Portfolio Construction

Building the Kenilworth

Portfolio construction, as pointed out in past blog entries, is a multiple step process. The first step in the process is to select asset classes. This is what I am doing with the Kenilworth portfolio, so let's focus on that portfolio. So far the investments include U.S. Equities in the form of VTI. Since we have so little cash available, I chose to go with a total market ETF instead of breaking it into the Big Six or Big Nine asset classes that make up U.S. equities. The Kenilworth currently holds REITs, another of our basic asset classes. VNQ is the ETF used to cover REITs. Limit orders are in for Developed International Equities (VEU) and Emerging Markets (VWO).

With VTI, VEU, VWO, and VNQ, we have four asset classes covered. As the portfolio grows, we will begin to split VTI into six or nine sub-asset classes to take advantage of Fama-French research. [Read more...]