With the majority of ITA portfolios currently recommending no new purchases, now is a good time to rework the investment quiver if you are not completely satisfied with either the Factors or Asset Classes that make up your portfolio. Think through what asset classes or factors you want to include in the portfolio. Below are some suggestions.
Sample Investment Quiver
I generally begin with specific asset classes. Here are ones I consider essential to every portfolio other than the Dual Momentum accounts. These six ETFs mirror the recommendations that come out of the “Swensen Six.”
- U.S. Equities – My preference is to use VTI. If this is not a commission free ETF for you, another ETF might fill in for VTI.
- Developed International Equities – VEA is my preference. If one does not wish to include a specific ETF for Emerging Markets, then VEU is a good choice as it combines Developed and Emerging Market Equities.
- Emerging Market Equities – VWO is my go to ETF for this asset class. I would not include this ETF if using VEU for the #2 slot.
- U.S. Real Estate – VNQ is my choice for this asset class.
- Bonds – Here I generally go with either BND or AGG.
- Treasuries – TLT is my ETF of choice.
I consider the above six as first tier or essential ETFs to include in any portfolio. Now we move to the second tier group. This is where one begins to apply more judgment and I expect different investors will come up with different recommendations and choices.
Rather than I bias readers with my choices, please place your ETF recommendations in the Comment section provided below. If you are commenting for the first time, I need to approve your first message, so be patient. On occasion, a comment is caught in the Spam folder. I check that regularly, but if your comment does not immediately show up, the Spam net might be the problem – which I will solve.
Have a go and let me know what ETFs should be added to the “Swensen Six.”
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Lowell,
I would consider two other bond funds: International BNDX and inflation protected VTIP.
…Lee
Lee,
Thank you for the suggestions. These are two additional “off ramp” securities one might use when equities are out of favor. David Swensen recommends holding 15% in an inflation protected security such as TIP or VTIP. VTIP has a much lower expense ratio compared to TIP as does BNDX compared to BWX.
Lowell
Lowell,
I always include the tech heavy QQQ and momentum factor MTUM in my portfolios.
~jim
Jim,
Thanks for these two additions to the few I suggested above. Like you, I also include QQQ and MTUM in most of the non-Dual Momentum portfolios.
To all readers, keep the security suggestions coming.
Hope you are enjoying the air cleaning rains as much as we are in Portland. Our lawn is even greening up after a long spell without moisture.
Lowell
Lowell,
I have to agree with Lee Schamp that having an inflation protected bond fund makes a lot of sense. The Federal Reserve seems to be doing there best to increase inflation. It puts me in mind of Wayne Gretzky’s famous quote, “I skate to where the puck is going.”
Richard
Richard et al.,
Gretzky’s quote is one of my favorites from the sports world.
The coming week will be a busy one for portfolio updates and HedgeHunter will be active with month-end updates as I will be as well. If nothing changes on Monday, readers will see some movement from equities into what I call “off ramp” securities such as bonds and treasuries.
The three Carson portfolios are scheduled for review on Wednesday (September 30) and I expect to see some rotations among the ETFs. The recent market correction is roiling equities.
Time to make sure your stop loss orders are in position.
Lowell