With zero commissions now available through Schwab and TDAmeritrade, additional flexibility is accessible when it comes to making up the investment quiver. Let’s combine our ideas and put together a set of ETFs that cover the basic asset classes while adding in the key factors of Size, Value, Quality, and Momentum.
Below is my first crack at setting up such a portfolio, initially valued at $100,000. This is a virtual portfolio and is not backed by real money as are the other ITA portfolios.
The following list of ETFs (investment quiver) is built to include the following:
- U.S. Equities
- Developed International Equities
- Emerging Market Equities
- U.S. REITs
- International REITs
- U.S. Bonds
- International Bonds
- Small-Cap Value Equities
- Mid-Cap Value Equities
- Two Top Tier ETFs (last two in list)
With the model set to BHS, below are the recommendations based on 10/4/2019 prices. The reason for the two Hold? recommendations is due to populating this portfolio a few days ago. The last few market days changed the recommendations.
Setting the model to LRPC and using a maximum of five securities, the recommendations are less ambiguous. Here we buy SCHH, SPTL, SGOL, ITB, and TLT. TLT and SPTL are mirror U.S. Treasury securities so we could eliminate one. For this example, keep is simple and go with the flow.
ITB and TLT are the two survivors after screening for Top Tier ETFs from an initial group of over 200 ETFs.
Manual Risk Adjustments
If this were a real portfolio, below are the manual risk adjustments I would use. I think SHV is also commission free so one might want to use the available cash and buy 45 shares of this treasury.