What ETFs Are In Your 'Safe' Portfolio? | ETF Trends

The old dogma for safe investing has been severely rebuffed by the current financial crisis. So, what type of investments and exchange traded funds (ETFs) should our portfolios include?

Investors have been finding the balance between stocks, bonds and cash for many years, but switching around assets in these three areas did not prove as helpful as it used to, remarks Kirk Shinkle for US News & World Report.

Advisors, educators, and analysts are all starting to recommend that Mr. and Mrs. Investor to include a hodgepodge of investments to mitigate risk in his or her portfolios. Such recommendations include:

Gold. In anticipation of inflation and a weaker dollar, traders should consider some allocations to the precious metal. Current growing prices during this economic downturn shows that investing in gold could prove to be a prudent defensive trade.

  • iShares COMEX Gold Trust (IAU): down 1.9% year-to-date
  • SPDR Gold Shares (GLD): down 2.0% year-to-date

Energy. There is a low correlation between energy and many asset classes that make it an essential component for a diversified portfolio. Besides, we are still very much dependent on oil and that probably won’t change any time soon.

  • iShares Dow Jones US Energy (IYE): down 3.5% year-to-date

Agriculture. People still eat and agricultural commodities are the most basic components of what we eat. Population growth and changing diets around the world only help add to the benefits of this sector for the long haul. Renowned investor Jim Rogers has also been fervently advocating the potential for this sector.

  • PowerShares DB Agriculture (DBA): down 7.6% year-to-date
  • Market Vectors Agribusiness ETF (MOO): up 9.2% year-to-date

Real Estate. REITs are still the best way for potential investors to tap into an asset class that could cut overall volatility. Real estate related investments usually don’t move with stocks and has low correlations with short-term bonds.

  • Vanguard REIT Index ETF (VNQ): down 31.1% year-to-date

Emerging Markets. Many emerging markets saw plummeting prices but the returns can be quite lucrative. Though it should be noted that specific countries or regions can be volatile at times, One can invest in country or region related ETFs.

  • iShares MSCI Emerging Markets Index (EEM): up 5.7% year-to-date

Wherever you choose to invest, always make sure the trend is up instead of relying on fundamentals.

Disclosure: Tom Lydon has clients that hold shares in EEM.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.