“A more risk averse profile will allocate more to bonds while a risk seeking profile will allocate more to stocks,” Forsyth said.
Finally, as we build a diversified core portfolio, investors should stay disciplined or keep portfolios on course with regular rebalancing. If you are a risk-adverse investor and want a more conservative portfolio, one should regularly rebalance to keep his or her bond and stock allocations in line with the original positioning, regardless of how the assets have performed year-over-year. The same is true for investors of various risk tolerance.
Bartolini pointed out that an investor can tailor equity allocations to achieve specific objectives. With ETFs, investors can focus on specific factors like growth and income through SPYG and SPYD, respectively, or look to segments that represent long-term opportunities, improving valuations and demographic shifts through options like SPYV, SPSM and SPEM.
Investors can also tialor their fixed-income allocations to achieve specific goals. For example, Bartolini pointed to SPTS and SPTL to shorten or lengthen duration exposure or the impact of fluctuating interest rates depending on one’s view of rate movements. Something like SPSB, SPIB, SPLB could balance income and risk exposure through precise investment-grade credit exposure.
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