A rub with some model portfolios constructed with exchange traded funds is that these portfolios are limited to a single issuer’s products.
That’s not the case with WisdomTree’s Modern Alpha Model Portfolio. Across an extensive lineup of bespoke portfolios, WisdomTree mixes its own products along with ETFs from other issuers. This holds true across domestic and international equities, fixed income, alternative assets and more.
Take the example of the issuer’s Select Model Portfolios that include PIMCO bond ETFs.
“The strategy seeks to balance growth of capital through domestic and international equity ETFs, and preservation of capital with fixed income ETFs that may serve as a source of income and potentially reduce volatility. The strategy may include both WisdomTree and non-WisdomTree ETFs within its equity component, while using PIMCO ETFs in its fixed income component,” according to WisdomTree.
A Superior 60/40 Spin
The old 60/40 equity/fixed income split is still favored by many investors, but there are avenues for sprucing it with the potential for superior income and quality exposure.
This model portfolio contains three groupings: conservative, moderate, and aggressive. Each contains equity ETFs issued by WisdomTree and other sponsors while the fixed income funds all hail from the PIMCO stable.
One of the components in the fixed income sleeve is the PIMCO Low Duration Active ETF (NYSEArca: LDUR).
LDUR is a diversified portfolio of high quality bonds that is actively managed to limit interest rate exposure while maximizing returns in a risk-controlled framework. The fund offers a conservative core bond strategy that is designed to capitalize on opportunities across multiple sectors of the fixed income market. The average portfolio duration is typically between 1 and 3 years.
With PIMCO being one of the best fixed income managers in the world, that does a lot for the ETF space specific to short term, low duration safety, and they have a variety of ETFs that fit the bill. LDUR is something to consider if investors are actually holding high money market fund balances.
In many cases, aside from trend following, putting focus towards LDUR is about considering an investor’s safe money. One has to ask if its okay to have money one wants to keep safe, where the goal is a better yield, especially on a day to day basis, as this is an ETF with a price that will fluctuate.
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.
