CRG Conservative ETF Model

OBJECTIVE:

The Conservative ETF Model is designed for investors seeking steady, low-risk allocation with a primary focus on capital preservation and income generation. This model portfolio emphasizes stability by investing predominantly in high-quality, income-producing assets with limited exposure to market volatility.

RISK LEVEL Very Low
TIME HORIZON (YRS)  0 – 3
RISK SCORE RANGE  0 – 20
EST. NOMINAL RETURN  2.5 – 4%
EST. VOLATILITY  3 – 6%

HOLDINGS

TICKER RATIONALE LITERATURE

 

AGG (iShares Core U.S. Aggregate Bond ETF)

 

The iShares Core U.S. Aggregate Bond ETF (AGG) provides a diversified, stable, and income-generating core fixed income holding in a Conservative ETF Model Portfolio. It supports capital preservation, reduces volatility, and offers steady income, aligning perfectly with the conservative investor’s focus on protecting principal while achieving modest, stable returns.

  • Broad U.S. Investment Grade Bond Exposure: AGG offers diversified exposure to the U.S. investment-grade bond market, including Treasuries, government-related bonds, and corporate bonds.
  • Capital Preservation: Bonds in AGG tend to be lower risk than equities, helping preserve capital in a conservative/moderate risk portfolio.
  • Income Generation: Provides steady income through interest payments, supporting portfolio stability.

 

FACTSHEET

 

PROSPECTUS

 

BND (PIMCO Active Bond ETF)

 

Vanguard Total Bond Market ETF (BND) offers broad, diversified, and low-cost fixed income exposure that supports capital preservation, steady income, and risk reduction in a Conservative ETF Model Portfolio. This makes BND an ideal core bond holding for conservative investors seeking stable returns with minimal volatility.

  • Comprehensive U.S. Bond Market Coverage: Similar to AGG, BND offers broad exposure to the entire U.S. investment-grade bond market.
  • Low Cost & Liquidity: Vanguard ETFs like BND typically have low expense ratios, making them cost-effective core fixed income holdings.
  • Risk Reduction: Bonds in BND help reduce portfolio volatility and provide a buffer against equity market downturns.

 

FACTSHEET

 

PROSPECTUS

 

SHYG (iShares 0-5 Year High Yield Corporate Bond ETF)

 

The iShares 0-5 Year High Yield Corporate Bond ETF (SHYG) can modestly enhance income and diversify fixed income exposure through short-duration high-yield bonds in a Conservative ETF Model Portfolio . Its lower interest rate risk relative to longer-duration high-yield funds makes it a more suitable choice for conservative investors seeking incremental yield while maintaining a focus on capital preservation and risk management.

Caveat: Given the higher credit risk inherent in high yield bonds, SHYG allocation is limited to avoid undue risk and maintain the portfolio’s conservative risk profile. 

  • Higher Yield than Investment-Grade Bonds: SHYG invests in short-term high yield (junk) corporate bonds, which typically offer higher yields compared to investment-grade bonds. This can boost the portfolio’s overall income without significantly extending duration.
  • Reduced Interest Rate Sensitivity: SHYG focuses on bonds with maturities of 0-5 years, which reduces exposure to interest rate fluctuations compared to longer-duration high yield bonds.
  • Credit Quality Diversification: Adding a measured allocation to high yield bonds diversifies the fixed income portion beyond strictly investment-grade bonds, potentially improving risk-adjusted returns.
  • Complement to Core Bonds: SHYG can complement traditional core bond holdings (like AGG or BND) by adding exposure to a different segment of the credit market.

 

FACTSHEET

 PROSPECTUS

 

MINT (PIMCO Enhanced Short Maturity Active ETF)

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Including MINT (PIMCO Enhanced Short Maturity Active ETF) in a conservative ETF model supports the objectives of capital preservation, low volatility, enhanced yield over cash, and diversification, while maintaining liquidity and flexibility—key attributes for conservative investors.

  • Short Duration, Low Interest Rate Sensitivity: MINT invests in short-term investment-grade debt, minimizing interest rate risk.
  • Capital Preservation: Its short maturity focus reduces price volatility, which is ideal for conservative investors.
  • Higher Yield Than Cash Equivalents: Offers better income potential than money market funds or cash, with limited risk.
  • Active Management: PIMCO’s active approach aims to enhance returns while controlling risk in the short-term bond space.

 

FACTSHEET

 

PROSPECTUS

 

 

 

 BNDX (Vanguard Total International Bond ETF)

 

Including the Vanguard Total International Bond ETF (BNDX) in a conservative ETF Model Portfolio enhances fixed income diversification by adding currency-hedged international bonds, reducing overall portfolio volatility and risk. It complements domestic bonds, supports income generation, and contributes to capital preservation, aligning well with the investor’s conservative capital preservation stance. 

  • International Bond Diversification: BNDX provides exposure to investment-grade bonds issued outside the U.S., including developed markets.
  • Currency Hedging: BNDX is currency-hedged to the U.S. dollar, reducing currency risk and volatility.
  • Risk Mitigation: Adding international bonds helps diversify interest rate and credit risk geographically.
  • Income and Stability: Complements domestic bonds by broadening the fixed income base for steady income and capital preservation.

 

FACTSHEET

 

PROSPECTUS

 

IAU (iShares Gold Trust)

 

IAU (iShares Gold Trust ETF) complements a conservative ETF model by providing portfolio diversification, inflation protection, and a safe-haven asset with no credit risk. Its inclusion helps reduce overall portfolio risk and preserve capital during inflationary or turbulent market environments, aligning well with conservative investment objectives.

  • Inflation Hedge: Gold is traditionally seen as a store of value and a hedge against inflation and currency devaluation.
  • Diversification: Gold has low correlation with stocks and bonds, providing portfolio diversification and reducing overall risk.
  • Safe Haven Asset: In times of market stress or geopolitical uncertainty, gold can help preserve wealth.
  • Conservative Risk Role: While gold can be volatile, a small allocation in a conservative portfolio can enhance risk-adjusted returns by mitigating downside risks.

 

FACTSHEET

 

PROSPECTUS

 

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