This video presents an ultimate guide to the best ETF portfolio for long-term investing. The speaker reviews a 4-ETF portfolio designed for diversification and maximizing returns, addressing previous feedback on a 3-ETF portfolio. The video explains each ETF category (foundational, growth, dividend, and additional diversification options) and presents back-tested performance data.
The video provides the following ETF examples:
Foundational/Broad Market ETF: VOO, VTI, VT, SPLG. VOO and VTI are specifically mentioned as good examples of S&P 500 ETFs.
Growth/Technology ETF: QQQ, SPMO, VGT, SCG.
Dividend ETF: SCHD, VYM, DGRO, FDVV.
The video provides the following backtested performance data (since 2016):
Original 3-ETF Portfolio (60% VOO, 25% QQQ, 15% SCHD): 15.5% annual return, 15.6% standard deviation, outperformed the S&P 500 by 1.2% annually.
4-ETF Portfolio with Small-Cap (50% VOO, 25% QQQ, 15% SCHD, 10% VB): 15.1% annual return, 15.8% standard deviation, outperformed the S&P 500 by 0.8% annually.
4-ETF Portfolio with Gold (50% VOO, 25% QQQ, 15% SCHD, 10% GLD): 15.2% annual return, 15.4% standard deviation, outperformed the S&P 500 by 0.9% annually.
4-ETF Portfolio with International (50% VOO, 25% QQQ, 15% SCHD, 10% VXUS): 14.7% annual return, 15.4% standard deviation, outperformed the S&P 500 by 0.4% annually.
Note that the speaker uses slightly different ETF tickers in the backtesting (e.g., VOO instead of VTI). The speaker also states that the choice of ETFs for backtesting was based on the longest available history for those specific ETFs.
The video doesn't explicitly state which of the 4-ETF portfolio variations is the "best-performing," only that the original 3-ETF portfolio had the highest return in the backtest. However, it implies the Gold ETF portfolio is a strong contender due to its lower volatility while still providing strong returns.
The allocation percentages used in the backtests for the best-performing (3-ETF) portfolio were:
The allocations for the 4-ETF portfolio variations were modified to incorporate the additional ETF category at a 10% allocation, reducing the allocation of the foundational ETF to 50% and maintaining the other allocations. The reasoning is to add diversification without significantly altering the core portfolio's structure. No specific justification for the exact 10% allocation is provided.
