While most of us enjoy chasing higher returns by moving in and out of stocks, ETFs and mutual funds, a few perhaps wiser investors build a diversified portfolio and just let it run.

It is human nature to try to outperform the market by trying to pick a ten bagger or tapping into economic growth in India or Brazil. No doubt outsized returns are achievable and the dismal performance of broad indices such as the S&P 500 over the past few years has frustrated most passive investors.

While we offer investors six model ETF portfolios, one of the most popular is our Gone Fishing portfolio which has been part of our ETF Starter Kit and hasnt changed at all. It contains 14 ETFs that range from the iShares COMEX Gold (IAU) to an ETF tracking the S&P Global 100 (IOO).

30% of the portfolio is allocated to three fixed income ETFs such as the iShares Lehman Aggregate (AGG), 20% to broad and regional international ETFs such as the iShares MSCI Pacific Ex-Japan (EEP). 20% of the portfolio is allocated to U.S. equities balanced nicely between small cap, mid-cap and mega-cap.

How has this simple and balanced portfolio done? In 2005, it was up 11.43% versus less than 5% for the S&P 500 index and so far this year it is up 6.3% versus 2.97% for the S&P 500. The key of course is the right blend of ETFs so that the duds are likely offset by the sectors on fire.

ETFs present investors with the best tools to build a Gone Fishing portfolio because they are low cost and tax efficient. The weighted annual fee for the portfolio is 0.58% and there have been no capital gains distributions for the iShares family of ETFs during the past four years.

But for those adventuresome souls who yearn for the thrill and profits of chasing higher returns with commensurate risk, ETFs are also a good tool. Country-specific ETFs often are highly concentrated due to market cap weighting and the ETF sector funds offer interesting but tricky opportunities as well. ETFs can also be shorted and for many of them options are available.

Chartwells Global Tactical Asset Allocation ETF service and portfolio ($1,995 a year) contains a more limited number of ETFs and closed-end funds and does not shy away from risk. Thailand (TF) and Brazil (EWZ) are two current holdings and the portfolio is up 23% this year beating the S&P 500 index by a 7 to 1 margin.

Whether you are a Gone Fishing investor or more aggressive and trading oriented, ETFs should be in your investment tool box and can nicely complement stock and mutual fund holdings. Make sure that you allocate most of your portfolio to a diversified conservative portfolio so that you protect your capital and will always have the time to fish all day long.