The AlphaDEX ETFdb Portfolio is now available to ETFdb Pro members, offering an option for those seeking to build a well-diversified portfolio comprised of ETFs from the AlphaDEX suite. This ETFdb portfolio is intended for those with a long-term investment horizon as it includes a heavier tilt towards equity holdings, although the fundamental screening process employed by AlphaDEX funds should help ease the inherent stock market volatility over time. Investors ought to consider this alternative weighting methodology since more often than not, traditional cap-weighted index funds fall victim to some serious drawbacks; one common pitfall being that the underlying portfolio employs a biased, “bigger means better”, investment approach.
Historical performance shows that the AlphaDEX methodology most certainly offers the potential to generate alpha over time. For example, during the market rebound in 2009, FEX, which selects stocks from the S&P 500 index, outperformed its benchmark index by as much as 1000 basis points. The AlphaDEX methodology distinguishes itself by undertaking an enhanced, passive, indexing approach as each step of the stock screening process is completely transparent and quantitative [see recent AlphaDEX performance report].
The AlphaDEX ETFdb Portfolio is split 70/30 between stocks and bonds respectively. Its equity component is well diversified, exposure is well spread out across companies of all sizes and geographies. In addition to traditional U.S. large cap exposure, this ETFdb Portfolio allocates a substantial portion of its assets to developed and emerging market equities, nicely rounding out exposure to riskier corners of the global stock market that may offer a source of uncorrelated returns. The fixed income component of this portfolio offers deep, balanced, exposure as well; providing investors with access to a host of fixed income securities within the global bond market. This portfolio is likely too risky for retired investors given its fairly sizeable allocation to international equities, but may appeal to those with a longer-term bullish outlook on the global economic recovery who can stomach the volatility.
The complete AlphaDEX ETFdb Portfolio is available to ETFdb Pro members or with a free 7-day trial to ETFdb Pro.
Also included with the ETFdb Pro subscription are more than 25 all-ETF model portfolios, including both retirement-focused and more tactical themed strategies. [To see all that is included, a free sample of the Emerging & Frontier Markets ETFdb Portfolio is available to all ETFdb readers]