Apr 30
Portfolio Construction Through Sector Diversification
Investors frequently attempt to diversify their portfolio by using sectors of the market. Over the next several days I am posting information on sector and asset class allocation diversification. Last week, I laid out a sample portfolio using what I call the Mosaic approach. The Mosaic portfolio plan is where one builds the main body of the portfolio around index ETFs and then supplements this framework with a few stocks for additional diversification. The stock screen below will focus on constructing a portfolio using the eleven sector ETFs from Vanguard.
As you will see in the entry tomorrow, I allocated 9% to each sector ETF and 1% to cash. If I were to actually use the sector approach, I would definitely lighten up on Consumer Staples and Utilities and go heavy with REITs and Financials, two sectors that are still out of favor.
Lowell Herr
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