Forums - 3 ideas for longterm ETF portfolios

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Posted by Chuck Krug on 01-29-09 10:42 AM:

3 ideas for longterm ETF portfolios

1)
15% Vanguard Value Index (symbol VIVAX) (Tracks an index of undervalued stocks from the largest 750 U.S. companies)
15% Vanguard Small Cap Value Index (VISVX) (Tracks an index of stocks of small, undervalued U.S. companies)
13% iShares MSCI EAFE Value Index (EFV) (Tracks an index of stocks of large, undervalued foreign companies)
13% iShares MSCI EAFE Small Cap Index (SCZ) (Tracks an index of stocks of small overseas companies)
4% Vanguard Emerging Markets Stock Index (VEIEX) (Tracks an index of companies from developing nations)
40% Vanguard Inflation-Protected Securities (VIPSX) (Invests at least 80% of assets in inflation-indexed bonds issued by the U.S. government)

2)
20% Vanguard Total Stock Market ETF (VTI) (Tracks a broad index of U.S. companies)
20% Vanguard FTSE All-World ex-US ETF (VEU) (Tracks a broad index of stocks from developed and emerging foreign markets.)
20% Vanguard Total Bond Market ETF (BND) (Tracks a broad index of high-quality U.S. bonds)
10% Vanguard Capital Opportunity (VHCOX) (An actively managed fund that likes big growth companies down on their luck)
10% Vanguard Emerging Markets ETF (VWO) (Tracks an index of stocks developing nations)
10% Templeton Dragon (TDF) (Invests in stocks from China and nearby nations)
10% Matthew's India (MINDX) (Invests in stocks from India)

3)
25% iShares Barclays Aggregate Bond ETF (AGG) (Tracks a broad index of high-quality U.S. bonds)
25% iShares iboxx $ Investment Grade Corporate (LQD) (Tracks an index of the most liquid, long-term corporate bonds)
10% Fidelity Floating Rate High Income (FFRHX) (Invests in floating rate bank loans that automatically adjusts to rising short-term interest rates. It offers additional inflation hedge)
10% iShares MBS Fixed Income (MBB) (Tracks a broad index mortgage-backed securities)
7.5% SPDR DB International Govt Inflation-Protected Bond (WIP) (Invests in an index of non-U.S., inflation-linked bonds)
7.5% PowerShares Emerging Markets Sovereign Debt (PCY) (Tracks an index of emerging markets government debt)
7.5% iShares Barclays TIPS Bond (TIP) (Tracks an index of inflation-protected, U.S. Treasury securities)
7.5% iShares Iboxx $ High Yield Corporate Bond (HYG) (Tracks an index of high yield bonds)

http://www.kiplinger.com/columns/fu...ndwatch0127.htm

Posted by nazzdack on 01-29-09 07:01 PM:

4) 100% S&P-500 Index Fund. It has all of the "diversification" one could "need".

Posted by TraderZones on 01-29-09 07:08 PM:

Quote from nazzdack:

4) 100% S&P-500 Index Fund. It has all of the "diversification" one could "need".

the USA is 25% of the world's economic activity and the dollar is suspect. Even though many of the 500 are multinational, it is still good to hold international portfolios.

In addition, it leaves out midcap and small cap.

The Wilshire is a better hold, if just one index.

Posted by nazzdack on 01-29-09 07:11 PM:

TZ---You're mostly correct. However, if nearly all markets and sectors are correlated, diversification becomes unnecessary.

Posted by gkishot on 01-29-09 07:13 PM:

What's the goal of each portfolio?

Posted by nazzdack on 01-29-09 07:29 PM:

Quote from gkishot:
What's the goal of each portfolio?

He wants his account statement to have the "appearance" of activity and complexity.

Posted by LEAPup on 02-06-09 07:28 AM:

Quote from gkishot:

What's the goal of each portfolio?

Exactly! What is the goal?

Posted by alexg on 02-08-09 04:20 PM:

nazzdack 01-29-09 02:01 PM

4) 100% S&P-500 Index Fund. It has all of the "diversification" one could "need".

Can't agree more. If you just want to be "in the market," have the performance of the broad market mutual funds, an S&P ETF (I like SPY) is the way to go.

Posted by Chuck Krug on 02-09-09 02:22 PM:

Quote from nazzdack:

4) 100% S&P-500 Index Fund. It has all of the "diversification" one could "need".

What about commodities, bonds and cash?

Posted by Chuck Krug on 02-09-09 02:29 PM:

How about this 1?

(40%) vtsax - emulates wilshire 5000 broad domestic
(05%) vtmsx - emulates russell 2000 small cap
(10%) veusx - western europe, not true index but close
(05%) vpacx - pacific, again not true index but close
(25%) vbtlx - broad bond fund - 4.77% return, good for bond allocation
(05%) vwehx - corporate bond exposure
(05%) vnq - reit fund
(05%) vwo - etf emerging markets

Sorry for the original poster of this allocation, I would give you credit, but I forgot your name.

Posted by nazzdack on 02-11-09 09:55 AM:

Quote from Chuck Krug:
What about commodities, bonds and cash?

A great "opportunity" would be to create ETF's whose underlying component is commodity futures contracts. You could have single-commodity ETF's in corn, cattle, sugar, 10-year notes, gold....whatever. There may be legal and regulatory obstacles to overcome.

Posted by especulator on 02-11-09 11:21 AM:

Hello,
Im not too familiar with these so....
Whats your thoughts on a high yield corporate bond etf like HYG.

They say the highest rate of defaults were around 15% and it was during the great depression. HYG pay around .68 dividends every month. Unless the economy go into the shiter, which is possible, the reward/risk seems fairly good. Even if we do, i doubt all the high yield bonds will default unless our world ends.

There r so many Etf/index funds the choices seems overwhelming for me. Ive bought a little bit here and there of the more popular ones since i couldnt choose but some of them do similiar things so theres no point in having that many. So dia or spy or qqQq? Vanguard 500 or fidelity?
Or just stick with etf that have dividends?

Posted by Chuck Krug on 02-12-09 07:41 AM:

especulator,
if i would have to choose between spy, qqqq and dia, i would choose spy, because it's broader.

Posted by jwcapital on 02-16-09 09:14 PM:

I like some of the elements of the suggested funds. At this time, I do own LQD. My goal is high current income with preservation of capital. As such, I added PGX (investment grade preferred stocks). High income and a speculative play on the banks (JPM, BAC, WFC, HSBC). I also added two closed-end funds (sometimes they are actually better than the corresponding ETF), ACG and PHD. ACG concentrates on high quality government bonds both here and abroad, and PHD invests in senior notes with floating interest rates. Added these at the end of last year, and have been pleased with the results. Given the current climate, if any of these fail, then the end of the world as we know it, will occur. BTW, everything is a trade. If any of these shoot up quickly, like LQD and PGX did, I take some profits. The divvies would not cover the quick profit anyway.

Posted by pathus21 on 02-17-09 12:12 AM:

Why don't you just pick an allocation and re-balance yearly.

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