Which ETFs Are Optimal for VHNW Investor Portfolios?

Published on August 18, 2009 | Updated November 9, 2009

In the early days of the ETF industry, the vast majority of funds tracked well-known equity benchmarks, such as the S&P 500, Russell 1000, and Dow Jones Industrial Average. As the benefits of ETFs have become more widely known and understood, the number of issuers and ETFs has increased significantly, and so has the scope of asset class exposure available through ETFs.

One of the most glaring misconceptions about ETFs is that they are best suited for “plain vanilla” investor portfolios: those holding (approximately) 65% equities (split between domestic and international funds), 20% fixed income, 10% real estate, and 5% cash. While the majority of ETF assets are allocated to traditional investment strategies and asset classes, there has been a great deal of innovation to the industry in recent years, resulting in ETFs that implement increasingly complex and unique investment strategies. Financial advisors managing accounts of very high net worth individuals have a tendency to dismiss ETFs as a viable option for their wealthiest, most risk-hungry clients. But anyone who does so risks overlooking investments that may be excellent matches for high net worth individuals.

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