What is ETF Flow?
ETF Flow is the portfolio construction of a specific basket of ETF’s that is balanced, diversified, and takes into consideration your risk tolerance and income/growth objectives.
How does the “Flow” work?
The challenge with the word diversification is that we fall into the trap of owning sectors of the markets that underperform at the same time as the better performing sectors. This lowers the long-term performance. Our method is to review our baskets every quarter and move out of underperforming sectors and replace them with outperformers. Thus, the “Flow” from one sector to the other. History has shown us that sectors of the markets outperform for an extended period, so moving to them on a quarterly basis helps to improve the overall performance of the portfolio.
The portfolio also adheres to the theory that clients should, to some extent, participate in the earnings that companies generate by receiving dividends. We therefore chose ETF’s that pay out dividends from companies in the ETF baskets. For clients who need income from their portfolio, this method alleviates the need to dip into the capital of the portfolio.
Can Individual stocks be included in an ETF Flow Portfolio?
Yes, every individual company is from a subset of the markets be that Technology, Healthcare, Energy, or any other sector of the markets. We just incorporate our laws of diversification and quarterly review on each individual security just like we would in the ETFs.
How to proceed?
Since we have our list of preferred ETFs, all we need is to discuss your objectives and risk tolerances. We will discuss your income needs and create a bespoke portfolio exactly right for you. Be ready to get involved! For the “Flow” to work, a quarterly review is necessary to ensure we are properly invested in the most desirable sectors of the markets.