Global Growth Portfolios
The goal of these aggressive, highly diversified portfolios is long-term growth of capital. Portfolio assets are invested in a basket of exchange traded equity funds (ETFs). When selecting individual ETFs for this portfolio, management uses a top down approach. First, an assessment of the current and expected state of the U.S. economy is made. Second, given the economic outlook, management identifies the financial sectors and asset categories that are expected to perform best. Finally, management examines the portfolios of various ETFs and invests in those that are positioned consistent with the economic/sector outlook.
The use of exchange traded mutual funds offers individual investors several advantages over direct investment in stocks and bonds. First, ETFs are indexed to baskets of securities and thus replicate the financial performance of asset categories, market sectors and specific industry groups. As such, these mutual funds exhibit a high degree of transparency. Second, ETFs have a unique structure that minimizes capital gains distributions that can erode investment returns by the premature payment of income taxes. Finally, ETFs possess annual expense ratios that are significantly less than those of actively managed mutual funds.
These portfolios are suitable for aggressive, long-term oriented investors who can tolerate above-average risk in the pursuit of above-average returns. Although portfolio turnover is expected to be modest, rapidly changing economic circumstances can increase portfolio turnover resulting in short-term capital gains.