Mark Luschini, an equity strategist at Janney Montgomery Scott, has an all-ETF portfolio designed to be a solution for investors trying to rebuild their investments.
It’s always worth deconstructing these exercises to learn from strengths and weaknesses. That way, we build better portfolios for ourselves.
Here’s the portfolio:
Vanguard Total Stock Market ETF(VTI Quote): 30%
SPDR S&P Dividend Aristocrat(SDY Quote): 18%
SPDR S&P World ex-US(GWL Quote): 9%
iShares iBoxx Invesment Grade Corp Bond(LQD Quote): 20%
Vanguard Total Bond Market ETF(BND Quote): 20%
SPDR Gold Trust(GLD Quote): 3%
The positives include inexpensive access to many asset classes, a conservative mix that isn’t overly dependent on a single outcome and the realization that price inflation looms as a threat with the inclusion of the SPDR Gold Trust.
There are a couple glaring omissions as well. There is virtually no small-cap exposure. Total stock market proponents will tell you that Vanguard Total Stock Market ETF covers the entire market, which includes small companies. But the fund is heaviest in mega-cap names like ExxonMobil(XOM Quote), AT&T(T Quote) and Microsoft(MSFT Quote). The ETF’s small-cap stocks have miniscule weightings and are unlikely to move the needle.