[Feedback Request] Diversified, Low TER ETF Portfolio

Hi all, I’ve done some research and have come up with the below ETF portfolio. I’ve tried to diversify it as much as possible, while trying keeping the Expense Ratio down. I appreciate that it’s largely weighted to the US (in particular the S&P 500), which I’m okay with, for this is where I’m holding most of my ‘certainty’. I’ve included some Value and Size ETFs as well, although I’m not totally happy with the 0.32% total charges for the VVAL ETF, but I can find no better Value ETF option on Freetrade.

My investment strategy is to simply put money in each month and then forget about it. Due to the inclusion of EM, Value, and Small Cap, I intend to keep the money in these ETFs as long as possible. I’m 23, and want the money to be in there for at least 20-25 years.

I’d appreciate any feedback! I’m happy to play with the weightings and which ETFs I include/exclude. The below percentages correspond to the ETF weighting.

IUSA (S&P 500, 0.07% TER) - 30%
ISF (FTSE 100, 0.03% TER) - 7.5%
VMID (FTSE 250, 0.26% TER) - 7.5%
CS51 (Large EUR Companies, ex-UK, 0.1% TER) - 10%
EMIM (Emerging Markets, 0.17% TER) - 15%
WLDS (Global Small Cap, 0.25% TER) - 10%
VVAL (Global Value, 0.32% TER) - 7.5%
VJPN (Large Japanese, 0.18% TER) - 5%
VAPX (Pacific ex-Japan, 0.17% TER) - 7.5%

Luke, it looks great to me. You’ve put some thought into it and you’re following the key principles of passive investing (diversified, low cost trackers).

If it were me, I’d change some of the percentages but there’s nothing wrong with what you’ve chosen. None of us know how things will pan out!

Edit: Not sure where you’re getting the TER figures from. When I had ISF and VMID, they were 0.07% and 0.10%, respectively. I have VVAL and think it is 0.22%.

Hi Luke,

Looks good to me, you’ve actually gone for a similar portfolio to me (a reconstructed global index with tilts towards small cap and value). I think this makes sense as we a both in a similar position and have a long time horizon so it makes sense to take on the additional factor risks.

I guess the only thing that really jumps out is you’ve gone for a large home bias (15% UK vs ~4% UK in a typical global index). Lots of people like a home bias in their portfolio so that could make sense for you, just something to be aware of.

On the flip-side you have excluded a few large markets, developed Europe is almost entirely excluded but makes up ~13.5% of a global index as well as Canada. Just something to be aware if this isn’t a conscious decision.

As someone recently recommended for me you could also consider swapping your UK ETFs for a UK all cap ETF.

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Thanks for the feedback. The TER percentage is including the transaction costs, which I appreciate is misleading as I now realize I’ve used the incorrect term.

Thanks for the feedback Cameron. I have little interest in harbouring a home bias, honestly, and may instead just go with 3.75% each for the FTSE 100 and the FTSE 250. I’d say it may be worth my going higher on the FTSE 250 due to the higher potential long-term returns, but I’m somewhat disquieted by the higher TER for this ETF. Otherwise, there’s the FTAD and FTAL, each of which have a comparatively higher (compared to the FTSE 100) TER of 0.24%. I’d be interested to hear your thoughts on this.

Regarding Europe, what would you recommend, for I tried hitting developed Europe with the CS51. I’m entirely new to this, so I’m open for any criticism and advice. Would a switch from CS51 to VERX be sufficient? Yet there is also the XSX6, although his has a higher TER than VERX.

Regarding Canada, I can see only that VNRT fits the criteria of including it, yet Canadian stocks make up only 4.1% of the fund (https://www.vanguardinvestments.dk/portal/instl/dk/en/product.html#/fundDetail/etf/portId=9523/assetCode=equity/?portfolio). I guess this is better than not having Canada in at all. Would you recommend, say, allocating 15% each to IUSA and VNRT? I don’t know the significance of reducing IUSA, but I would like the S&P 500 in here somewhere. Perhaps the S&P 500 is simply a subset of VNRT, but I’m unsure of this.

Cheers
Luke

Sorry I completely missed that - for some reason I thought you only had 1%, ignore me. For reference I am using VERX though.

Yeah Canada is very small so that’s probably not a a big issue, just something to think about. I am using VNRT instead of an S&P 500 though.

I think that’s pretty much the case, the S&P is a bit arbitrary in how it works though (for better or worse) it’s not just a simple market cap weighted index like some people assume, there are other criteria. VNRT is still only large cap so it doesn’t fully cover the north american market, but I think it may be more complete than the S&P 500.

You can see a bit of criticism of the S&P 500 as an index here:

True, but at least the WLDS covers much of the small cap in the US (~53% of the WLDS are US small caps), I believe: https://www.hl.co.uk/shares/shares-search-results/i/ishares-iii-world-small-cap-ucits-usdgbp

So, unless I’m mistaken, swapping out the S&P 500 for VNRT (or reducing S&P 500 to, say 10% and allocated the 20% to VNRT) while also having WLDS, I’ll be hitting much of the US market while now including Canada within the mix, right?

I’ll do some more comparisons of CS51 vs VERX, but I’m hoping that either one will sufficiently expose me to Eur ex-UK.

Have you any thoughts regarding my comment regarding FTAD and FTAL? Either I go with one of these or I’ll simply reduce the weightings of the FTSE 100 and FTSE 250.

Overall, my portfolio could look as such:

VNRT - 30%
ISF - 3.75%
VMID - 3.75%
VERX/CS51 - 10%
EMIM - 15%
WLDS - 15%
VVAL - 7.5%
VJPN - 7.5%
VAPX - 7.5%

I’ll mix +/- 2.5% here and there perhaps, but generally I think this above is something close to complete. Perhaps I’ll just go 5% total for the UK and bump up either the VVAL, VJPN, or VAPX, but I’m completely unlearned regarding Asian/Pacific markets, and may thus just bumb up the VVAL, irrespective of the higher TER. Let me know your thoughts.

And thanks for linking that video; I’ve watched a few of his others already, and the ones regarding small caps and value stocks were of particular help in shaping this portfolio.

Cheers
Luke

Yeah to be honest I’m not really sure, I think I might go FTAL if I change mine, but as you say it’s more expensive than FTSE100 and they track pretty similarly.

Currently I have FTSE100 and my main priority is reducing the weighting of it (by buying more of the other ETFs) but I’ll consider swapping it to FTAL in the future.

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Okay man, that’s fair. Cheers for your feedback on this

Let us know your YoY return with this -)

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