ETF collection for passive investing, thoughts on my selection

I spent some time reading this article from IC that goes over the top 50 core ETFs for the UK market.

I have spent some time putting together a list from that collection for my own passive investing, I am wondering if some ETF experts here can give me their opinion. The collection doesn’t have a WORLD wide ETF as I dont want too much overlap.

So far, I have Nasdaq / S&P 500 / FTSE100 / EM / Japan and some bonds. I wouldn’t mind looking into getting the whole UK market instead of the FTSE100, haven’t decided yet.

Ticker Name OCF URL Weight
EQQQ Invesco Nasdaq 100 0.30% link 22.10%
ISF iShares Cor FTSE 100 0.07% link 20%
EMIM iShares Core MSCI Emerging Markets 0.18% link 14%
SJPA iShares Core MSCI Japan 0.15% link 6.20%
CSP1 iShares Core S&P 500 0.07% link 19.70%
SLXX iShares Core GBP Corporate Bond 0.20% link 18%

With the weights in place as above, just ETF is saying I should potentially get a 10.82% return with a 0.16% fee per year. Now not sure how realistic that is, but seems pretty modest.

What are peoples thoughts?

You can use this tool to see what your current allocations across country and sector and then compare them to a global index (e.g. FTSE All World) to see where you are under / over exposed. Then you just have to decide if you are happy with those discrepancies or not.

Just a few things to consider:

  • You are very heavily skewed towards the FTSE100 / UK - lots of investors like to have a home bias so it’s fine but something to be aware of.
  • You are skewed towards large cap quite a lot (FTSE 100, SP500 and Nasdaq are all large cap) - these are probably safer than smaller cap so that might be desirable
  • You have no exposure to Canada, Europe, Asia pacific which are some pretty big market (~21% of the world), again that might be desirable but it’s worth being aware of.

There are some good points to consider from the community in this thread as well as a few other passive portfolios you can compare to (including mine) if you want.

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Agree. FTSE performance is abysmal historically. Would sell the full FTSE100 etf and swap to a MSCI World like index. Maybe add a global small cap one as well.

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That graph I see around of how the FTSE it basically at the same level as it was 20 years ago always grinds my gears. I know a lot of people say “but the reinvested dividends” but even they appear to being slashed given the pandemic.

I’m keeping all of my investing outside of Brexit Britain, I don’t want the risk and I’m not clever enough to know how to short British companies or the £GBP!

Similar to Canada, Australia etc. it is due to the composition of the indexes being heavy in banks, miners and resources.

To add to the others’ comments:

Corporate bonds are relatively risky, so you may prefer to move to government bonds (e.g. UK gilts, US Treasuries, etc). And I would be really pleased with a 10.82% return!