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

EEMV Crosses Below Key Moving Average Level
Wed, May 4, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV) ...

ACWI Crosses Below Key Moving Average Level
Wed, May 4, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI ACWI ETF (ACWI) crossed below their ...

EDIV Makes Notable Cross Below Critical Moving Average
Wed, May 4, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the SPDR S&P Emerging Markets Dividend ETF (EDIV) crossed ...

QTEC Crosses Critical Technical Indicator
Wed, May 4, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the First Trust NASDAQ-100-Technology Sector Index Fund ETF (QTEC) ...

Shares of FXL Now Oversold
Wed, May 4, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the First Trust Technology AlphaDEX Fund ETF (FXL) entered ...

EWX Makes Notable Cross Below Critical Moving Average
Wed, May 4, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the SPDR S&P Emerging Markets Small Cap ETF (EWX) ...

IDV Crosses Below Key Moving Average Level
Wed, May 4, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares International Select Dividend ETF (IDV) crossed below ...

VT Crosses Below Key Moving Average Level
Wed, May 4, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the Vanguard Total World Stock ETF (VT) crossed below ...

TUR Crosses Critical Technical Indicator
Wed, May 4, 3:54 PM ET, by ETF Channel

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

IJR's Underlying Holdings Could Mean 11% Gain Potential
Wed, May 4, 1:44 PM ET, by ETF Channel

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

We Did The Math SPXN Can Go To $45
Wed, May 4, 1:34 PM ET, by ETF Channel

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

Implied XTN Analyst Target Price: $52
Wed, May 4, 1:34 PM ET, by ETF Channel

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

ONEK's Underlying Holdings Could Mean 12% Gain Potential
Wed, May 4, 1:34 PM ET, by ETF Channel

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

EXT's Holdings Could Mean 10% Gain Potential
Wed, May 4, 1:24 PM ET, by ETF Channel

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

MMTM's Underlying Holdings Could Mean 10% Gain Potential
Wed, May 4, 1:24 PM ET, by ETF Channel

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

PBS's Holdings Could Mean 12% Gain Potential
Wed, May 4, 1:24 PM ET, by ETF Channel

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

S&P 500 Headed 12% Higher, If Analysts Got The Components Right
Wed, May 4, 1:24 PM ET, by ETF Channel

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

The Math Shows FTA Can Go To $45
Wed, May 4, 1:14 PM ET, by ETF Channel

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

Analysts See 62% Gains Ahead For XBI
Wed, May 4, 1:14 PM ET, by ETF Channel

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

The Math Shows ITA Can Go To $134
Wed, May 4, 1:14 PM ET, by ETF Channel

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

The Math Shows PBP Can Go To $23
Wed, May 4, 1:14 PM ET, by ETF Channel

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

The Math Shows FPX Can Go To $59
Wed, May 4, 1:14 PM ET, by ETF Channel

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

See How Coca-Cola Ranks Among Analysts' Top Dow 30 Picks
Wed, May 4, 11:54 AM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Coca-Cola Co (KO) is ...

Vanguard Utilities ETF Experiences Big Outflow
Wed, May 4, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: VPU, NEP, CAFD Exchange traded funds (ETFs) trade just like ...

IVV, GE, PM, ABBV: ETF Outflow Alert
Wed, May 4, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: IVV, GE, PM, ABBV Exchange traded funds (ETFs) trade just ...

IEMG Crosses Below Key Moving Average Level
Wed, May 4, 11:34 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Core MSCI Emerging Markets ETF (IEMG) crossed ...

EWS Crosses Below Key Moving Average Level
Wed, May 4, 11:34 AM ET, by ETF Channel

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

IXN Crowded With Sellers
Wed, May 4, 11:34 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Global Tech ETF (IXN) entered into oversold ...

PFF, HSBC, DB, RBS: Large Inflows Detected at ETF
Wed, May 4, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: PFF, HSBC, DB, RBS Exchange traded funds (ETFs) trade just ...

IYE, SLB, EOG, PSX: Large Inflows Detected at ETF
Wed, May 4, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: IYE, SLB, EOG, PSX Exchange traded funds (ETFs) trade just ...

EWD Crosses Below Key Moving Average Level
Wed, May 4, 11:34 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Sweden ETF (EWD) crossed below their ...

HYLS: ETF Outflow Alert
Wed, May 4, 11:14 AM ET, by ETF Channel

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

XOP, SM, MUR, WPX: Large Inflows Detected at ETF
Wed, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XOP, SM, MUR, WPX Exchange traded funds (ETFs) trade just ...

OEF, MA, ACN, USB: Large Outflows Detected at ETF
Wed, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: OEF, MA, ACN, USB Exchange traded funds (ETFs) trade just ...

IJR, VSAT, MPW, SWX: ETF Outflow Alert
Wed, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IJR, VSAT, MPW, SWX Exchange traded funds (ETFs) trade just ...

HEWJ: ETF Inflow Alert
Wed, May 4, 11:14 AM ET, by ETF Channel

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

SPDR S&P Oil & Gas Equipment & Services Breaks Below 200-Day Moving Average - Notable for XES
Tue, May 3, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the SPDR S&P Oil & Gas Equipment & Services ...

DTH Crosses Below Key Moving Average Level
Tue, May 3, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the WisdomTree International High Dividend Fund ETF (DTH) crossed ...

First Trust Global Tactical Commodity Strategy Fund Breaks Below 200-Day Moving Average - Notable for FTGC
Tue, May 3, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the First Trust Global Tactical Commodity Strategy Fund ETF ...

Medtronic Takes Over #120 Spot From Time Warner
Tue, May 3, 11:54 AM ET, by ETF Channel

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

XTN Makes Notable Cross Below Critical Moving Average
Tue, May 3, 11:24 AM ET, by ETF Channel

In trading on Tuesday, shares of the SPDR S&P Transportation ETF (XTN) crossed below their ...

ECON Crosses Below Key Moving Average Level
Tue, May 3, 11:24 AM ET, by ETF Channel

In trading on Tuesday, shares of the EGShares Dow Jones Emerging Markets Consumer Titans 30 ...

VWO, SHI, CCU, VEDL: Large Inflows Detected at ETF
Tue, May 3, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VWO, SHI, CCU, VEDL Exchange traded funds (ETFs) trade just ...

iShares S&P 500 Growth ETF Experiences Big Outflow
Tue, May 3, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IVW, AAPL, MSFT, MO Exchange traded funds (ETFs) trade just ...

Cullen/Frost Bankers a Top Ranked SAFE Dividend Stock With 3.4% Yield (CFR)
Tue, May 3, 8:24 AM ET, by ETF Channel

Cullen/Frost Bankers, Inc. (CFR) has been named to the Dividend Channel ''S.A.F.E. ...

IVZ Named A Top Socially Responsible Dividend Stock
Tue, May 3, 8:14 AM ET, by ETF Channel

Invesco Ltd (IVZ) has been named a Top Socially Responsible Dividend Stock by Dividend Channel, ...

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

In trading on Monday, shares of the iShares Short Maturity Bond ETF (NEAR) crossed below ...

Mallinckrodt Moves Up In Analyst Rankings, Passing Newell Brands
Mon, May 2, 11:54 AM ET, by ETF Channel

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

VBK: Large Outflows Detected at ETF
Mon, May 2, 11:14 AM ET, by ETF Channel

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

18.5% of MORT Holdings Seeing Recent Insider Buys
Mon, May 2, 9:44 AM ET, by ETF Channel

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

  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.