My approach to ETF-based model portfolios

For personal productivity reasons, many financial advisors have in recent years turned to ETF-based model portfolios to serve client needs. Recently I decided to do the same and investigated a few independently organized and managed services that are popular. For reasons of inability to intervene at times that I believe an advisor must, I decided to go a different way.

Moreover, because many of these industry managed portfolios are simply passive index-tracking investments, I believe that almost any investor can do as well without additional costs by simply buying the S&P 500 index with infrequent trades based on extreme readings of weekly and monthly readings of the RSI.

This week in the community blog, I published data from my industry sources that show that most of these passive programs (sometimes called Robos) are under-performing, especially when fees upon fees are added. 1Q2020 was a particularly weak quarter for programmed investing, regardless of the management and distribution offerings.

So, I did my homework to find an ETF manager-distributor that would inspire me to choose from among their offerings and build model portfolios for Growth, Value, and Income that would appeal to most investors. In direct communications with Global X, a Mirae company, I found almost everything I needed.

Global X is a relative newcomer in the ETF marketplace and so far, a smaller but important industry competitor. I believe that Global X management is relatively more youthful and less political, which I think is important these days of rapid societal change and the taking over of Wall Street by the youngest and brightest professionals who will lead the world forward.

The Global X company presently offers about 72 unique ETFs. Unfortunately, I found unacceptable more than half of them on the grounds of their very small size. Of course, as I will be offering a new service to new clients, my personal trading ought not to become a liquidity issue for clients for a long time, if ever. I am but a small player in a massive marketplace.

However, as I am registered to trade professionally only by the US regulators, which prevents me from serving as a fiduciary any clients in Canada and a few other countries, I decided to use the publisher’s exemption from SEC regulation to serve investors in those other countries as well as the thousands of you who invest on your own or who already have a good advisor. Many of you — about 50% non-American — have been following my words since I first published 16 years ago (April, 2004). As the owner of Greenfield Capital that publishes the billcara.com website, I have asked Alexei to organize this initiative sometime in the next month.

Today, I m not going to offer anything more than a list of Global X ETFs that I have selected for Growth, Value, and/or Income investments. You can now be the beneficiary of my studies over the past month.

As you can do this investing on your own or later subscribe to my Greenfield service based on your understanding of your needs and resources, I am not held liable for what I publish to the general public. You can start here if you wish, but it’s up to you to do the due diligence or speak to your financial advisor before proceeding.

Here are my 17 Global X selections and two iShares selections along with a brief write-up for each:

AIQ       

This Growth-oriented non-diversified Global X ETF invests most of its assets in companies involved in the development and utilization of artificial intelligence (“AI”) and big data

 

BOTZ     

This Growth & Value-oriented non-diversified Global X ETF invests most of its assets in companies involved in the development of robotics and/or artificial intelligence (“AI”)

 

CLOU     

This Growth & Value-oriented non-diversified Global X ETF invests most of its assets in companies that are positioned to benefit from the increased adoption of cloud computing technology

 

DIV      

This Income-oriented Global X ETF invests in about 50 of the highest dividend-yielding equity securities in the US, including Master Limited Partnerships (MLPs) & Real Estate Investment Trusts (REITs)

 

FINX     

This Growth & Value-oriented non-diversified Global X ETF invests in companies in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software, and alternative currencies

 

GNOM    

The Growth-oriented non-diversified Global X ETF invests in companies that are positioned to benefit from further advances in the field of genomic science and biotechnology

 

HERO   

The Growth-oriented non-diversified Global X ETF invests in companies that are positioned to benefit from increased consumption related to video games and esports

 

MILN     

This Growth & Value-oriented non-diversified Global X ETF invests most of its assets in companies that provide exposure to the millennial generation, which is the US demographic born from 1980- 2000

 

MLPA     

This Value & Income-oriented non-diversified Global X ETF invests in the energy infrastructure Master Limited Partnership asset class that includes many high dividend-yielding US natural gas equities

 

MLPX        

The Value & Income-oriented non-diversified Global X ETF invests in the midstream energy infrastructure Master Limited Partnership asset class that includes many highest dividend-yielding US equities

 

PFFD        

This Value & Income-oriented Global X ETF invests only in high dividend-yielding preferred securities of companies that are headquartered in and whose revenues are primarily from the US

 

QYLD         

This Value & Income-oriented Global X ETF invests in a theoretical portfolio of NASDAQ-100 stocks and “writes” (or sells) a succession of 1-month at-the-money NASDAQ-100 Index covered call options

 

SDIV     

This Income-oriented Global X ETF invests in 100 equally weighted global companies, including emerging market countries, that are among the highest dividend-yielding equity securities in the world

 

SIL     

This Growth & Value-oriented non-diversified Global X ETF invests most of its assets in companies that are involved in the precious metals mining industry with a silver bias

 

SNSR     

This Growth & Value-oriented Global X ETF invests in Internet-connected auto tech, wearable tech, home automation, sensors, networking infrastructure/software, smart metering & energy control devices

 

SOCL      

This Growth & Value-oriented non-diversified Global X ETF invests most of its assets in companies that provide social networking, file sharing, and other web-based media applications

 

SPFF     

This Income-oriented Global X ETF invests mostly in the highest dividend-yielding preferred securities of companies headquartered in the US and Canada

 

I also selected two iShares ETFs to be used for my specific needs where Global X did not offer such a product

 

IAU     Growth      Value     Income

The iShares Gold Trust ETF imitates a gold bullion investment without expenses of assay, transportation, warehousing & insurance. Gold is the only non-paper currency trusted by central banks

 

SHV     Growth   Value   Income  

This iShares ETF seeks to invest 95%+ of its assets in US Treasury debt issues that have a remaining maturity of 1 year or less. We over-weight the portfolio in SHV shares at times of elevated risk

 

 


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