ETF portfolios
Exchange-traded funds (ETFs) can build diversified portfolios across broader markets, industries, and bonds. Unlike selecting individual companies, this approach focuses on how funds fit together with your goals, timeline, and comfort with risk.
Explore the approachA broader approach
ETF portfolios use funds to invest across a range of markets and investment themes. Changes in spending, interest rates, and world events can create opportunities and risks. Research into those changes can help guide investment decisions, but forecasts can be wrong.
Here are a few examples of how that can work. These are illustrations; your portfolio may not include these investments.
Consumer spending, jobs, and business investment help reveal how the economy is changing.
Technology: Spending on computer chips, cloud services, or automation may lead me to consider a technology fund. Prices and the share of your portfolio tied to one industry also matter.
Rising prices and changing borrowing costs affect households, businesses, and investments. Understanding those changes helps put the risks to your portfolio in context.
Interest rates: The outlook for rates may influence the mix of shorter- and longer-term bond funds in a portfolio. Potential income needs to be weighed against how much a fund’s value could change when rates move.
Changes in government policy, trade, and world events can affect different investments in different ways.
Oil markets: Changes in oil supply, demand, and world events may lead me to consider energy funds. A fund that owns energy companies also faces business risks, and its returns can be very different from changes in oil prices.
Putting ideas into practice
Funds hold a collection of investments. Depending on your plan, these may cover broad markets, particular industries, different regions, or bonds. The selection depends on how the funds fit together and where overlapping holdings could concentrate risk.
Choosing a fund means understanding what it owns, what it aims to do, its costs, and how easily it can be bought or sold. It needs to fit your plan as well as the investment idea.
As the economy changes, each investment deserves a fresh look. Before making adjustments, your goals, existing investments, costs, and taxes all matter.
Part of your financial plan
A portfolio informed by economic trends can serve as your primary investment approach or complement other holdings. Your income needs, access to your money, and long-term goals determine its role. Together, we can discuss whether this approach fits your situation.
On investing broadly
Don’t look for the needle, buy the haystack.
John Bogle
Broad-market funds can provide a diversified foundation for a long-term portfolio. Depending on your goals, more focused funds may complement that foundation to reflect economic views. Keeping costs in mind and reviewing how the investments fit together are important parts of the approach.
Fund portfolios can lose value, including principal. Macroeconomic forecasts may be incorrect, and allocation decisions may underperform other approaches. Diversification does not guarantee a profit or prevent losses; sector or regional exposures can increase concentration risk.
Fund expenses and trading costs apply in addition to advisory fees. For ETFs, market prices can differ from the value of a fund’s holdings. Consider each fund’s objectives, risks, charges, and expenses before investing. No strategy guarantees a particular result.
Learn about ETFs at Investor.govStart a conversation