The 60/40 equity/fixed income portfolio methodology isn’t dead, but it’s in need of refreshing. Advisors can do so with the right model portfolio.
Enter WisdomTree’s Strategic Model Portfolio, which offers a unique, quality-driven on 60/40 thinking.
“This model portfolio is designed for investors with mid- to long-range time horizons who are willing to tolerate short-term price fluctuations,” according to the issuer. “The model portfolio seeks to balance growth of capital through domestic and international equity ETFs, with potentially volatility-reducing fixed income ETFs that also serve as a source of current income. The model portfolio strives to deliver performance in excess of a 60/40 combination of a broad-based global equity benchmark and a U.S. aggregate bond index.”
This model portfolio features 11 equity-based exchange traded funds and eight bond ETFs. Integral to the model portfolio’s success and utility is the fact that it’s not overly dependent on domestic large-cap stock and U.S. Treasuries.
Model Portfolios for a Global Reach
Yield can come in many forms. That’s exactly what fixed-income investors need nowadays, especially when it comes to venturing outside of bonds. As such, there are a few exchange-traded fund (ETF) options investors can use as long-term income options.
In addition to featuring exposure to quality dividend strategies focusing on domestic mid-and small-cap stocks, WisdomTree’s Strategic Model Portfolio also offers avenues to international dividend equities – a trait worth considering in the current environment.
Some of the model portfolio’s payout proposition is sourced via the WisdomTree International SmallCap Dividend Fund (DLS). DLS seeks to track the price and yield performance of the WisdomTree International SmallCap Dividend Index, which is comprised of the small-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada.
On the fixed income side, the Strategic Model Portfolio features an array of credit qualities, durations and geographic exposures, including emerging markets via the actively managed WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD). ELD seeks a high level of total returns consisting of both income and capital appreciation.
The fund attempts to achieve its investment objective through investment in local debt denominated in the currencies of emerging market countries. Constituent countries include: Brazil, Chile, Colombia, Mexico, Peru, Poland, Romania, Russia, South Africa, Turkey, China, Indonesia, Malaysia, Philippines, South Korea, and Thailand.
For more on how to implement model portfolios, visit our Model Portfolio Channel.
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.