A Bespoke Model Portfolio for the Long Haul | ETF Trends

Riskier assets are making their way back from the March lows. Some have easily surpassed those levels, but the time is still appropriate for advisors to increase customization and education with clients, bolstering relationships along the way.

One way of doing that is with straight forward though still bespoke model portfolios, including those offered by WisdomTree Investments. A pair of the firm’s model portfolios are developed in concert with Senior Investment Strategy Advisor, Dr. Jeremy Siegel, Professor of Finance at the Wharton School.

One of those offerings is the Siegel-WisdomTree Longevity Model Portfolio.

“The collaboration with Professor Siegel brings a unique solution to investors with mid- to long-range time horizons who are trying to balance current income needs with longevity risk,” according to WisdomTree. “The Siegel-WisdomTree Longevity Model Portfolio was designed to outperform a traditional 60/40 portfolio in a risk-conscious manner by structurally allocating more toward equities over fixed income and tilting toward factors such as dividend yield and low P/E ratios to seek higher income generation and outperformance potential. The models are strategic in nature but also reflect tactical tilts based on market conditions. The strategy may include both WisdomTree and non-WisdomTree ETFs.”

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One of the equity pillars of the Siegel-WisdomTree Longevity Model Portfolio is the WisdomTree Earnings 500 Fund (NYSEArca: EPS), a smart beta alternative to cap-weighted domestic large-cap equity strategies, could be an alternatively-weighted strategy for investors to consider when markets steady and volatility abates.

EPS targets an earnings-weighted index that screen for positive cumulative earnings over their most recent four fiscal quarter period and assigns weights to components to reflect the proportionate share of the aggregate learning’s each company generated, so those with greater earnings have larger weights. That gives the fund value and quality tilts.

The portfolio features a 25% fixed income allocation, the bulk of which is sourced via the WisdomTree Barclays U.S. Aggregate Bond Enhanced Yield Fund (NYSEArca: AGGY), a superior alternative to traditional aggregate bond funds.

AGGY seeks to track the price and yield performance, before fees and expenses, of the Bloomberg Barclays U.S. Aggregate Enhanced Yield Index (the “index”). The index is designed to broadly capture the U.S. investment grade, fixed income securities market while seeking to enhance yield within desired risk parameters and constraints.

AGGY uses a“rules-based approach and re-weights the subcomponents of the Bloomberg Barclays U.S. Aggregate Bond Index to enhance yield, while broadly maintaining familiar risk characteristics. AGGY tries to boost return by reweighting the components of the Aggregate Index. But this additional yield is not free as it comes with greater credit risk and rate risk,” according to WisdomTree.

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.