ETF Store Insight

Asset Allocation and ETFs

June 21st, 2012 by ETF Store Staff

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

On our most recent radio broadcast, we discussed a critical aspect of successful investing – asset allocation.  A landmark study concluded that over 90% of the variability of long-term returns can be attributed to asset allocation.  In other words, the study concluded that the performance of your portfolio over the long-run isn’t determined by picking individual stocks or bonds or trying to time the market but instead, is based on asset allocation.  The words “asset allocation” may sound complex, but quite simply, they refer to investing in different types of investments that perform differently in different market and economic conditions.  The key here is different.

On our show, we explained how ETFs have completely changed the game for investors by allowing them to invest in a wide range of asset classes that previously were unavailable or difficult to access – investments like gold, commodities, real estate, and emerging market stocks and bonds.  ETFs allow investors to access just about any asset class around the globe and build a portfolio of investments that perform differently in different market conditions.  Unfortunately, a number of investment advisors simply put their clients in a cookie-cutter portfolio of stocks and bonds.  As we described on the show, if your investment advisor is only using mutual funds in your portfolio, there’s a pretty good chance that you don’t have exposure to some of the asset classes mentioned above.  At The ETF Store, we focus on asset allocation and use Exchange Traded Funds, or ETFs, to ensure our portfolios are anything but cookie-cutter.  Listen to the full show here to learn more about asset allocation and ETFs.  Plus, catch our weekly market update and ETF Spotlight (ticker IAU).