Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

How To Invest Like The Nobel Foundation With ETFs

Thu, Nov 8, 8:16 AM ET, by Michael Johnston

Individual investors and an ever-increasing number of professional money managers have embraced ETFs as viable “building blocks” for executing a cost-efficient strategy. With more than 1,400 ETPs on the market, investors have no shortage of options at their fingers; although previously hard-to-reach asset classes are now readily accessible, investors’ success over the long-haul is still very much dependent on prudent portfolio management strategies [see How To Pick The Right ETF Every Time].

We often stumble upon priceless lessons in the most unlikely of places and, when it comes to finance, portfolio management tips from Alfred Nobel is as strange as they come. Better known as the inventor of dynamite, Alfred Nobel left behind a legacy that would forever change scientific advancement. What’s less known is that upon his death, Nobel instructed that his fortune be invested in “safe securities,” which quickly turned out to be a financial disaster for the Nobel Foundation [see Simple Safe Haven ETFdb Portfolio].

Originally worth $1.2 million in today’s money, inflation plagued the Nobel Foundation’s bond investments, prompting the changing of some rules that had been more or less blindly followed since its establishment in 1901. Now worth $430 million, the Nobel Foundation stands to offer some valuable lessons that have stood the test of time.

Bond Are Good, But Not Great

Bonds are often times regarded as “safe haven” must-haves, however, history shows us that fixed-income securities actually boast a rather dismal track record when it comes to beating inflation. The current ultra low-rate environment reflects how Treasuries are poised to offer lackluster protection against inflation over the long haul as the Fed will inevitably raise rates, thereby negatively impacting the already puny returns offered through these debt notes. The Nobel Foundation allocates barely over 20% of its assets to fixed-income investments; besides stocks, the rest of its portfolio is well-diversified across several asset classes, including:

Keep An Eye On Taxes and Management Costs

The Nobel Foundation is tax-exempt, but what’s an individual investor supposed to do? First, investors should strive to maximize their holdings in tax-deferred accounts, including 401(k)s and IRAs. Second, it’s important to minimize current income generated from investments outside of those tax shelters. Last, cutting down on your management fees, even if just by a few basis points, adds up big time over the long-haul [see High-Tax Bracket ETFdb Portfolio].

ETFs are by nature tax-efficient vehicles and, as such, can be used to execute a number of tax-loss harvesting strategies, which can help to lower your tax liabilities. Furthermore, passive exchange-traded funds are very cost-efficient, thereby serving as viable “building blocks” in long-term, buy-and-hold portfolios. Cost competition among issuers is only expected to increase, which ultimately benefits cost-conscious investors who have embraced the exchange-traded product structure as part of their strategy.

Think Outside the Border

For most investors, shedding their home country bias is a major challenge. The Nobel Foundation invests close to two-thirds of its assets outside of Sweden, showcasing its commitment to casting a wide net outside its home country’s borders. One of the foundation’s advisors, Kent Janér, highlights how U.S. investors maintain a heavy home country bias given the sheer size of the domestic market. He warns, however, that the next century may hold a number of unforeseen events that could make such a geographically-concentrated strategy less than ideal [see Ex-U.S. ETFdb Portfolio].

Luckily, the ETF universe is vast and investors have options when it comes to tapping into foreign markets. Whether you’re looking to diversify into a developed or emerging market, there’s more than likely several ETFs at your disposal. The free ETF Country Exposure Tool is a great place to start; simply click on a country from the map and take your pick from the various ETPs which offer exposure to that market.

Follow me on Twitter @SBojinov

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.


SDI Glossary: "Bond" Definition
SDI Glossary: "price" Definition
SDI Glossary: "Equity" Definition
SDI Glossary: "ETFs" Definition
SDI Glossary: "the Fed" Definition
This Article's Word Cloud:   Alfred   ETFdb   ETFs   Foundation   Nobel   Portfolio   asset   bias   blocks   classes   comes   cost   country   efficient   fixed   free   from   haul   have   home   including   income   inflation   into   investments   investors   less   long   management   market   million   more   number   offer   outside   over   portfolio   several   strategies   strategy   than   that   their   thereby   time   upon   very   when   which   your

| More

Junior Gold Miners Breaks Above 200-Day Moving Average - Bullish for GDXJ
Fri, Feb 5, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the Junior Gold Miners ETF (GDXJ) crossed above their ...

PEZ Crowded With Sellers
Fri, Feb 5, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the PowerShares DWA Consumer Cyclicals Momentum Portfolio ETF (PEZ) ...

IGV Crosses Critical Technical Indicator
Fri, Feb 5, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the iShares North American Tech-Software ETF (IGV) entered into ...

DWAS Crosses Critical Technical Indicator
Fri, Feb 5, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the PowerShares DWA SmallCap Momentum Portfolio ETF (DWAS) entered ...

PowerShares S&P 500 High Quality Portfolio Experiences Big Outflow
Fri, Feb 5, 4:14 PM ET, by ETF Channel

Symbols mentioned in this story: SPHQ, EMR, RTN, CHRW Exchange traded funds (ETFs) trade just ...

