Financial Advisors Who Actively Allocate to Passive Indexes

Over the last decade, low cost index funds and ETFs have surged in popularity. These passive investment vehicles offer broad exposure to the underlying stocks and bonds of the indexes they follow, usually at a very attractive price.

But just because these investment portfolios are passive doesn’t mean how you choose to allocate among index funds needs to be passive as well. In fact, actively allocating an investment portfolio among passive index funds offers the potential benefits of active management with the cost-savings of index funds.

Numerous factors are usually considered by professional investment managers to construct actively managed portfolios. Factors often include economic conditions, industry cycles, government polices, interest rates and taxes among other inputs.

– Financial Advisors Who Actively Allocate to Passive Indexes –

Three Questions with Rob, Chartered Financial Analyst:

It seem counter-intuitive that index funds would routinely beat active portfolio managers.

Need Help Buying Life InsuranceWhy do you believe actively allocating to passive index funds is a thoughtful approach for investors to consider?

How frequently do you rebalance your allocations and why?

Asset allocations may be slightly modified month-to-month, but larger changes to asset allocations occur less frequently. The key factors we use in our investment process are economic, fundamental, technical and quantitative.

The initial asset allocation recommendation for a new family is the result of a multi-step process. For families that are new to us, it is extremely important to determine the long term asset allocation target.

What are the most important factors you consider to determine the initial asset allocation for a new client?