ITA Risk Reduction Portfolio
Over the last few weeks, I've discussed a risk reducing portfolio consisting of seven ETFs. They are: VTI, IWN, VEU, VWO, VNQ, RWX, and IGE. While this combination provides global exposure, there are inherent risks. While the projected return is a robust 9.7%, we take on a high degree of uncertainty to reach this return. The projected standard deviation is a very high 20.8%. If we implement the ITA Risk Reduction model, taking on this volatility is more acceptable.
The Diversification Metric is quite low and this is to be expected considering the limited number of holdings and no bonds in the mix.