How to Use Dividend ETFs to Diversify Your Portfolio

I think it's nice to talk about dividends, something that people like Warren Buffett have been doing for decades and decades and decades. I feel like all anyone wants to do is talk about AI and Bitcoin and growth. But in your portfolio, when you construct a portfolio, you should have diversification. That's what we preach to our financial advisors.

A lot of the core of your portfolio could be in something that looks like low-cost index beta. If you think about your traditional 60/40, you shouldn't put all 60% in low-cost beta. You should have diversified factors and diversified sectors. Dividends have been largely ignored the last two or three years as we've had this epic AI-induced rally. You really want to load up these two ETFs into a portfolio construction tool.

You could use Bloomberg Port, or something like Vanguard, which is free for advisors. When you load it up, you see how these things shape up from a style box standpoint and a valuation standpoint. We are a high conviction asset manager. We like more concentrated portfolios. FDV fits our style box with 100 securities. The ETFs that we manage, PPI for instance, has 60 securities. ROE has 100.

I don't like buying big blocks, like DGrow, which has 398 securities. What Tom was alerted to makes a lot of sense: where do you want to be in terms of sectors? We like tech a lot. FDV has more tech exposure, which I think is very interesting. I do like FDV.

We'll talk about performance in a second, but FDV blows out DGrow out of the water. I'm going to be partial to FDV in this conversation. Purely from an exposure standpoint, I like what FDV is doing.