the new Private Equity ETF which is ticker PSP, not sure if that is what you had in mind and I don;t know if going forward it will capture the effect or not.
VTI does cover style in a way, it has grwth and value. The reason to to own a value product and a growth product is to control how much of each your portfolio has, for people that want to control that aspect.
I am a fan of the double short funds conceptually and own SDS for clients. If things aren't different now, there needs to be a correction at some point which is obviously when these funds kick in. If the market never corrects they obviously will serve a drag on performance.
Forsyth's portfolio lacks small and value asset classes (in US and intl. Here's my buy and hold portfolio for comparison:
VIGRX
IWD
IWO
IWN
IWC
VDMIX
DOL
PISRX
DLS
VEIEX
VFSTX
VBMFX
Note, I'll eventually add REITs into the mix but they seem too pricey right now.
TomK,
Thank you for sharing this. The willingness to seek out different products is a big thing here, there is not enough of that out there.
I love DLS that I see both of you have in your portfolios. It is a heavily weighed in three countries though. The UK (24%), Japan (17.2%) & Australia (16.8%).
By contrast it only has 0.5% in Austria, 2.1 % in France & 2.7% in Germany.
I bought DHS, DLS and DTN in late October. My DHS is up 2.1 %, DTN is up 1.75 % and DLS is up 10.63%.
Tom.
I don't see any energy ETFs in your portfolio. Are you staying away until late winter?
The US only Vanguard REIT should have RWX added to it. This State Street product gives European/Australian and Asian REIT exposure to complement the US REITs.
Roger, I'm thinking "acquisition" where private capital buys companies and then spins them out as ipo's. I guess you have to be one of the big dogs to get a piece?
Anon 8:09, This portfolio does include energy...but only in proportion to energy's weight in the indexes represented. The basic idea behind this strategy is to bet equally against all major equity asset classes (within reason). This is similar to the passive portfolios Merriman Capital Group and Index Fund Advisors package (except they use DFA funds).
You need to add some more international to that slow moving list.
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