Some advisors adjust asset allocations only for periodic rebalancing, but others see opportunities in the market and want to take tactical advantage of them. For the second group, exchange-traded funds can be ideal. While ETFs don’t eliminate market risk, their broader-based portfolios can mitigate company and sector risk.
“If you want to be aggressive, then you can certainly take a narrow sector,” says Morris Armstrong, owner of Armstrong Financial Strategies, an RIA in Danbury, Conn. He used a Japanese equity ETF last year to make such a tactical play. But, he cautions, no matter how you approach tactical allocation, you have to first be allowed that flexibility in your investment policy statement.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access