What types of assets are contained within a non-core portfolio? Naturally, it should be mutual funds or ETFs linked to non-core asset classes such as individual commodities, single currencies, or even specialized asset classes like private equity or volatility. Non-core assets also include individual stocks and can even include trading strategies that use leverage or short the market.
The identifying mark of non-core portfolio holdings is they are generally less diversified, higher risk, and attempting to outperform key benchmarks. As a result, an investor’s non-core portfolio will be substantially different from their core, thereby making it a complementary piece to their total portfolio.
Summary
In the year ahead, 54 percent of RIAs say they plan to increase their investments in ETFs. Looking even further out, almost half (48 percent) say they see ETFs as being the dominant investment type in the portfolios they manage, according to Charles Schwab. What does it mean?
The increased usage of ETFs among RIAs, along with the increasing number of ETFs, will force advisors to have a disciplined framework for building ETF portfolios. There is no other way. And the core/non-core portfolio strategy offers RIAs a simple but organized strategy for building and managing investments in any market climate.
Ron DeLegge is founder and chief portfolio strategist at ETFguide