Perfect 2019 Set-It And Forget-It ETF Portfolio (2024)

After a gut wrenching 2018, it can be scary to buy shares and rebalance back to your preferred asset mix. Even more challenging is buying international equity funds, which have suffered from sub-par returns since 2013. Yet, this is the perfect time to grab the beaten down losers, before a rebound.

Actually, market declines present an opportunity to buy shares at bargain prices. If you’re a long-term investor, then inure yourself to the financial news and the market ups and downs.

The best investment strategy is to choose a reasonable asset mix, decide on suitable asset class percentages in each category and rebalance annually.

Choose your funds from these five diversified ETFs with low fees, liquidity, and narrow bid-ask price spreads. If you’re setting up a new portfolio in 2019, or re-calibrating an older one, don’t delay. Since 1960, January’s average return was 0.87 percent with 41 positive years and 28 losers.

Or, if you want an even easier route, choose a free robo-advisor to do the heavy lifting for you.

Top 5 ETFs for 2019

Invesco S&P 500 Equal Weight ETF (RSP)

Price: $96.17

Yield (12-month): 2.02%

Expense ratio: 0.20%

Instead of the typical, market-weight US stock fund, check out this popular equal-weight choice. With more emphasis on lower-priced companies, the equal weight fund has a “value-bent” and isn’t overly influenced by the largest capitalization firms.

Research also favors the equal weight offering over the market weight offering, despite the higher expense ratio.

When comparing the SPDR S&P 500 ETF (SPY), a market-cap index fund, with the Invesco S&P 500 Equal Weight ETF (RSP) over the last 15 years, the equal-weight fund wins. Cumulative returns from December 2003 to October 2018 for RSP was 145.98 percent, compared to 91.05 percent for the SPDR S&P 500 ETF.

iShares Core MSCI EAFE ETF (IEFA)

Price: $57.18

Yield (12-month): 3.46%

Expense ratio: 0.08%

This silver Morningstar-rated fund owns large-, mid- and small-cap stocks from 21 overseas developed market. The 2,500 stocks and low management fee creates a compelling story for this international fund. In fact, throughout the life of the fund, from October 2012 through November 2018, the fund beat its category average return by 1.07 percent. In combination with an emerging market fund, such as VWO, IEFA covers the international investment world.

Vanguard FTSE Emerging Markets ETF (VWO)

Price: $40.15

Yield (12-month): 2.87%

Expense ratio: 0.12%

Emerging markets have a prominent place on the worst stock performers of the last 12 months list. Although VWO lost 14.57 percent in 2018, it’s currently on sale. VWO is currently selling at a 27 percent discount to developed market stocks when measured by its price to forward earnings. And with a heavy weight in Chinese stocks, VWO should benefit when trade relations improve with China. Although riskier than developed markets, a smattering of emerging nation stocks can goose your returns when international markets rebound.

Vanguard Real Estate ETF (VNQ)

Price: $78.90

Yield (12-month): 4.73%

Expense ratio: 0.12%

VNQ is an inexpensive path to the domestic-equity real estate asset class. This fund is broadening its holdings to include formerly excluded mortgage REITs and specialty REITs such as timber or cell-tower REITs. This change makes an already tempting real estate fund more desirable.

The real estate industry has benefited from the lower interest rates of the past decade. The major headwind for this sector is rising interest rates. Although in contrast with historical levels, interest rates remain low.

The S&P Dow Jones’ Global Industry Classification System, or GICS, recently initiated real estate as a standalone sector, adding to the desirability of including this sector to your investment portfolio.

iShares Core US Aggregate Bond ETF (AGG)

Price: $106.51

Yield (12 month): 2.72%

Expense ratio: 0.04%

Reflecting the composition of the U.S.-dollar denominated investment-grade bond market, with an ultra-low management fee, there’s a lot to like about this comprehensive bond fund. It tilts toward higher credit quality issues, making it a solid offering for the safety-conscious investor. Although, this advantage can also be a negative. If you desire higher returns on your fixed investments, there are other choices that include a bit more risk. Also, the average effective maturity of 8.15 years suggests that this fund will be somewhat more sensitive to interest rate increases than an intermediate-term fund.

Simplicity is all the rage today. So why not create a simple investment portfolio in line with your risk tolerance level and get on with your life? There's no guarantee that more funds equals better returns. And for the laziest investors, consider turning your investment management over to a robo-advisor.

*data from 1/16/19 and 1/17/19

Barbara Friedberg