VFH, WFC, JPM, BRK.B: ETF Inflow Alert
Fri, Feb 5, 4:14 PM ET, by ETF Channel

Symbols mentioned in this story: VFH, WFC, JPM, BRK.B Exchange traded funds (ETFs) trade just ...

HYG: ETF Outflow Alert
Fri, Feb 5, 4:14 PM ET, by ETF Channel

Symbols mentioned in this story: HYG Exchange traded funds (ETFs) trade just like stocks, but ...

PNQI Crowded With Sellers
Fri, Feb 5, 10:54 AM ET, by ETF Channel

In trading on Friday, shares of the PowerShares NASDAQ Internet Portfolio ETF (PNQI) entered into ...

VDC, CL, KR, SYY: ETF Inflow Alert
Fri, Feb 5, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: VDC, CL, KR, SYY Exchange traded funds (ETFs) trade just ...

Shares of FDN Now Oversold
Fri, Feb 5, 10:54 AM ET, by ETF Channel

In trading on Friday, shares of the First Trust Dow Jones Internet Index Fund ETF ...

Add Up The Pieces: SPYG Could Be Worth $113
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Add Up The Parts: XLG Could Be Worth $163
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

RFG's Holdings Could Mean 24% Gain Potential
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

PHO's Holdings Imply 18% Gain Potential
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Sum Up The Parts: FPX Could Be Worth $60
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts See 27% Gains Ahead For IYG
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

We Did The Math IWY Can Go To $61
Fri, Feb 5, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

DVY, LMT, PM, KMB: Large Outflows Detected at ETF
Thu, Feb 4, 1:24 PM ET, by ETF Channel

Symbols mentioned in this story: DVY, LMT, PM, KMB Exchange traded funds (ETFs) trade just ...

Oil Services ETF Experiences Big Outflow
Thu, Feb 4, 1:24 PM ET, by ETF Channel

Symbols mentioned in this story: OIH, BHI, CAM, NOV Exchange traded funds (ETFs) trade just ...

IWM, STE, TYL, CUBE: ETF Outflow Alert
Thu, Feb 4, 1:24 PM ET, by ETF Channel

Symbols mentioned in this story: IWM, STE, TYL, CUBE Exchange traded funds (ETFs) trade just ...

FBT, TECH, QGEN, BIIB: Large Outflows Detected at ETF
Thu, Feb 4, 1:24 PM ET, by ETF Channel

Symbols mentioned in this story: FBT, TECH, QGEN, BIIB Exchange traded funds (ETFs) trade just ...

GDX Makes Bullish Cross Above Critical Moving Average
Thu, Feb 4, 1:24 PM ET, by ETF Channel

In trading on Thursday, shares of the Gold Miners ETF (GDX) crossed above their 200 ...

PowerShares High Yield Equity Dividend Achievers Portfolio (PEY) Shares Cross Above 200 DMA
Thu, Feb 4, 1:24 PM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares High Yield Equity Dividend Achievers Portfolio ETF ...

Sum Up The Parts: IXN Could Be Worth $108
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Expect QLD To Hit $79
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Add Up The Pieces: DTN Could Be Worth $79
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

MLP ETF -- Insider Buying Index Registering 43.3%
Thu, Feb 4, 10:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the MLP ETF (MLPA) shows an impressive ...

Sum Up The Pieces: FTA Could Be Worth $45
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied REM Analyst Target Price: $12
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Predict 17% Upside For The Holdings of IHI
Thu, Feb 4, 10:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Strong Insider Buying Reported in MORT Holdings
Thu, Feb 4, 10:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the Mortgage REIT Income ETF (MORT) shows ...

Implied ICF Analyst Target Price: $106
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

IJJ's Holdings Imply 22% Gain Potential
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

IYR's Underlying Holdings Could Mean 17% Gain Potential
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Expect 35% Upside For The Holdings of FDN
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Expect OEF To Hit $103
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts See 12% Upside For HDV
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

How The Parts Add Up: IWP Targets $104
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Expect XLI Will Reach $58
Wed, Feb 3, 7:35 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

UUP Crosses Below Key Moving Average Level
Wed, Feb 3, 7:35 PM ET, by ETF Channel

In trading on Wednesday, shares of the PowerShares DB US Dollar Index Bullish Fund ETF ...

We Did The Math VHT Can Go To $155
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Look Under The Hood: USMV Has 11% Upside
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Peek Under The Hood: RSP Has 23% Upside
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Add Up The Parts: IBB Could Be Worth $424
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

VV's Holdings Could Mean 22% Gain Potential
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Anticipate 29% Upside For XLE
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Sum Up The Pieces: XLY Could Be Worth $89
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Surprising Analyst 12-Month Target For SDY
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

We Did The Math IWS Can Go To $78
Wed, Feb 3, 2:25 PM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Sum Up The Parts: S&P 500 Has 20% Upside
Wed, Feb 3, 11:45 AM ET, by ETF Channel

The financial media loves to get predictions from experts about where they think the S&P ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

How To Invest Like The Nobel Foundation With ETFs | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.