Pimco Chief Investment Officer (CIO) Dan Ivascyn Recently told Morningstar.com’s Sarah Hansen that investors should think about adding more bonds to their investment portfolio. One way to do that is through the use of asset allocation ETFs. 

“With bonds looking attractive and stocks looking expensive, Ivascyn says, ‘the old 60/40 rule of thumb … shifts back to something like 40/60.’ He thinks a case can even be made for a 35% stocks/65% bonds split,” Hansen wrote on July 12.

The CIO also likes bonds because yields are high right now, suggesting you’ll likely earn relatively high returns over the next few years from your bond holdings.

So, if you’re interested in flipping the 60/40 portfolio on its head, I’ve got three asset allocation ETFs to buy to make it happen. All three will have both stocks and bonds and be weighted close to the 40/60 mentioned above.

iShares Core Moderate Allocation ETF (AOM)

The iShares Core Moderate Allocation ETF (NYSEARCA:AOM) is the largest of my asset allocation ETFs, with $1.36 billion in net assets. Launched on Nov. 4, 2008, the fund charges a reasonable 0.15%, or $15 per $10,000 invested.

AOM tracks the performance of the S&P Target Risk Moderate Index. It’s intended to provide investors with significant fixed-income exposure while also providing some capital appreciation potential through equities. 

At present, AOM has 58.8% of its net assets invested in fixed-income investments, 40.5% in equities and 0.65% in cash. The top three sectors by country are the U.S. (67.6%), Japan (3.86%) and China (2.98%).

The ETF is a fund-of-funds with seven iShares ETFs, including the iShares Core Total USD Bond Market ETF (NASDAQ:IUSB), the largest weighting of the seven, with 50.4% of its net assets. The second-highest is the iShares Core S&P 500 ETF (NYSEARCA:IVV) accounting for 23.3%.

Amplify High Income ETF (YYY)

The Amplify High Income ETF (NYSEARCA:YYY) is the second-largest of my asset allocation ETFs, with $471.8 million in net assets. Launched on June 21, 2013, the fund charges 0.50% plus 4.10% for the fees paid for this fund-of-funds ETF.

Why would someone pay such exorbitant fees?

YYY invests in 60 closed-end funds (CEFs). Its goal is to generate a high level of monthly income and capital appreciation. It tracks the performance of the ISE High Income Index, which ranks the 60 CEFs by yield, discount to net asset value (NAV) and liquidity.

The index selection methodology starts with all U.S.-listed CEFs that trade on the NYSE, Nasdaq, NYSE American and CBOE Exchange. The funds are then divided into two tiers — Tier 1 funds have net assets of $500 million or more while Tier 2 are $250 million or higher — and ranked based on the three factors mentioned earlier. 

The top 30 CEFs by fund yield are given equal 3% weights. The remaining 30 (it can be less) are given equal weights to get to 100%. Rebalanced in December and June, no holding can exceed a 3.5% weight with those outside the top 30 maxing out at 2%. 

It’s a little bit of a bonds overkill, with 86% of its net assets in bonds and 14% in stocks. However, it yields 12.03%. 

The Brinsmere Funds-Conservative ETF (TBFC)

The smallest of the ETFs, The Brinsmere Funds-Conservative ETF (NYSEARCA:TBFC) is the smallest of the three asset allocation ETFs, with $284.9 million in net assets. Launched on Jan. 12, 2024, it is also the newest. The fund charges a reasonable 0.41%.

TBFC is an actively managed fund of funds. The Adviser is The Milwaukee Company, which uses two evidence-based tactical asset allocation investment strategies: Systematic Market Beta (SMB) and Classic Asset Allocation Revisited Strategy (CAAR). You can read more about it in the summary prospectus. 

The goal of the two strategies is to deliver higher risk-adjusted returns. 

It currently invests in 25 ETFs and mutual funds weighted between 15.29% for the Vanguard Short-Term Treasury ETF (NASDAQ:VGSH), its top holding, to the bottom weight of 0.14% for the First American Treasury Obligations Fund (NASDAQ:FXFXX).

The fund-of-funds currently allocates 53.6% to fixed-income, 42.8% to equities, and the remaining 3.6% to cash and other investments. Nearly 100% of the fixed-income securities held by the ETFs and mutual funds have investment-grade bond ratings. The average market cap of the equities held is $138.2 billion. 

Because it’s new and doesn’t have a track record, you’ll want to do greater due diligence for TBFC.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.