If You Own Just 4 ETFs for the Rest of Your Life, History Says This Is the Best Combination
These four ETFs target different areas of the market and work well together to mitigate portfolio risk.
Overview
Proper portfolio construction really isn't as hard as many people think it is. You don't need 10-15 different ETFs to be diversified. You don't want to invest in a bunch of funds that have a high overlap with each other. You honestly just need a few funds that cover different areas of the market, are able to work together to mitigate overall risk, and come with very low expense ratios.
In today's market, it's tougher because 1) the S&P 500 is very top-heavy with a handful of mega-cap tech names and 2) most of the best-performing ETFs may have different names but their portfolios look substantially the same.
Details
Here's an example that probably sounds familiar to some people. You own a portfolio that includes the Vanguard S&P 500 ETF (NYSEMKT: VOO), the Vanguard Information Technology ETF, the Invesco QQQ ETF, the Vanguard Growth ETF, and the VanEck Semiconductor ETF.
Source
Originally published at www.fool.com.