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Portfolio > Portfolio Construction

Portfolio Management: Built to Last

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What’s the difference between a successful ETF investor and a failure?

Successful investors often have a written investment plan. Another common difference between investment failure and success is getting the right mix of funds.

To that end, ETFs can help financial professionals to get their client’s money on track.

Market Index Funds

The foundation of all good portfolios is a group of ETFs that follow true market indexes.

Why? Because market index funds routinely outperform the vast majority of active money managers. For example, in 2008 a stunning 72 percent of active small-cap mutual funds failed to beat small-cap index benchmarks.

Other important advantages are low cost and tax efficiency.

What ETFs can serve as the foundation of a portfolio?

See broad market equity funds like TMW or CWI (found online at

Watch the Maintenance

Most things in life require some form of maintenance, and no where is this truer than with investment management.

Many individual investors make the routine mistake of forgetting to rebalance their portfolios.

Alert financial professionals can help investors not only to rebalance, but to also assess risk levels and verify that a portfolio is optimally built.

Compliment the Core

Once your client’s portfolio has been built, look at complimenting the portfolio with strategy funds.

One example is the SPDRs S&P Dividend ETF (SDY), which follows the S&P High Yield Dividend Aristocrats Index.

The index is designed to measure the performance of the 50 highest dividend yielding S&P Composite 1500. Selected stocks have consistently increased dividends every year for at least 25 years.

The top three industry sectors represented in SDY are financials (39.17 percent), utilities (19.26 percent), and basic materials (12.55 percent).

The dividends in this fund are paid quarterly and the current yield is in the vicinity of 5.45 percent.


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