Published on by Stoyan Bojinov on August 22, 2011 | Updated February 11, 2014

Portfolio Strategy

The Simple (But Effective) Safe Haven ETFdb Portfolio is designed as a tactical position for investors looking to shift positions into asset classes that generally perform well during times of economic uncertainty and maintain relatively low volatility during times of chaos and panic on Wall Street. At the same time, this ETFdb Portfolio strives to maintain some of the upside potential that exists from holding equity positions; this portfolio is a strategy for investors who are looking to temporarily scale back risk instead of fleeing from risky assets altogether. The investment thesis behind this portfolio is quite simple; its core holdings are asset classes which are generally considered to be various degrees of safe havens, appealing to investors during times of panic-selling and attracting capital inflows when investor sentiment is generally pessimistic across other corners of the market. It should be noted that the not all components of this ETFdb Portfolio will necessarily gain value when broader equity markets slump; rather, as a group this ETFdb Portfolio should perform relatively well when volatility spikes. Investors looking to eliminate risk entirely would be better off considering significant position in the ETFs grouped in the Money Market ETFdb Category .

The Simple (But Effective) Safe Haven ETFdb Portfolio is a blend of equity, commodity, and fixed income holdings, all of which have the potential to take on safe haven appeal during periods of high market volatility. From a historical perspective, this portfolio has a tendency to either surpass or match the performance of the S&P 500; however, its volatility is considerably lower, making for a very appealing risk/return profile [see Historical Return Analysis below].

Investors should consider using this portfolio, or certain parts of it, as a tactical allocation to complement their existing holdings during times of uncertainty when markets seem directionless or when they need to scale back their risk appetite. This portfolio should not be considered as a viable long-term investment strategy since it lacks proper diversification across market cap levels and geographic regions, excluding small cap equities and emerging markets entirely.

• Risk Tolerance: Low to Moderate. Equities receive the heaviest weighting, making this portfolio moderately risky, although the equity exposure in concentrated in safer corners of the market and complemented nicely with a broad fixed-income fund.