Why We Use Exchange-Traded Funds (ETFs)
Exchange-traded funds (ETFs) are America’s most popular investment vehicle for many reasons. At DeGreen, we pioneered ETF investing long before it was “cool.”
ETF Definition. An exchange-traded fund (ETF) is a collection of stocks, bonds or other assets designed to faithfully track the price performance of an underlying index – in a transparent and cost-efficient manner.
Index Definition. An index is just a specific list of stocks, bonds or other assets. There are thousands of “investable” indices worldwide, and more than 5,000 index-tracking exchange-traded products in the U.S. alone.
Bringing You a World of Opportunities™. Many U.S. ETFs track indices outside the U.S. This empowers us at DeGreen to invest in all the world’s most promising markets.
Here are just some of the many advantages offered by ETFs:
- Better performance. According to independent studies, ETFs outperform the great majority of mutual funds that compete against the same index.
- Automatic Diversification and Reduced Trading Expenses. A single ETF permits us to invest in an entire market or sector – with a single low-cost transaction. This greatly reduces costs, and reduces the organizational risk associated with buying individual stocks or bonds.
- Less Expensive. ETFs are significantly less expensive than conventional, actively-managed mutual funds, and way less expensive than annuity subaccounts, and most 401(k) sub-accounts.
- Tax Efficiency. ETFs are typically much more tax efficient than mutual funds.
- Liquidity. ETFs may be traded like stocks throughout the day. Mutual funds may only be traded at the end of each day. This can be very important in times of crisis.
- Transparency. ETFs are far more transparent than mutual funds.
Our Simple Approach: Barbell Investing
“Growth” and “Wealth Preservation”
Smart, Proactive Investing requires an important core decision: the extent to which your portfolio should be clearly allocated toward “Growth” or “Wealth Preservation.”
Many investors languish between the two – with results that are mediocre at best. We will help you objectively make that core decision. Using our innovative, proven ETF portfolios, we will allocate your portfolio within your “Wealth Barbell.”
Our Proven Portfolios Balance Each Side of Your Wealth Barbell
Break it all down and ultimately there are only two types of portfolios: “Growth” and “Wealth Preservation.”
“Growth” is commonly associated with equities (stocks) and with certain more volatile alternative investments such as, for example, real estate, commodities or pipeline partnerships.
“Wealth Preservation” is commonly associated with fixed income (bonds), cash and other less volatile or “inflation hedge” alternative investments such as, for example, precious metals.
Each of our 15 low-cost, risk-adjusted ETF portfolios is weighted, like a barbell, between “Growth” and “Wealth Preservation.”
At FEE-ONLY DeGreen Capital Management, in cooperation with our colleagues at Efficient Market Advisors (EMA), we allocate our 15 diversified portfolios across the four major investment asset classes: equities, fixed income, alternatives and cash.
Within our more aggressive portfolios, we lean more heavily toward growth assets; and within our less aggressive portfolios we favor assets associated with wealth preservation. Based on historical returns, the more a portfolio is allocated toward growth the greater is its potential return, but the more volatile it can become. The reverse is historically true with portfolios allocated more toward wealth preservation.
Each of our portfolios presents its own range of historic volatility. At your initial Best Interest Interview, we will discuss and decide together what volatility range is most appropriate for you in pursuit of your longer-term investment objectives. Our goal is to assume no more volatility than necessary in order to accomplish your objectives.
Our fees are the same regardless of the portfolio you select. There is no hidden agenda. Our only priority is to ensure that we select the portfolio that best fits your needs, and that it performs in a manner consistent with your realistic expectations.
After strategically allocating across diverse asset classes, our investment committee makes tactical selections within specific markets, sectors and industries, in the U.S. and around the world. Here we objectively weigh fundamental, technical, economic and public policy factors as we rotate among the world’s most promising markets.
But there is much more, as we seek to defend your portfolio…
Successful investing is not just about what you make when markets rise. It’s about what you keep when markets decline.
By far, your best risk-control mechanism is proper portfolio selection – choosing the diversified portfolio that is right for you. That is precisely why we maintain 15 carefully risk-adjusted ETF portfolios, and why precision – selecting the portfolio that best meets your needs – will be a major focus during your initial Best Interest Interview – and thereafter should your personal circumstances change.
In addition to precise portfolio selection – exclusively at DCM – we may also go completely or partially to cash, or may take other defensive actions when circumstances warrant. Click Here to read our exclusive Defensive Measures Policy.