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

VSPY Makes Notable Cross Below Critical Moving Average
Fri, Apr 17, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the S&P 500 Volatility Response Shares ETF (VSPY) crossed ...

PEX Crosses Below Key Moving Average Level
Fri, Apr 17, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the ProShares Global Listed Private Equity ETF (PEX) crossed ...

iShares Global Telecom Breaks Below 200-Day Moving Average - Notable for IXP
Fri, Apr 17, 3:54 PM ET, by ETF Channel

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

VF Takes Over #60 Spot From Honeywell International
Fri, Apr 17, 11:54 AM ET, by ETF Channel

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

EUFN Makes Notable Cross Below Critical Moving Average
Fri, Apr 17, 11:24 AM ET, by ETF Channel

In trading on Friday, shares of the iShares MSCI Europe Financials ETF (EUFN) crossed below ...

KRE, OZRK, BXS, BOKF: Large Outflows Detected at ETF
Fri, Apr 17, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: KRE, OZRK, BXS, BOKF Exchange traded funds (ETFs) trade just ...

SPDR S&P Biotech ETF Experiences Big Inflow
Fri, Apr 17, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XBI, DYAX, INO, ESPR Exchange traded funds (ETFs) trade just ...

SHV: ETF Outflow Alert
Fri, Apr 17, 11:14 AM ET, by ETF Channel

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

VXF, LNKD, ILMN, UAL: Large Inflows Detected at ETF
Fri, Apr 17, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VXF, LNKD, ILMN, UAL Exchange traded funds (ETFs) trade just ...

FKO Makes Bullish Cross Above Critical Moving Average
Thu, Apr 16, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the First Trust South Korea AlphaDEX Fund ETF (FKO) ...

See How Chevron Ranks Among Analysts' Top Dow 30 Picks
Thu, Apr 16, 12:14 PM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Chevron Corporation (CVX) is ...

Medtronic Takes Over #123 Spot From Electronic Arts
Thu, Apr 16, 12:14 PM ET, by ETF Channel

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

FAB, SWN, CAM, CHK: Large Outflows Detected at ETF
Thu, Apr 16, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FAB, SWN, CAM, CHK Exchange traded funds (ETFs) trade just ...

FTA, XEC, DVN, HES: ETF Outflow Alert
Thu, Apr 16, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: FTA, XEC, DVN, HES Exchange traded funds (ETFs) trade just ...

WisdomTree DEFA Equity Income Fund (DTH) Shares Cross Above 200 DMA
Thu, Apr 16, 10:54 AM ET, by ETF Channel

In trading on Thursday, shares of the WisdomTree DEFA Equity Income Fund ETF (DTH) crossed ...

(DBV) Shares Cross Above 200 DMA
Thu, Apr 16, 10:54 AM ET, by ETF Channel

In trading on Thursday, shares of the ETF (DBV) crossed above their 200 day moving ...

MCHI: ETF Inflow Alert
Thu, Apr 16, 10:54 AM ET, by ETF Channel

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

FEX, DO, HP, MRO: Large Outflows Detected at ETF
Thu, Apr 16, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: FEX, DO, HP, MRO Exchange traded funds (ETFs) trade just ...

CSX a Top Socially Responsible Dividend Stock With 2.2% Yield (CSX)
Thu, Apr 16, 9:44 AM ET, by ETF Channel

CSX Corp. (CSX) has been named a Top Socially Responsible Dividend Stock by Dividend Channel, ...

WisdomTree Emerging Markets Equity Income Fund (DEM) Shares Cross Above 200 DMA
Wed, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the WisdomTree Emerging Markets Equity Income Fund ETF (DEM) ...

iShares MSCI Russia Capped Breaks Above 200-Day Moving Average - Bullish for ERUS
Wed, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Russia Capped ETF (ERUS) crossed above ...

ESR Makes Bullish Cross Above Critical Moving Average
Wed, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Emerging Markets Eastern Europe ETF (ESR) ...

ProShares Ultra Basic Materials (UYM) Shares Cross Above 200 DMA
Wed, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the ProShares Ultra Basic Materials ETF (UYM) crossed above ...

IYM Makes Bullish Cross Above Critical Moving Average
Wed, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares U.S. Basic Materials ETF (IYM) crossed above ...

XHB, RYL, SPF, DHI: ETF Outflow Alert
Wed, Apr 15, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: XHB, RYL, SPF, DHI Exchange traded funds (ETFs) trade just ...

Guggenheim Shipping (SEA) Shares Cross Above 200 DMA
Wed, Apr 15, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the Guggenheim Shipping ETF (SEA) crossed above their 200 ...

