Mark Luschini, an equity strategist at Janney Montgomery Scott, has an all-ETF portfolio designed to be a solution for investors trying to rebuild their investments. It's always worth deconstructing these exercises to learn from strengths and weaknesses. That way, we build better portfolios for ourselves. Here's the portfolio:
- Vanguard Total Stock Market ETF (VTI): 30%
- SPDR S&P Dividend Aristocrat (SDY): 18%
- SPDR S&P World ex-US (GWL): 9%
- iShares iBoxx Invesment Grade Corp Bond (LQD): 20%
- Vanguard Total Bond Market ETF (BND): 20%
- SPDR Gold Trust (GLD): 3%
If you believe rates will rise, you may expect the U.S. dollar to weaken, which is an argument for foreign bond exposure. iShares and SPDR each provide short and intermediate maturity exposure: iShares S&P/Citigroup 1-3 Year Intl Treasury Bond Fund ( ISHG), iShares S&P/Citigroup Year Intl Treasury Bond Fund ( IGOV), SPDR Barclays Capital Short Term International Treasury Bond ETF ( BWZ) and SPDR Barclays Capital International Treasury Bond ETF ( BWX). The point of this exercise is not to pick on anyone but to learn. ETFs and other investment products create the opportunity for diversified portfolios with a small number of holdings. The advantage of ETFs is that you know what you own right now and you know what you will own in six months. Building these types of portfolios is easier to do, with more sophisticated results than it used to be, and the trend will only continue.