ETFs can be used as part of long-term investment strategy, as well as for tactical and short-term investments.
Types of investment strategies
Investing in ETFs can be a simple and effective way of building a well-diversified portfolio at a low cost.
A popular approach to portfolio construction is to think about your investment portfolio with ‘core’ and ‘satellite’ components.
The core typically uses passively managed ETFs to provide exposure to major asset classes (mainly equities and fixed income). A high growth portfolio might have a core with a higher proportion of ‘riskier’ assets like equities, while a defensive portfolio might focus more on assets like fixed income.
The satellite tends to hold more opportunistic investments, designed for specific outcomes and could include active investments, investments in individual companies and real estate or targeted ETFs.
This type of enhanced core-satellite investing is a flexible strategy that can be used to target specific investment goals and manage market volatility.