There is a short post up at ETF Investor that contains model ETF portfolios from Agile Investors. There is one for conservative, moderate and aggressive investors. I like to make readers aware of this type of thing whenever possible because so-called model portfolios can be some great tools to learn from.I am not picking on the work because I believe no all-ETF portfolio can cover all the bases. It can probably cover most of them but not all.
Agile’s portfolios have plenty of foreign but is heavily tilted toward Japan. EFA has 23% Japan and VPL has 74% Japan. The way the numbers work out the conservative portfolio has 15% of its equity exposure in Japan, about 12% of the moderate is in Japan and 11% of the aggressive. These weights are not heavy compared to the MSCI World Index but might be heavy given that Japan has doubled in the last couple of years.
There is also not much yield. I did not plug it into Morningstar to calculate but I can tell it will be low.
The investment-product world (notice I am taking it beyond ETFs) has a lot of very innovative tools that allow investors to capture many different themes, more than what is being captured here.
As an example, PowerShares has a lot of innovative products. Any of the Dividend ETFs might be a better way to capture the financial and utility sectors. IShares Australia (EWA), which is a personal holding, can be a good way to capture financials and materials or iShares UK (EWU) can be a good way to capture energy and financials. Both yield more than 3%.
The point here is that do-it-yourselfers can capture some very narrow themes without having to be stock pickers. Obviously anyone willing to do a little stock picking can capture even narrower themes, like Norway which has been a favorite of mine for over a year.
4 comments:
Agile's portfolios have been very conservative in their allocation to energy. I can't understand why. At present, the energy sector is negatively correlated to the market, offering great diversity. The worst that can happen to the sector is that a new giant oil field will be discovered.
if that happens my call is that the stock market will explode upwards
OG
Have you ever looked at the asset advisor allocation model (http://theassetadvisor.com/)? It is a mutual fund model but tries to cover different asset class and categories (US and Non-US Stocks, Real Estate, US and Non-Us Bonds, Sector and commodities). Just let me know what you think? Due to my age (33), my portfolio is 25% US stocks, 50% international stocks, 25% commodities (oil, gold, timber) and 0% bonds.
tough for me to ague with TAA's performance. After just two years they are either smart or the market landscape has allowed their approach to thrive. who can say for sure?
I don't really know enough to say your allocation is right or wrong because I don't know you. 50% in foreign is a lot and 25% in commodities is a lot. I am overweight both themes but not to the same extent. Your domestic equity exposure is your counter-strategy to a very specific theme. I think bonds have a place in any portfolio. I'm not that much older than you and I have a little exposure to things that act like bonds. Hope that helps.
Did you hear that AMVESCAP is buying PowerShares? Finally a mutual fund company embracing ETFs.
HOUSTON, TX—January 23, 2006—AMVESCAP PLC announced it has signed a definitive agreement to acquire PowerShares Capital Management LLC, a leading provider of exchange-traded funds (ETFs). PowerShares, based in Wheaton, IL, currently manages more than $3.5 billion in assets in a family of 36 different ETFs.
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