A Better Pie: Asset Allocation for the Next 5 Years | ETF Trends

For many advisors, it’s hardly obvious what the next year holds. Looking beyond the short-term issues of political outcomes, we believe that advisors need to understand the broad themes that may continue to drive returns.

In the upcoming webcast, A Better Pie: Asset Allocation for the Next 5 Years, Jim McDonald, Chief Investment Strategist, Northern Trust Asset Management, will present the firm’s five year outlook, with comprehensive guidance on fixed income, equity and alternative allocations that may provide long term growth and capital preservation. From China to Climate Change, this presentation will cover all of the bases, and leave room for your questions.

ETF investors have a number of options to craft a diversified global investment portfolio. For example, investors who are seeking stability, along with exposure to the growing U.S. markets, can look to the FlexShares Quality Dividend Index Fund (NYSEArca: QDF), FlexShares Quality Dividend Dynamic Index Fund (NYSEArca: QDYN) and the FlexShares Quality Dividend Defensive Index Fund (NYSEArca: QDEF). The suite includes a group of smart-beta ETFs that focus on both quality and dividends.

There are flaws in dividend-focused strategies. For instance, reacting to a reduced dividend after the fact results in holding the dividend-paying security until the next rebalance or potentially after the stock price has reacted to the news. To evaluate consistent dividend payers, a long history is required, which means newer players are excluded from consideration. Short-term changes in the macro-environment could affect a company’s ability to maintain or grow dividends.

Alternatively, FlexShares argued that focusing on the core financial health of a dividend-paying company may be a better approach to address some of the shortcomings of other dividend-themed strategies.

Additionally, FlexShares has partnered with Morningstar in creating a line of smart beta ETFs, such as the FlexShares Morningstar U.S. Market Factor Tilt Index Fund (NYSEArca: TILT), which tries to provide enhanced exposure to U.S. equities by tilting the portfolio toward long-term growth potential of small-cap and value stocks. For international exposure, investors can look to the FlexShares Morningstar Developed Markets Ex-US Factor Tilt Index Fund (NYSEArca: TLTD) and the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (NYSEArca: TLTE).

Financial advisors who are interested in learning more about asset allocation strategies can register for the Tuesday, October 6 webcast here.