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

iShares MSCI Finland Capped Breaks Below 200-Day Moving Average - Notable for EFNL
Wed, Mar 4, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Finland Capped ETF (EFNL) crossed below ...

Shares of TUR Now Oversold
Wed, Mar 4, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Turkey ETF (TUR) entered into oversold ...

FTSL Makes Notable Cross Below Critical Moving Average
Wed, Mar 4, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the First Trust Senior Loan Fund ETF (FTSL) crossed ...

VGT, HPQ, TEL, BRCM: Large Inflows Detected at ETF
Wed, Mar 4, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: VGT, HPQ, TEL, BRCM Exchange traded funds (ETFs) trade just ...

TIP: Large Inflows Detected at ETF
Wed, Mar 4, 10:54 AM ET, by ETF Channel

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

QLD, ALTR, AAL, ADI: Large Outflows Detected at ETF
Wed, Mar 4, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: QLD, ALTR, AAL, ADI Exchange traded funds (ETFs) trade just ...

11.1% of MDYV Holdings Seeing Recent Insider Buys
Wed, Mar 4, 9:54 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SPDR S&P 400 Mid Cap Value ...

USB a Top 25 Dividend Giant With $2.49B Held By ETFs
Wed, Mar 4, 9:34 AM ET, by ETF Channel

U.S. Bancorp (USB) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, ...

AFL Named A Top Socially Responsible Dividend Stock
Wed, Mar 4, 9:24 AM ET, by ETF Channel

AFLAC Inc. (AFL) has been named a Top Socially Responsible Dividend Stock by Dividend Channel, ...

Mallinckrodt Moves Up In Analyst Rankings, Passing Akamai Technologies
Tue, Mar 3, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

Vanguard S&P 500 ETF Experiences Big Inflow
Tue, Mar 3, 11:14 AM ET, by ETF Channel

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

TLH: Large Outflows Detected at ETF
Tue, Mar 3, 11:14 AM ET, by ETF Channel

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

iShares Russell Mid-Cap Growth ETF Experiences Big Inflow
Tue, Mar 3, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: IWP, KR, CCI, MHFI Exchange traded funds (ETFs) trade just ...

EWT: Large Inflows Detected at ETF
Tue, Mar 3, 10:54 AM ET, by ETF Channel

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

13.9% of FYT Holdings Seeing Recent Insider Buys
Tue, Mar 3, 10:14 AM ET, by ETF Channel

A look at the weighted underlying holdings of the First Trust Small Cap Value AlphaDEX ...

14.8% of FDM Holdings Seeing Recent Insider Buys
Tue, Mar 3, 10:14 AM ET, by ETF Channel

A look at the weighted underlying holdings of the First Trust Dow Jones Select MicroCap ...

XLU Makes Notable Cross Below Critical Moving Average
Mon, Mar 2, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the Utilities Select Sector SPDR Fund ETF (XLU) crossed ...

RYU Crosses Below Key Moving Average Level
Mon, Mar 2, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the Guggenheim S&P 500 Equal Weight Utilities ETF (RYU) ...

Alexion Pharmaceuticals Takes Over #13 Spot From Tyson Foods
Mon, Mar 2, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

XLV, UNH, ABBV, AGN: ETF Inflow Alert
Mon, Mar 2, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XLV, UNH, ABBV, AGN Exchange traded funds (ETFs) trade just ...

Technology Select Sector SPDR Fund Experiences Big Outflow
Mon, Mar 2, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XLK, MA, TXN, CRM Exchange traded funds (ETFs) trade just ...

VWO, TSU, EC, YZC: Large Inflows Detected at ETF
Mon, Mar 2, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VWO, TSU, EC, YZC Exchange traded funds (ETFs) trade just ...

VNQ: Large Outflows Detected at ETF
Mon, Mar 2, 11:14 AM ET, by ETF Channel

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

VBK: ETF Outflow Alert
Mon, Mar 2, 11:14 AM ET, by ETF Channel

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

VB, RNG, DPLO, CUDA: ETF Outflow Alert
Mon, Mar 2, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VB, RNG, DPLO, CUDA Exchange traded funds (ETFs) trade just ...

Daily Financial Bull 3x Shares Experiences Big Outflow
Mon, Mar 2, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: FAS, AFL, AMG, ARE Exchange traded funds (ETFs) trade just ...

