Building an ETF Portfolio | Index One

In this edition of Index One Insights by Index One, we cover the key features and types of ETFs, as well as the importance of rebalancing and risk management in building a resilient ETF portfolio.

Also in this edition:

🎥 WEBINAR: Redefining Performance by Risk: Engineering Top Index Allocations

📊 POLL: How do you primarily use ETFs in your institutional portfolio?

🎥 Portfolio Strategies Outlook: Q2 2025

📈 Index Spotlight

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Building an ETF Portfolio | Index One

Introduction to ETFs

Exchange-Traded Funds (ETFs) have revolutionized the way individuals invest, offering access to a wide range of asset classes, sectors, and strategies. Over the past decade, ETFs have surged in popularity, becoming a go-to investment vehicle for both novice and seasoned investors alike.

The ETF’s built-in diversification, low fees, and ease of trading provide an efficient way to build a well-rounded portfolio. Whether you’re aiming for long-term growth, steady income, or capital preservation, there’s likely an ETF, or a combination of them, that can help you meet your financial goals.

In this article, we’ll explore practical strategies for building an ETF portfolio based on different investor profiles. From first-time investors to those seeking advanced, tailored exposure, we’ll show you how to construct a portfolio that aligns with your objectives, risk tolerance, and investment horizon.

What is an ETF?

An Exchange-Traded Fund (ETF) is a type of investment fund that holds a basket of assets (such as stocks, bonds, or commodities) and is traded on stock exchanges, much like individual stocks. ETFs are designed to track the performance of a specific index, sector, or theme, offering investors a simple and cost-effective way to gain exposure to a broad range of securities.

Key Features of ETFs

ETFs have become popular because they combine a number of key advantages.

• Diversification: By holding multiple assets in a single fund, ETFs reduce the risk associated with investing in individual securities.
• Liquidity: ETFs are bought and sold on exchanges throughout the trading day, providing flexibility and ease of access.
• Transparency: Most ETFs disclose their holdings daily, so investors know exactly what they own.
• Low Fees: Compared to mutual funds, ETFs generally have lower management fees and no minimum investment requirements.

Types of ETFs

• Index ETFs: Track major market indices like the S&P 500, Nasdaq-100, or MSCI World. Ideal for broad market exposure. Index Example: i1 World 1000
• Sector ETFs: Focus on specific sectors such as technology, healthcare, energy, or financials. Great for targeted exposure. Index Example: BX/Thor Sector 100 Index
• Bond ETFs: Invest in government, municipal, or corporate bonds, offering income and diversification within fixed income. Example: SPLT | Brompton Split Corp. Preferred Share ETF Tracking Brompton Index One Split Preferred Shares Index TR
• Thematic ETFs: Capture emerging trends or values, such as ESG, artificial intelligence, or clean energy. Example: XVOL | Acruence Active Hedge US Equity ETF Tracking BX US Dividend Yield Plus Momentum
• International ETFs: Provide access to global markets, including developed and emerging economies. Index Example: BX International Momentum 25 Index
• Inverse & Leveraged ETFs: Designed for short-term trading, these aim to deliver multiples (or the inverse) of an index’s return. Index Example: i1 Inverse Cramer

ETFs can be powerful building blocks for almost any investment strategy. Understanding their types and features is the first step toward constructing a well-balanced and goal-aligned portfolio.

ETF Rebalancing and Risk Management

Maintaining a well-balanced portfolio isn’t a one-time task- it requires regular review and adjustment. Rebalancing is the process of realigning your portfolio back to its target allocation after market movements cause it to drift. For example, if tech stocks rally, they may take up a larger portion of your portfolio than intended, increasing your exposure to risk. Rebalancing helps manage risk and maintain diversification, ensuring your investments remain aligned with your financial goals and risk tolerance.

It’s also important to adjust allocations based on major life changes, such as retirement, a significant increase or decrease in income, or a change in financial goals. For instance, as you near retirement, you may want to gradually shift from riskier growth assets to more stable income-generating investments like bonds or dividend-paying ETFs.

Redefining Performance by Risk: Engineering Top Index Allocations

Join us as we examine how a suite of high-performing, risk-adjusted index blends is purpose-built to deliver results across conservative, moderate, and growth mandates.

We’ll walk through:

• How these strategies respond to real-world advisor needs
• Where they fit in portfolios across different client types
• A breakdown of the BX Intro Package: six core strategies across equity, fixed income, and risk-based models calculated by Index One
• Discuss alpha, beta, and risk management in model portfolio design

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POLL: How do you primarily use ETFs in your institutional portfolio?

ETFs have evolved far beyond passive beta tools. From strategic allocation to managing liquidity and transitions, they’ve become integral to portfolio construction across mandates.

💡 How do you primarily use ETFs in your institutional portfolio?

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Portfolio Strategies Outlook: Q2 2025

Which investment strategies performed well this quarter, and why?

In this session of Portfolio Strategies Outlook, Index One and BX analyze market trends and investment strategies that either proved resilient or were impacted by market conditions in Q2 2025.

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We also explore newly onboarded strategies on the BX platform, calculated by Index One.

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Index Spotlight

Popular indices calculated by Index One. As of 17th July 2025.

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