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Summary I’m watching VNQ, SCHH, SCHC, and SCHF over the next few months. The equity REIT indexes could see some weakness with the Federal Reserve trying to stimulate higher rates. I think they are more bark than bite. If equity REIT indexes sell off, I’d love to boost my allocation to them at attractive prices. My international allocations are too low. SCHC and SCHF look like great options to fix that. With only two months left to go in the year I’m looking at which ETFs I may want to give a higher weighting in my portfolio. These are ETFs that I already hold, but I am contemplating putting a little more cash in them over the next few months. The List Name Ticker Vanguard REIT Index ETF VNQ Schwab U.S. REIT ETF SCHH Schwab International Small-Cap Equity ETF SCHC Schwab International Equity ETF SCHF These four ETFs are on my watch list for different reasons. VNQ / SCHH I’ve got VNQ and SCHH on the list as attractive funds because I expect long term yields on debt securities to remain fairly low. I don’t expect to see a sustained 3% yield on 10 year treasury notes within the next year or two. There may be some spikes where it happens, but I wouldn’t expect to see those yield levels maintained. With the Federal Reserve constantly talking about raising interest rates, I see the potential for some pricing weakness in the equity REIT indexes. They might raise rates slightly, but I’m not sure that such an increase in rates would even be maintained let alone that they could build on increases to raise rates in each year for the next few years. Since I expect rates to remain weak, I like the equity REITs as a nice source of yield and SCHH and VNQ are two well diversified REIT index ETFs with very low expense ratios. If the Federal Reserve ramps up their talk about raising interest rates it could cause the interest rates to increase in the market for a while. When the rates go up the prices on bonds will fall and I would expect the prices on VNQ/SCHH to drop during that time period. That would be a great opportunity for me to buy more shares before the prices rebounded. I’m holding both of these already and wanting more equity REIT exposure in my portfolio. My current weighting is getting a bit heavy on domestic equity and mortgage REITs. The mortgage REITs are substantially different from the equity REITs, but I’m overweight on the sector because I feel there are some attractive values being presented. SCHC / SCHF These two international plays offer low expense ratios for extremely diversified international exposure. I would classify these as my two my favorite international funds currently. My international equity exposure is dramatically underweight right now. I was holding the Vanguard Global ex-U.S. Real Estate ETF (NASDAQ: VNQI ) for a substantial portion of my international exposure but decided to sell it so I could act on a high conviction play in the mREIT sector. Over the next few months I want to bring the international exposure on my portfolio higher. I don’t want a very heavy weighting to the international equity sectors, but I should probably be putting at least 10% or so of my portfolio there. My most likely method for getting that position will be something similar to dollar cost averaging with quite a few small purchases driving up the allocations. Why I like Them So Much When I first started looking into SCHC, I wasn’t entirely sold on the fund. The expense ratio of .18% is low for international equity but still higher than quite a few of my allocations. As I looked through the fund I became very attracted by it being a play on small-cap equities and holding over 1,600 individual securities and less than 5% of the total fund being in the combined weight of the top 10 holdings. This is a beautiful ETF for getting exposure to a portion of the market that would often be ignored and the diversification within the fund is strong enough that individual securities won’t be creating a large impact on value. If the top holding of the fund suddenly saw the stock price double, the value of the fund would be up less than half of one percent. The top sector weightings for the fund are industrials (21.2%) and financials (20.4%). I would prefer to see those lower and the consumer staples weighting (5.0%) higher, but on the whole I think this is one of the top options for getting this exposure. Currently they are trading around $29.70 to $29.90. If they dip down towards $29 to $28.50 it would be push me to put in a little cash sooner rather than later. For SCHF the expense ratio is only .08%, which is exceptional for international equity, and the fund has over 1,200 holdings. The heaviest sector weight is the financial sector at 26.3%, but consumer staple comes in at 10.9% which is fairly nice. One of the ways my risk aversion manifests itself is having a preference for the consumer staples sector which I consider safer from potential negative events. Conclusion Those are the four ETFs I’m looking at over the rest of the year. I already own all four and due to dividend reinvestment, I can be fairly certain that I will be buying at least a few more shares in each. It is very highly likely that during the next few months I will add some cash to buy up more shares. Due to free trading on the Schwab funds I’m more likely to use allocations to SCHH for building my equity REIT allocation. Investors with free trading on VNQ may find it preferable. The yield on VNQ is over 4.1% per Yahoo Finance while the yield on SCHH is only around 2.4%. Since I’m buying these ETFs into a tax advantaged account and just reinvesting the income the difference in their payouts is not a significant factor for me. Due to dividend reinvestment, my share count in VNQ is likely to grow slightly even though allocations towards SCHH are more likely. SCHC and SCHF are my favorite options for international equity and that is an area where my portfolio could use some additions. The huge factors going in their favor are the very rare exposure for SCHC to the small-cap side and the extremely low expense ratio for SCHF.