ERX: Large Inflows Detected at ETF
Mon, Mar 2, 10:54 AM ET, by ETF Channel

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

CWB Makes Bullish Cross Above Critical Moving Average
Mon, Mar 2, 10:54 AM ET, by ETF Channel

In trading on Monday, shares of the SPDR Barclays Convertible Securities ETF (CWB) crossed above ...

EMB: ETF Inflow Alert
Mon, Mar 2, 10:54 AM ET, by ETF Channel

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

ICF, EQR, HCN, VTR: ETF Outflow Alert
Mon, Mar 2, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: ICF, EQR, HCN, VTR Exchange traded funds (ETFs) trade just ...

Why Prologis is a Top Socially Responsible Dividend Stock
Mon, Mar 2, 10:14 AM ET, by ETF Channel

Prologis Inc (PLD) has been named a Top Socially Responsible Dividend Stock by Dividend Channel, ...

Vanguard FTSE Europe Breaks Above 200-Day Moving Average - Bullish for VGK
Fri, Feb 27, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the Vanguard FTSE Europe ETF (VGK) crossed above their ...

DWM Crosses Above Key Moving Average Level
Fri, Feb 27, 3:54 PM ET, by ETF Channel

In trading on Friday, shares of the WisdomTree DEFA Fund ETF (DWM) crossed above their ...

Capital One Financial Moves Up In Analyst Rankings, Passing PerkinElmer
Fri, Feb 27, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

JNK: Large Inflows Detected at ETF
Fri, Feb 27, 11:14 AM ET, by ETF Channel

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

IYT, FDX, UNP, KSU: Large Outflows Detected at ETF
Fri, Feb 27, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IYT, FDX, UNP, KSU Exchange traded funds (ETFs) trade just ...

UST: Large Outflows Detected at ETF
Fri, Feb 27, 11:14 AM ET, by ETF Channel

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

RSX, YNDX, VIP, CTCM: ETF Inflow Alert
Fri, Feb 27, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: RSX, YNDX, VIP, CTCM Exchange traded funds (ETFs) trade just ...

FBT, ICPT, NVAX, PCYC: ETF Inflow Alert
Fri, Feb 27, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: FBT, ICPT, NVAX, PCYC Exchange traded funds (ETFs) trade just ...

IEV: Large Outflows Detected at ETF
Fri, Feb 27, 10:54 AM ET, by ETF Channel

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

Lockheed Martin a Top 25 Dividend Giant With $2.49B Held By ETFs
Fri, Feb 27, 10:14 AM ET, by ETF Channel

Lockheed Martin Corp. (LMT) has been named as a Top 25 ''Dividend Giant'' by ETF ...

Eversource Energy Named A Top Socially Responsible Dividend Stock
Fri, Feb 27, 10:14 AM ET, by ETF Channel

Eversource Energy (ES) has been named a Top Socially Responsible Dividend Stock by Dividend Channel, ...

PowerShares DWA SmallCap Momentum Portfolio -- Insider Buying Index Registering 10.2%
Fri, Feb 27, 9:54 AM ET, by ETF Channel

A look at the weighted underlying holdings of the PowerShares DWA SmallCap Momentum Portfolio (DWAS) ...

12.7% of DIV Holdings Seeing Recent Insider Buys
Fri, Feb 27, 9:54 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SuperDividend U.S. ETF (DIV) shows an ...

IXP Crosses Above Key Moving Average Level
Thu, Feb 26, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the iShares Global Telecom ETF (IXP) crossed above their ...

Tractor Supply Achieves #96 Analyst Rank, Surpassing TE Connectivity
Thu, Feb 26, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

Vanguard Value ETF Experiences Big Inflow
Thu, Feb 26, 11:14 AM ET, by ETF Channel

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

VEA, KOSS, MFD, EZCH: ETF Inflow Alert
Thu, Feb 26, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VEA, KOSS, MFD, EZCH Exchange traded funds (ETFs) trade just ...

UPRO, ACT, ADBE, ADT: Large Outflows Detected at ETF
Thu, Feb 26, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: UPRO, ACT, ADBE, ADT Exchange traded funds (ETFs) trade just ...

TQQQ, ATVI, AKAM, ALXN: ETF Outflow Alert
Thu, Feb 26, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: TQQQ, ATVI, AKAM, ALXN Exchange traded funds (ETFs) trade just ...

Related videos | all videos »
  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 - 2015, 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 over 1000 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.