ETF Diversification Advice

I’m currently spread across 10 ETFs, and would like some opinion on diversifying my holdings;

  • Vanguard S&P500 (£VUSA)
  • Vanguard FTSE All World (£VWRL)
  • Vanguard FTSE All World Div (£VHYL)
  • Vanguard FTSE Developed World (£VEVE)
  • Vanguard FTSE Emerging Markets (£VFEM)
  • Vanguard FTSE 100 (£VUKE)
  • Vanguard FTSE 250 (£VMID)
  • iShares Global Clean Energy (£INRG)
  • iShares Robotics (£RBTX)
  • iShares Global Water (£IN20)

What is everyone else holding? Any advice for someone on a medium to high risk appetite?
(Admins, please merge with any other applicable thread if necessary).

VEVE is something you can scratch I’d say, you’re just duplicating the stocks from VUSA and VWRL.

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Ok, yeah - I do have a bit of crossover.

Quite a few of your ETFs will overlap with VWRL. Specifically, VUSA, VEVE, VUKE, VFEM, and VMID. This is fine if you wish to alter the regional weighting (VWRL is about 56% US).

VHYL will also duplicate VWRL to some extent but if you’re holding it for the income then that’s understandable. I dare say INRG, RBTX and IN20 might also duplicate to a lesser extent but like VHYL you’re holding them for a particular purpose.

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Good advice, thanks very much.

Can anyone recommend additional ETFs that might broaden my holdings a bit further? Or, should I focus on simplifying my listings down to less than the above? Is there a general rule on ETFs as there are for individual stocks?

Of course I’m holding individual stocks in addition to these, but ETFs seem much less discussed in the community here (clearly not as trendy or volatile as others offerings), however I thought it’d be a good starter thread.

Brendon
There aren’t really any rules: buy whatever you want! But you might wish to consider the issue of duplication/overlap. VWRL has over 3,000 stocks from companies across the world and it’s only real weakness is that these are solely large and mid-cap companies, so you might wish to compliment your ETFs with something like WLDS to get small-cap exposure but it’s not essential.

Personally, I use iShares IWDG as my global ETF but that’s only to diversify away from Vanguard (I have Vanguard funds on another platform, to spread risk). I would be quite content to have just VWRL and WLDS as my main holdings (90%) and put the remainder in ‘fun’ stuff like INRG / IN20 and RBTX.

Ultimately though it’s your choice and you’ve got to be comfortable with what you are investing in.

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Brilliant, thanks very much :+1:t2:

Some of them are highly correlated.

You need to understand each component of each fund.

What is your strategy growth or dividend?

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iShares Core MSCI World UCITS ETF GBP Hedged (Dist) | IWDG
This is used if you think the GBP will strengthen against the usd which it did.
You can just use Vwrl if you think the pound will not strengthen further.

Pension craft has all of those funds explained with corelation.
The videos you want to watch are from the beginning.

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Why would you need to understand every stock in every ETF? The appeal of ETFs is that you don’t need to bother with its individual elements.

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Most importantly you need to compare their performance

There is the NASDAQ100 or iShares Technology which have a higher risk higher return than your etfs

Also above robotics etf mentioned also very high risk high return

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Thanks all, some great advice.

@SebReitz I don’t have that intention. I’m simply looking to understand my existing ETFs further, so I can re-balance them in an informed way. Totally agree regarding the ‘set and forget’ ideology of ETFs, but some further knowledge won’t go a miss.

@Michael2535 NASDAQ100 is one I haven’t looked into much to be frank, might have to consider it next.

Because he is buying Vwrl and VHYL and VUSA and Developed markets you are just buying more usa.
If you wanted 60% exposure on USA with the above you end up with 75% let’s say on USA.

So yes you need to know at least the 10 top holding on each etf to understand what you are buying.

Are you with me?

@SebReitz

Here below can you tell which one is which?

One is S and p 500 VUSA and the other one is NASDAQ100 Eqqq

But which one is which and if you buy both can you see your total exposure on Aapl and Msft is this what you want then OK.

But if you want diserfification then no.

Mhm, I agree.

I’m not really sure of the point of doing the All World and mixing the other regional markets on top. I sort of understand if you went All World + more exposure to Emerging Markets, since you’re making a bit of a bet on that, but the developed markets should be covered quite well by the All World.

Others have said in other topics, to maybe look for additional Small Value exposure, but there isn’t many options in that respect on FreeTrade right now.

Sector/Commodity ETFs I’m also unsure about, as you should still have some exposure to them. I suppose, if you want high risk ETFs you can’t really go wrong with INRG and Robotics.

If you’re after other commodity/sector ETFs, you might look at £WOOD, which sometimes beats the All World ETF, both in gains and in drawdowns in its year on year performances.

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@RobOda
Hi thanks!
Why Wood though it only has exposure into a specific market.

Best performing etf is Inrg because of nio and tesla maybe?

What about iitu which is IShares for eqqq not the same, but similar.

If tesla on its own sinks it sinks everything with it VUSA VWRL others.

Interesting thread, thank you. I have a bit in £WOOD too, because there is sustained demand for wood worldwide. And because a lot of ETFs seem to veer towards big companies, I have MSCI World Small Cap too - a long term growth play. I’ve been surprised looking at the breakdowns how much the world ETFs are US-centric - often 50% or so - so perhaps watch this generally given you have an S&P tracker too. I’m also considering global water.

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Would be very interested to know what tool you used for this!
Or if anyone else knows a good (and preferably free) tool to get data on etf overlaps

I only suggested it as it stood out when I was looking at the commodity/sector ETFs on FreeTrade. Most of the sector and commodity ETFs I could find underperform, or just stay in line with AllWorld (in which case, you may as well put that money into the AllWorld anyway).

It is the ‘best performing’ for last year +140%, but I expect it be corrected this year (and it has dropped -15% this month just gone, or -20% since the peak where I bought a share in it lol).

It also doesn’t have any shares in Nio or Tesla…?

Yes, seems like wood and wood industry will always be something to last until we replace them. It does seem a decent place to invest (I have no shares in it yet).

I do have some in the World Small Cap, but as far as I can see it is a new(ish) ETF, so I’m only putting a small part of my portfolio there, until I see how it gains/loses over time.

The only problems I have with £Wood and the £IH20 is that they both have expensive fees (0.65%), which would probably restrict me to putting into one of them tbh, but that’s me! I imagine they both probably go well together.

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@esteban
Just etf link above and
Morningstar