Build a Portfolio With etf.com’s Model Portfolio Tool

Build a Portfolio With etf.com’s Model Portfolio Tool

ETF model portfolios provide a great starting point for portfolio construction.

kent
|
Research Lead
Reviewed by: etf.com Staff
,
Edited by: James Rubin

etf.com’s new model portfolio tool is a great starting point for building an investment portfolio of exchange-traded funds. These models allocate assets across different classes like stocks and bonds, with specific ETFs in diverse fund categories representing a range of risk and return targets. 

How to Use etf.com’s Model Portfolio Tool

Investors can navigate to etf.com’s Model Portfolio tool by clicking on “My Portfolio” in the top navigation bar, then to the Portfolio Builder tool. By clicking on the Model Portfolio dropdown menu, investors may then choose a model that aligns with their risk profile. 

  • Assess your risk tolerance: Consider how comfortable you are with potential losses. Higher risk tolerance allows for potentially higher returns but also greater downside risk.  
  • Choose a model portfolio: Select a model that matches your risk profile. The models are listed in the dropdown menu from growth, which is the highest risk and potential return model, to conservative, which is the lowest risk and return profile.
  • Name and save the model portfolio: After giving your model portfolio a name and save it, you'll see the performance and risk data fields populate. 
  • Research the underlying ETFs: While the models provide the framework, investors can drill down and do more research to understand the specific ETFs within it. By clicking on a fund ticker, investors will be led to etf.com data, including performance, expense ratio, holdings, and competing ETFs. 
  • Consider adjustments: You can fine-tune the model to your preferences by adding or removing specific ETFs while maintaining a similar risk profile. 

ETF Model Portfolio

Risk Spectrum Breakdown: Growth vs. Conservative Portfolios 

Here's a breakdown of the risk profiles found in etf.com’s ETF model portfolios: 

  • Growth Portfolio: Targets high potential returns with a higher risk tolerance. Primarily consists of stocks, including aggressive growth stocks and emerging markets. 
  • Moderate Growth Portfolio: Aims for a balance between growth and stability. Includes a mix of stocks and bonds, with a higher allocation to stocks compared to bonds. 
  • Moderate Portfolio: Focuses on moderate risk and return. Has a balanced allocation between stocks and bonds. 
  • Moderate Conservative Portfolio: Prioritizes capital preservation with some growth potential. Invests more heavily in bonds with a smaller allocation to stocks, focusing on stability. 
  • Conservative Portfolio: Aims for capital preservation with minimal risk. Primarily consists of bonds, offering the lowest potential return but also the lowest risk. 

Benefits of Using ETF Model Portfolios

Model portfolios offer several advantages when it comes to constructing an ETF portfolio: 

  • Saves time: The streamlined starting point in portfolio construction saves time compared to independently researching and analyzing numerous ETFs. 
  • Diversification: These models inherently promote diversification by containing a mix of ETFs targeting different sectors and asset classes, reducing risk from overexposure to a single area. 
  • Risk-aligned options: Choosing from a range of model portfolios with varying risk profiles allows you to choose one that matches your comfort level with market volatility. 
  • Flexibility: While the model provides a framework, you can customize it by adding or removing specific ETFs to better suit your preferences while maintaining a similar risk profile. 

Bottom Line on Using ETF Model Portfolios

ETF model portfolios can be a valuable tool, particularly for beginner investors or those seeking a convenient, diversified ETF portfolio that aligns with their risk tolerance. With etf.com’s Model Portfolio tool, investors can get a pre-built framework of ETFs across different asset classes and fund categories, allowing them to choose a portfolio that aligns with their risk tolerance.  

These models range from growth-oriented (targeting high returns with higher risk) to conservative (prioritizing capital preservation with lower returns).  

By understanding your risk tolerance and researching the underlying ETFs within a chosen model, you can use these portfolios as a starting point to build your own investment strategy, potentially with some fine-tuning for your specific preferences. 

Remember, ETF model portfolios are general descriptions and suggestions, and the specific allocations within each model portfolio can vary among investors with unique investment goals, risk tolerance and investing preferences.

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.