10.3% of TWOK Holdings Seeing Recent Insider Buys
Wed, Apr 15, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SPDR Russell 2000 ETF (TWOK) shows ...

Chevron a Top Ranked SAFE Dividend Stock With 3.9% Yield (CVX)
Wed, Apr 15, 8:54 AM ET, by ETF Channel

Chevron Corporation (CVX) has been named to the Dividend Channel ''S.A.F.E. 25'' list, signifying a ...

Kroger Moves Up In Analyst Rankings, Passing Alliance Data Systems
Tue, Apr 14, 11:54 AM ET, by ETF Channel

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

KORU Crosses Above Key Moving Average Level
Tue, Apr 14, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the Daily South Korea Bull 3x Shares ETF (KORU) ...

EWS Makes Bullish Cross Above Critical Moving Average
Tue, Apr 14, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the iShares MSCI Singapore ETF (EWS) crossed above their ...

FXH, UTHR, PCYC, CNC: ETF Outflow Alert
Tue, Apr 14, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FXH, UTHR, PCYC, CNC Exchange traded funds (ETFs) trade just ...

XOP, LPI, EPE, EXXI: ETF Inflow Alert
Tue, Apr 14, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XOP, LPI, EPE, EXXI Exchange traded funds (ETFs) trade just ...

First Trust Technology AlphaDEX Fund Experiences Big Outflow
Tue, Apr 14, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FXL, SNDK, SUNE, DST Exchange traded funds (ETFs) trade just ...

DTD, WMT, PEP, BMY: Large Outflows Detected at ETF
Tue, Apr 14, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: DTD, WMT, PEP, BMY Exchange traded funds (ETFs) trade just ...

First Trust Consumer Staples AlphaDEX Fund Experiences Big Outflow
Tue, Apr 14, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FXG, PPC, STZ, WWAV Exchange traded funds (ETFs) trade just ...

XRT, DPLO, FIVE, RAD: Large Inflows Detected at ETF
Tue, Apr 14, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: XRT, DPLO, FIVE, RAD Exchange traded funds (ETFs) trade just ...

Old Republic International a Top Ranked SAFE Dividend Stock With 4.8% Yield (ORI)
Tue, Apr 14, 9:54 AM ET, by ETF Channel

Old Republic International Corp. (ORI) has been named to the Dividend Channel ''S.A.F.E. ...

16.6% of FXZ Holdings Seeing Recent Insider Buys
Tue, Apr 14, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the First Trust Materials AlphaDEX Fund (FXZ) ...

10.9% of XSLV Holdings Seeing Recent Insider Buys
Tue, Apr 14, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the PowerShares S&P SmallCap Low Volatility Portfolio ...

ENZL Makes Notable Cross Below Critical Moving Average
Mon, Apr 13, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the iShares MSCI New Zealand Capped ETF (ENZL) crossed ...

EDC: Large Outflows Detected at ETF
Mon, Apr 13, 10:54 AM ET, by ETF Channel

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

iShares MSCI Belgium Capped ETF Experiences Big Outflow
Mon, Apr 13, 10:54 AM ET, by ETF Channel

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

PEY, GAS, NWN, ED: Large Outflows Detected at ETF
Mon, Apr 13, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: PEY, GAS, NWN, ED Exchange traded funds (ETFs) trade just ...

QCOM a Top 25 Dividend Giant With $4.8B Held By ETFs
Mon, Apr 13, 9:44 AM ET, by ETF Channel

Qualcomm, Inc. (QCOM) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, ...

T Named Top 25 SAFE Dividend Stock Increasing Payments For Decades
Mon, Apr 13, 9:44 AM ET, by ETF Channel

AT&T Inc (T) has been named to the Dividend Channel ''S.A.F.E. 25'' list, signifying a ...

EWY Makes Bullish Cross Above Critical Moving Average
Fri, Apr 10, 4:44 PM ET, by ETF Channel

In trading on Friday, shares of the iShares MSCI South Korea Capped ETF (EWY) crossed ...

Williams Takes Over #19 Spot From Citigroup
Fri, Apr 10, 12:34 PM ET, by ETF Channel

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

GLD: Large Outflows Detected at ETF
Fri, Apr 10, 11:14 AM ET, by ETF Channel

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

JKF Crosses Above Key Moving Average Level
Fri, Apr 10, 11:14 AM ET, by ETF Channel

In trading on Friday, shares of the iShares Morningstar Large-Cap Value ETF (JKF) crossed above ...

  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 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.