There is no single recipe to building an ETF portfolio. But understanding how a portfolio is built is key to picking the right one. And choices certainly abound, with hundreds of ETF strategist portfolios commanding nearly $100 billion in combined assets today.
For that reason, we are setting out to better understand how ETF strategists go about creating these portfolios in a series of interviews that look under the hood of some of the ETF portfolios available to retail, institutional and advisor clients alike.
Ladenburg Asset Management Program (LAMP): ETF Growth and Income Portfolio
Ladenburg Thalmann Asset Management
New York City
$2 billion in assets under management
Who We Talked To:
Philip Blancato, Chief Executive Officer
The portfolio sets out to provide long-term capital growth with some emphasis on current income. Assets are selected to produce both capital appreciation and income in the form of interest or dividends. “The primary goal of the Ladenburg Asset Management Program (LAMP) is to deliver optimal portfolio performance relative to the risk that our investors are willing to take with their investments.”
The driving investment philosophy here is to build a globally diversified portfolio based on strategic asset allocation. LAMP defines strategic asset allocation as a strategy that divides up a portfolio among major asset classes (equities, bonds, cash equivalents and alternative investment vehicles) in proportions that are consistent with an investor's long-term financial goals and objectives, establishing a "base policy mix." This mix of assets is based on expected rates of return and risk for each asset class.
To determine an asset allocation, the firm reviews the last 10 years of data history. “With our long-term focus in place, our focus is then threefold; start with a strategic allocation, consider macroeconomic conditions and implement tactical portfolio changes.” The tactical overlay essentially helps the strategist determine which areas to under- or overweight based on market conditions.
Individuals, families, foundations, endowments, retirement plans or profit sharing plans
Asset Allocation Breakdown:
No. But the portfolio is primarily made up of ETFs—about 90%. The “alternative” allocation uses mutual funds since this asset class requires some flexibility in investment strategy.
ETFs Included in This Portfolio:
Large- Cap Value: iShares Russell 1000 Value (IWD | A-88)
Large-Cap Growth: iShares Russell 1000 Growth (IWF | A-92)
Midcap Value: iShares Russell Midcap Value (IWS | A-89)
Midcap Growth: iShares Russell Midcap Growth (IWP | A-87)
Small-Cap Blend: iShares Russell 2000 (IWM | A-91)
International: JPMorgan International (JPIN | D-47)
International: iShares MSCI EAFE Small Cap (SCZ B-93)
Fixed-Income Intermediate Term Debt: SPDR DoubleLine Total Return (TOTL | C)
Intermediate-Term Debt: Fidelity Total Bond (FBND | C)
Intermediate Government: iShares GNMA Bond (GNMA | B-88)
Short-Term Debt: PIMCO Low Duration (LDUR | C)
Short-Term Debt: iShares Barclays 1-3 Year Credit Bond (CSJ | A-90)
Year-to-date through 5/31/2016 (Gross): 2.81%
Contact Cinthia Murphy at [email protected].