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Strategies & Market Trends : Young and Older Folk Portfolio
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To: cole505 who wrote (1629)11/30/2023 2:26:31 PM
From: chowder3 Recommendations

Recommended By
Ericeira
Menominee
toccodolce

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I am of the opinion that if I am going to use and ETF in addition to individual equities, the ETF should represent a minimum of 20% of the portfolio value. Due to the diversification of the ETF, I can then hold fewer equities.

For example, in the Young Folk Portfolio, I currently have SPY representing 8.0% of the portfolio value, but in January I am going to sell NSC and SYY and add the proceeds to SPY, thus increasing the percentage of the SPY holding while being able to hold fewer equities. SPY provides the diversification needed if I'm going to get the number of holdings down to around 20.

I might actually raise the position size closer to 30% or 40% of the portfolio value.

It doesn't make sense to me to use an ETF as a regular sized position in proximity to the other holdings.

This approach though is from a capital gain strategy, not a dividend growth strategy although I do expect some dividend growth.

If I were looking at VYM or SCHD, then it would depend on how much income the holding generates as to whether you could minimize the number of holdings you have. It would also depend on the size of your other positions. If you wanted to treat it like any other holding, I suppose I can see that but if you limit position size to 4% of the portfolio value for example, I might put VYM or SCHD at 8%.

So I suppose it depends on why you want to own an ETF that determines the best approach. I use them to help limit the number of holdings I have while still providing me with market diversification.
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