We have two ETF portfolios because it is difficult for these beneficiaries to hold individual stocks because of their professions. We moved Portfolio 2 to ETF’s several years ago and just sold the individual stocks in Portfolio 3 so that we can invest for Fall 2019 in “ETF mode”.
Portfolio two has the following ETF’s:
- VTI – the Vanguard all US market ETF
- VEU – the Vanguard all non-US market ETF
- HEFA – the “hedged” non-US market (so that it is not exposed to changes in currency rates)
- IAU – the ETF that tracks the price of gold
- Cash – the remaining dollars (40%) are in the Vanguard money market (VMMXX), which currently returns 2% / year
The decision for Fall 2019 is whether to keep this high cash allocation or to increase the allocation for equities.
Option One – keep current allocation
Option Two – add a bond ETF. Bond ETF’s go up when interest rates go down (as they have been doing). We could put $5000 in BND (Total bond market ETF)
Option Three – add $5000 to VWO which is the Emerging Markets ETF (broad) from Vanguard
Option Four – add an additional $5000 to VTI, which is the US stock market ETF
Options Two – Four can all be done since there is $17,367 in cash.
Portfolio Three has $24,561 in cash. We need to set up ETF’s for this portfolio and can broadly follow the same model as portfolio two.
- VTI – US market -30% of investment
- VEU / HEFA – 15% each (non US markets, with half hedged) for a total of 30%
- IAU – optional, could be 10%
- Cash or BND – could be 30%
These percentages could be changed as needed.
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