Are you leery about investing your money in one or two ETFs as recommended when using either the Dual Momentum or Swensen models? If so, this sample **Factor** portfolio goes to the other extreme. Forty (40) ETFs from all the different factors are included in the investment quiver. In this sample I am using a maximum of five (5) ETFs at any given time, but other investors will use a higher number for additional diversification.

There is nothing wrong with running a correlation analysis and trimming some of the ETFs from this investment quiver. Consider this an extreme portfolio where the maximum number of ETFs populate the investment quiver.

**Factor Investment Quiver**

Here we have a forty (40) ETF investment quiver. The factors include Beta or Equities (both domestic and international), Value, Size, Quality, Momentum, and Term or what I think of as risk controllers. The portfolio also meets all the Swensen “mathematical” arguments for diversification as well as set to handle inflation and deflation. If I were to make one substitution, I would slip in QQQ and remove SCHB as SCHB is highly correlated with VTI. I noticed this after I was nearly finished with this blog post.

**Factor BHS Recommendations**

With the investing model set to BHS and using a maximum of five ETFs the recommendations are as follows:

- Buy 341 shares of EWX.
- Buy 118 shares of VBK.
- Buy 144 shares of MTUM.
- Buy 219 shares of VFMO
- Buy 547 shares of SGOL

Of course the number of shares to purchase is a function of the cash available. If this were a real portfolio I would sell all the current holdings with exception of EWX.

**Special Note:** In the first screen shot you will see that I set maximum percentages for the different ETFs. SGOL has a limit of 10%. If the limit had been set to 100%, SGOL would show an allocation of 20% instead of 10%. Where did the 10% go? Five percent (5%) was moved up to VBK where it has a limit of 25%. Another five percent moved up to SHV.

EWX has an upper limit of 15% so instead of receiving 1/5 of the total or 20%, that extra 5% also moved up to SHV. If all the maximum percentages are set to 100% each of the recommendations will see 20% as the Required percentage. Hope this is clear.

## Leave a Reply

You must be logged in to post a comment.