How Advisors Are Building Portfolios With ETFs

Plus, 49% of advisors say they will use these non-cap-weighted products more in the next year or two.

Mack Courter, principal of Courter Financial LLC in Bellefonte, Pennsylvania, mainly uses cap-weighted “plain vanilla” ETFs for the core holdings of a portfolio, and then adds sector, equal-weighted or fundamental ETFs as “opportunity” holdings, he says.

“I choose the ETFs based on many factors, starting with the asset class I want exposure to, then moving on to the methodology used by the ETFs to get the best fit, and then finally I look at liquidity and expenses,” Courter explains.

John Diak, principal of Oatley & Diak LLC in Parker, Colorado, says his group’s approach is somewhat different.

“As we transition from mutual funds and individual stocks to [becoming] an ETF-focused shop, we’re really focused [on] broad-based index funds to create the core for client portfolios,” Diak explains, and the team has begun to add factor-investing, smart beta and low-volatility ETFs to create dividend and value-based holdings.