The Wiser Wealth Management Roundtable where we believe the best financial advice should be conflict free. Host Casey Smith, President of the podcast sponsor Wiser Wealth Management, is joined by co-hosts and colleagues Brad Lyons and Matthews Barnett. In today’s episode, the group discusses building portfolios using Exchange Trading Funds, also known as ETFs.
Casey begins the conversation by discussing Wiser Wealth Management’s experience utilizing ETFs in their own models beginning in 2004. When they realized how efficient ETFs were becoming, they began building entire portfolios with them. Brad points out the versatility of ETF investments, allowing the investor to curate a portfolio which accurately reflects their values and objectives.
Brad then goes on to define and contextualize strategic portfolios. Utilizing ETFs in this space is highly efficient, he says, and gives the investor the opportunity to have access in each asset class at a very low cost with high liquidity. With ETFs, one can easily and affordably rebalance a portfolio back to the ideal 60/40 ratio as needed.
The sheer number of ETF types makes it impossible to explore every opportunity, but Brad, Casey and Matthews provide a few examples of other approaches to ETFs. These strategies include tactical allocations, core-satellite strategies, sector rotation and smart beta funds. In light of the S&P 500, Brad stresses that by investing in the broad asset class, you are guaranteed to be invested in the best performing sector of the market at any given time.
As the episode comes to a close, they outline the value of a financial advisor and shed light on the difference between quality portfolio management vs. sector rotations. Brad then discusses the use of transition management, and utilizing an ETF to maintain market exposure while portfolios are in a transition phase. They then offer a bit of advice for DIY investors as a closing note.
1:30 – Casey provides background on ETFs.
4:15 – Why do we want to have ETFs in portfolios?
5:30 – What are strategic portfolios?
8:39 – Liquidity of ETFs.
10:30 – Other investment strategies which may utilize ETFs.
18:40 – Current state of ETFs.
24:50 – Comparing strategies to benchmarks.
28:37 – The value of financial advisors.
32:45 – Advice for DIY investors and closing notes.
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