So, you’ve decided to switch your practice over to exchange traded funds (ETFs). Good choice! But…now what?
After you’ve determined what your investment strategy will be, you’ve got to get to work on picking ETFs that will be suitable for your clients. There are more than 900 ETFs trading today, which means that there are several sectors, asset classes and global regions that have multiple choices available. How can you be sure that you’re making the best decision?
We have several tips for you on building an ETF portfolio and our research tools will make finding this information a snap.
The Basics of Portfolio Building
Think about your clients’ goals. Building a portfolio based on a short-term or long-term outlook will determine the type of risks you and your clients will be comfortable with.
The classic portfolio combination would include a good mixture of equities and bonds. With the diverse selection of ETFs now available, it shouldn’t be hard to hone in on an equity- or bond-related ETF that would mix well with your portfolio design. For instance, if you’re looking for a stock-to-bond ratio, there are total stock market ETFs available, along with more specialized themes like developed or emerging markets, and a plethora of bonds or fixed-income ETFs, again, along with their own specialized themes.
Another good point to keep in the back of your mind is to review and rebalance your portfolio at regular intervals. We have alert tools that will remind you to do this at times you determine.