Simple Portfolio Building: Balanced

This article is the second in a series of articles about simple portfolio allocations for different levels of risk tolerance. In this article I will be constructing a balanced portfolio of ETFs.

There are two goals I had for constructing the following portfolio:

Make sure the portfolio is diversified as measured by correlations.

Reduce the volatility of the portfolio by weighting the least volatile funds higher than more volatile funds. I used the 3 month average volatility over the last 12 months. [Volatility data is from ETFreplay.com]

Portfolio Funds

Balanced	Symbol	Weight	Volatility
iShares iBoxx $ Invest Grade Corp Bond	(LQD)	25%	4.70%
iShares Barclays TIPS Bond	(TIP)	25%	4.90%
Vanguard Dividend Appreciation ETF	(VIG)	30%	9.10%
iShares MSCI EAFE Growth Index	(EFG)	20%	17.70%