Managed portfolios of exchange traded funds and ETFs programmed to invest in several asset classes are growing in popularity with investors and advisors shopping for all-in-one options.
One example is the Global X Permanent ETF (NYSEArca: PERM), which was launched in February. [Chart of the Day: Global X Permanent ETF]
The ETF is designed to weather any economic environment and provide steady returns.
PERM invests 25% in each of these four asset classes:
- Global stocks
- Short-term U.S. Treasury bonds
- Long-term U.S. Treasuries
- Gold and silver
PERM has an expense ratio of 0.49%.
The ETF employs a strategy similar to the Permanent Portfolio (PRPFX), based on the theories of Harry Browne. “Designed as a core portfolio holding, the Permanent Portfolio seeks to preserve and increase the purchasing power value of each shareholder’s account over the long term, regardless of current or future market conditions, through strategic investments in a broad array of different asset classes,” according to a fact sheet on PRPFX.
The $17 billion mutual fund targets 20% to gold, 5% to silver, 10% to Swiss franc assets, 30% to stocks and 35% to U.S. Treasuries and other dollar assets.
However, investors can assemble their own “model portfolios” using ETFs as the building blocks. They can tailor the portfolio to meet their own unique investment needs and rebalance occasionally to maintain the target exposures. [Why ETF Managed Portfolios are Growing in Popularity]
Harry Browne’s original portfolio was envisioned as 25% allocations to four asset classes: gold, Treasuries, equities and cash.