Safe Haven ETF Portfolio For Conservative Investors – Sneak Peek

by on June 9, 2012 | ETFs Mentioned:

The growth of the ETF industry continues to foster innovation across the financial landscape, offering up countless ways for investors to easily and efficiently tap into previously hard-to-reach corners of the market. The diverse lineup of ETPs has been embraced by investors of all walks; exchange-traded products can serve as core building blocks in long-term, buy-and-hold portfolios, as well as tactical holdings in themed portfolios. As such, below we offer a sneak peek of the Simple (But Effective) Safe Haven ETFdb Portfolio, which may offer a compelling case for conservative investors who are looking to “fortify” their capital in times of market turbulence.

The investment thesis behind the Simple (But Effective) Safe Haven ETFdb Portfolio is fairly straightforward; the underlying holdings offer exposure to asset classes which are largely considered to be various degrees of “safe haves”. The core holdings in this portfolio have a history of being able to attract capital inflows when investor sentiment is shaky or when panic-selling strikes.

Under The Hood

The Simple (But Effective) Safe Haven ETFdb Portfolio includes:

Ticker ETF Allocation Expense Ratio
XLU Utilities Select Sector SPDR 20% 0.20%
KXI iShares S&P Global Consumer Staples Sector Index Fund 20% 0.48%


iShares Dow Jones EPAC Select Dividend 20% 0.50%
DBP PowerShares DB Precious Metals Fund 20% 0.75%
AGG iShares Barclays Aggregate Bond Fund 20% 0.22%
Weighted Average Expense Ratio  

[The complete Simple (But Effective) Safe Haven ETFdb Portfolio is available to ETFdb Pro Members or with a free 7-day trial. ETFdb Pro Members also have access to more than 40 All-ETF model portfolios]


We included this ETF as a core holding given its exposure to the domestic utilities sector as well as its competitive expense ratio. This corner of the market is known for exhibiting low volatility, but is still capable of offering lucrative upside potential during bull markets; utilities are also known for offering a consistent record of distributions.


Exposure to consumer staples is essential in any long-term portfolio, which is why this global sector ETF serves as a core holding in this defensive-minded ETFdb portfolio. KXI offers broad-based exposure to predominantly large cap consumer staple companies around the globe; similar to XLU, this ETF also offers a consistent history of distributions, helping to beef up this portfolio’s current return.


We have included this dividend-focused ETF seeing as how the appeal of dividend-paying securities has historically increased in times of uncertainty as well in low-rate environments. When signs of economic turmoil appear, many investors will tend to gravitate towards stocks that provide a meaningful current return as their first line of defense instead of those that may offer greater capital appreciation.


This ETF fills out our exposure to precious metals, which have demonstrated their ability to lower overall portfolio volatility and offer uncorrelated returns to broad equity markets. DBP is largely comprised of gold futures contracts, although it does feature a meaningful allocation to silver as well; this allows investors to tap into a precious metal, which also has widespread industrial use.


This bond ETF serves as our core fixed-income holding given its deep portfolio of debt securities. AGG offers exposure to mortgage-backed securities, U.S. Treasuries, as well as U.S. corporate and agency bonds; this ETF fits well with the portfolio’s “safe haven” theme seeing as how an overwhelming majority of its holdings are AAA-rated.

[Check out the 2012 ETFdb Portfolio,  Financials Free ETFdb Portfolio, and our Greedy When Others Are Fearful ETFdb Portfolio as well]


  2008 2009 2010 2011
ETFdb Portfolio -19.8% 24.8% 14.9% 6.6%
Compare to SPY -36.7% 26.3% 15.0% 1.2%
Compare to AGG 7.6% 3.3% 6.4% 7.7%

Investors should note how this portfolio was far more resilient during the most recent financial crisis when compared to broad-based equity markets as represented by SPY. Furthermore, the Simple (But Effective) Safe Haven ETFdb Portfolio was also capable of delivering impressive returns during the following years of recovery, demonstrating its ability to participate in rallies during bull markets as well. This ETFdb portfolio may appeal to investors who are looking to gain diversified equity market exposure while defensively positioning themselves in case economic uncertainties emerge.

[ETFdb Pro members also have access to Realtime Ratings for 1,400+ ETFs and unlimited Excel downloads across more than 60 ETFdb Category pages and 200 ETFdb Types pages with a free 7-day trial]

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Disclosure: No positions at time of writing.