Currently, there are more than 2,000 exchange traded funds (ETFs) available, representing over $3.4 trillion in assets. We consider ETFs to be an ideal complement to our Risk Budgeting Methodology because of their multitude of potential benefits. CLS uses ETFs to build Risk-Budgeted, targeted, or strategically managed portfolios for investors seeking to build capital, generate income, protect wealth, or minimize tax consequences.
Explore Why CLS Likes ETFs
- Transparency: Most ETFs report exact holdings daily, so investors can verify that the ETF is closely tracking its benchmark.
- Intra-Day Trading: Like stocks, ETFs trade throughout the day, so their price fluctuates with market supply and demand.
- Lower Cost: Because ETFs do not have minimums, front-end loads, or redemption fees, they can offer significant cost savings.
- Diversification: ETFs are designed to track market indexes that may contain hundreds or thousands of securities.
- Stable Market & Risk Exposure: ETFs can provide much more stable market exposure than mutual funds, allowing CLS to minimize style drift.
- Tax Efficiency: ETFs typically distribute fewer capital gains to shareholders than traditional mutual funds.