Multi-Asset Model Portfolios? A Unique Winning Strategy | ETF Trends

Multi-asset strategies are in the spotlight due to depressed bond and cash yields. Yet these ideas aren’t carbon copies of each other, making allocating in this space a tricky endeavor.

A good place to start is with the Global Multi-Asset Income Model Portfolios, which are part of WisdomTree’s menu of Modern Alpha Model Portfolios. Within the Global Multi-Asset series, there seven portfolios for advisors to consider, ranging in risk tolerance from very conservative to very aggressive, ensuring there’s something for a variety of client risk profiles.

“Designed to help maximize income, offer capital appreciation potential and reduce volatility, this strategy typically provides exposure to a diversified allocation of dividend-focused stocks and yield-focused bonds using ETFs with global exposure,” according to WisdomTree. “The strategy may include both WisdomTree and non-WisdomTree ETFs. These model portfolios were previously known as Income Model Portfolios.”

This model portfolios is relevant at a time when safer investments aren’t expected to generate much in the way of yield or capital appreciation.

“The overall implications for investors in 2021 are becoming clearer,” according to BlackRock research. “‘Safe-haven’ assets will struggle to generate positive real returns given current inflation expectations and low yields. Higher yielding credit markets have less upside after an incredible run into year-end but remain a relatively attractive source of income. Equity markets still have upside potential and we expect the sectors and styles that lagged in 2020 to catch up as vaccines become more widely available.”

Model Portfolios: A Better Yield Idea?

Low yields and coronavirus fears are certainly making a formidable roadblock when it comes to fixed income investing, but there are still some multi-asset, income-generating strategies out there.

The moderate multi-asset model portfolios offered by WisdomTree has a 60% weight to equities, which is comprised of 10 ETFs. The remaining 40% is allocated to seven fixed income ETFs, addressing various bond asset classes of varying credit qualities and maturities.

“In this environment, a multi-asset strategy can offer more consistent income, diversification and upside potential relative to bonds,” notes BlackRock.

The very aggressive sleeve of the WisdomTree model portfolio features a 90/10 equity/fixed income split.

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.