Question:
You recently changed your recommended ETF portfolios. REITs used to make up 10 percent of the portfolio, the same allocation as large-cap, large-cap growth, small-cap and small-cap growth. Now REITs are only 5 percent and the others are each 11.25 percent. What is the rationale for this change?
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RICHARD BUCK:
You are mostly right. Actually, REITs still make up 10 percent of the equity portfolio; but now they are equally divided between U.S. and international REITs. We believe that REITs should not make up more than 10 percent of the overall portfolio, and there’s an advantage to including international REITs.

On the U.S. side of the portfolio, this means we add an additional 1.25 percent allocation to the other four asset classes, to keep the total U.S. allocation at 50 percent. This is an example of fine-tuning our recommendations on the basis of our research.

Richard Buck is a writer and publications manager for Merriman