Build an ETF Portfolio: etf.com’s Portfolio Builder Tool

ETF portfolio construction just got easier with etf.com’s Portfolio Builder.

kent
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Research Lead
Reviewed by: etf.com Staff
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Edited by: Ron Day

For investors wanting to build an ETF portfolio, the construction work just got easier with etf.com’s new Portfolio Builder. This tool provides investors with the ability to store and track multiple model portfolios, giving investors insight into performance and other fund data, as well as insight into the market. 

Here’s everything you need to know to take advantage of etf.com’s Portfolio Builder

What Is the ETF Portfolio Builder Tool? 

Portfolio Builder is etf.com’s portfolio management tool that enables users to construct portfolios combining exchange-traded funds and stocks to achieve their optimal mix, guided by the best-regarded ETF screener.  

How Does the ETF Portfolio Builder Tool Work? 

As the name suggests, the Portfolio Builder tool aids in the construction of a portfolio of ETFs. Users also have the option of including stocks in the portfolio. Investors and advisors can either build a portfolio manually or convert their existing watchlist to a portfolio.  

Build a Portfolio Manually  

Here are the basic steps for using Portfolio Builder to manually build a portfolio: 

  1. Access the tool: On etf.com, users can find the tool by clicking on the “My Dashboard” link at the top of the etf.com homepage or from any other page on the website. Then simply click on “Portfolio Builder” in the dropdown menu. 
  2. Choose how to build the portfolio: Users can choose to build an ETF portfolio by allocation percentage or by shares and purchase price. For example, say you wanted to build an equal-weight ETF portfolio with 10 funds. You could choose the percentage option and add 10 ETFs allocated at 10% each. 
  3. Name the portfolio: The portfolio name is up to you, whether it’s named after an account type, such as an IRA or brokerage account, or a set of benchmark assets you want to track. 
  4. Add ETFs and/or stocks: After you name your portfolio, it’s set up and ready to add securities. Simply choose which security type you want to add and find it with the ticker symbol. 

Create a Portfolio from a Watchlist 

Here are the two ways to create a portfolio from a watchlist: 

  1. Pull watchlist from Portfolio Builder: In the Portfolio Builder tool, users can simply click the “Convert Watchlist” button and the list of securities will be pulled from an already existing watchlist they built. 
  2. Convert to portfolio from watchlist: When in the Watchlist tool, users can simply click on the “Convert to Portfolio” button and that watchlist will be converted to a portfolio.  

How to Build an ETF Portfolio 

If you’re new to building portfolios, and you’re an ETF investor, the basic idea is like the process of constructing a physical building. The process begins with a plan or blueprint, an asset mix based on the investor’s financial goals and risk tolerance. The building begins from there with the ETF selection.  

The steps to build an ETF portfolio are to: 

  1. Define investment goal or objective: This is typically directed by an investor’s time horizon, such as short term (less than three years), intermediate term (three to 10 years) and long term (more than 10 years). 
  2. Assess risk tolerance: This is a gauge of how much risk an investor is willing to take to reach their investment goal or objective.  
  3. Determine the asset mix: The primary asset types are stocks, bonds and cash. For example, aggressive investors with a high risk tolerance will generally allocate a higher percentage of their portfolio to stocks; bonds and cash would receive lower allocations. However, conservative investors might prefer a higher allocation to bonds and cash. 
  4. Choose an ETF portfolio structure: Typical structures are core and satellite or equal weight. The core and satellite portfolio will choose one or two ETFs that receive heavier allocation weights, with the satellite ETF receiving lower weights. An equal-weight portfolio assigns an equal percentage allocation to each ETF holding. 
  5. Research and analyze ETFs: Investors can consider the different types of ETFs and then use tools, such as an ETF screener or an ETF comparison tool
  6. Select ETFs for the portfolio: The selection of specific funds for an ETF portfolio will be guided by the investor’s asset mix, portfolio structure and research. 
  7. Choose an entry strategy to buy ETFs: This involves choosing the time to purchase shares of the ETF(s). For example, a long-term investor may want to choose a dollar-cost-averaging strategy, where shares of ETFs are bought in increments over a periodic basis, such as monthly. Other investors may want to buy shares immediately or through a timing strategy. 

Bottom Line on etf.com’s Portfolio Builder 

With etf.com’s Portfolio Builder tool, investors, advisors and other market watchers can easily build an ETF portfolio or multiple models for monitoring personal performance or to gain insight into the market. Users can build an ETF portfolio manually using the tool, or they may create one quickly and easily from an existing watchlist.  

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.