Asset Allocation – Building an ETF portfolio

ETFs can provide cheap, easy (and liquid) access to a large range of assets such as Equity, Bonds, Real Estate or Commodities.

This discussion aims at covering the “Best Practice” for ETF portfolio construction.

Let start with an article showing how you can build a truly diversified portfolio with only a handful of ETFs, here comes Randy Kurtz.

The above article provides solide foundations to start your ETF portfolio, bringing some diversification while limiting both the number of underlying and the costs.

Want something more personalized? You can start by a robo-advisor. Based on a quick questionnaire, it will be able to suggest an ETF basket corresponding to your risk appetite and investment horizon. We have been testing the robo-advisor offered for FREE by SigFig and it proved quite accurate and selected only reputable ETF providers. The service is accessible here, in the Guidance section of the site. 

What does it take to buy such ETFs? Not much, you just need a brokerage account, preferably with access to US market, as most ETFs you may find interesting are US listed. Please share with us the references of your favorite brokers (specify the country you invest from). 

How often should you rebalance the portfolio? Our take is to reduce as much as possible the frequency of the trades, both from a practical aspect (you don’t wish to spend too much of your time on this) and from a cost perspective. Indeed, you can add some tactical overlays, such as overweight on specific macro trends, see for instance our posts relating to Renewable Energies or Technology.

Share with us your comments and links!

Feeling lost? Get to know what ETFs are in less than 5 minutes thanks to BlackRock, an ETF provider, with the top 5 questions on ETFs (from BlackRock’s Blog). You may also download BlackRock’s guide to ETFs. Please also feel free to ask questions in the comments. 

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