Hello ‘boggle heads’
I’ve been waiting for what seems like an ages to move my pension on to freetrade but it has finally arrived and now I’m looking to put together my portfolio. I’m looking at building a diversified global portfolio that gives me more control and cheaper fees but will be benchmarked against VWRL.
I’ve been down the rabbit hole of factor / smart beta investing and while fascinating I don’t want to have to pay for stockopedia and have to rebalance much more than when dividends build or I see the need for a change.
||Acc / Dist
|Vanguard FTSE North America
|FTSE Developed Europe
|Scottish Mortgage Investment Trust
I’m flexible on weightings and will gladly take some input.
India and China are included in the Emerging Markets but I wanted more exposure. Mainly India as I feel with young average age, good universities & English speaking they’ll fair well over the next 10 - 15 years once their brightest and best stay home to create companies.
How does everyone feel about some of these ETF’s being very top heavy? £IIND for example, the top 5 holdings account for 34% of the fund even though it tracks 85% of the stock market.
Currency hedging is of concern given the GBP seem to be fairly low v USD and many other major currencies right now, what are your thoughts on it?
I would like to have exposure to South Korea £IKOR MSCI Korea could work but.74% seems a bit high. Shall I include 1% or 2%?
Gold and Bonds - I feel there in there because its part of a balanced diet, like sprouts on a Christmas dinner I can take of leave them. Sprout yes? or Sprout no?
I’m not fussed by it, with further globalization I’m not fussed about coupling my returns to GBP in the very long term.
You are missing Developed Asia in general - you could consider looking at Vanguard’s FTSE Developed Asia Pacific ex Japan (or similar) to get that exposure which would also include Korea at a lower cost.
I have a long time horizon so I changed my mind and went 100% equities for now and I’ll only go for bonds once I get closer to drawing down cash. Same with gold - I don’t want to hold non-productive assets for a long time (besides a very small amount of crypto), but each to their own on that.
Wonderful! Thank you. I’ll add this to the mix. Have I overweighted Japan at 6% of the portfolio? I know I said I wasn’t worried about the weightings but Japan is a hard one the read.
I think I will too, I won’t eat sprouts until I have to!
Thank you for sharing your thoughts, I value your opinion, you’ve been a big help - obviously will make my own decision.
Nope, that’s about neutral - Japan is ~6% of VWRL at the moment.
If you are a Plus user then you can use £FRIN instead of £IIND for a lower OCF
IASH is MSCI China “A” - mislabelled on FT. However, I think the exposure to the domestic market is good. You won’t find Tencent or Alibaba here but you’re getting exposure to those companies in SMT.
Vanguard ETFs don’t really have currency hedged equivalents so if it is a concern then you will have to swap out your Vanguard regional ETFs for the iShares MSCI World ETF. Maybe consider a split of 50% unhedged 50% hedged (at a higher OCF). Personally I’d only hedge strategically if in the short-term I really felt the £GBP was going to strengthen vs USD. As a long term strategy it’s very difficult to know how currencies will go relative to one another.
Agree with Cameron about Gold and Treasuries. Treasuries or Gold is not the place to be if you think interest rates are going to rise. I had Gold in my early portfolio but I decided it wasn’t worth holding over the long term. I’m not against holding bonds as Junk bonds can still generate decent returns albeit you need to keep an eye on spreads. Junk bonds are correlated to Equities so it won’t offer any protection like treasuries normally would during a sharp sell-off.
@neilB I use FRIN. But it is not only because the TER is lower (.19%). I chose it also because of the question that you raised in your original post about concentrated holdings: FRIN uses the FTSE India 30/18 Capped index which means that the largest company is limited to 30% of the holding and the others are no more than 18%. I am not sure it makes much of a difference though
Of course, if you are a index purist you may not agree with the capping. But there you go … you have lots of freedom in deciding what you want.
Greetings, I cannot see VNRG on Freetrade
I asked for VNRG to be added and @Alex_B said it had been added but I think it might have been an error. It’s not the end of the world as I have plenty of out distributing funds but it would be easier not to have to them.
A massive thank you to @Cameron @J4ipod94 & @bitflip - I’ve taken on board all of your points and get all of these brought this week.
If there is another community meet up I owe you all a pret sandwich!
Any good ETF comparison tools you guys use?
- Etfdb seems to be just US based etfs
- justetf and martets.ft.com seem pretty good but I find there are some ETF’s missing
looking for something where I can saee side by side of the overall ETF performance and comparison of ther constituants and sectors the etf is invested in.
Hi @NeilB Out of curiosity what does your final portfolio look like now compared to the proposed one at the start of this thread?
What ETFs are missing on justetf, can you share? I usually use them as screener
I read the thread before starting any work on my portfolio, before that it would have been a complete mess.
The main things I changed was the removal of gold and bonds, they were there like salad at a BBQ - because I felt they should be. I also picked a different provider for India and China which were much more expensive than I had planned when I set out but got me the slightly oversized exposure I wanted.
I have since added so holdings in $T & $GLAD (paid for with dividend income) which should generate an annual dividend that pays for the SIPP, ISA and FT+. This is to necessarily based in a purely economic thought but It makes me feel better ($T is +5% and almost everything else is RED!)
I know I’ve given them a credit before but I truly do owe @Cameron @J4ipod94 & @bitflip a drink / dinner if we can arrange it before a community meet up. Their help and clear guidance was invaluable and when I’m a rich pensioner I’ll name my three holiday homes after them!
That’s my feeling about bonds. I still have them and enjoy the divis but I’m beginning to question the need to have them. I know bonds and equities used to be negatively correlated so bonds were seen as a stabilising force.
Tbh, I’m not seeing that negative correlation really. Extensive diversification across sectors, cap and territories seems to be effective in ‘balancing’ the portfolio and, let’s face it, in the ultimate black swan event, an ‘appropriate’ bond allocation isn’t going to save any of us.
Is it a throwback to times when we were less able to invest so globally? Or are bonds still appropriate in a limited passive portfolio of 3-5 funds? I’d be interested in what others think.
Thanks @NeilB I found this thread off the other one where everybody was listing their position percentages and you referenced this thread. Reading through that thread and noticing the “average” number of positions people holds, I realised I am taking the piss big time buying 1 share here, 2 there, another one here for no real reason other than name recognition and them being around for quite some time so it is unlikely they’ll go bust. I’m embarrassed to admit that I soon had a list just shy of 70 for a total amount of just over 3300 quid.
Your comments stood out then I also thought of a snippet of a Warren Buffet speech about the punch card and I realised I have to get my act together, cut my losses and scale back to no more than 20 max.
Also considering upgrading to plus on the 1st Feb (so billing is same time as other direct debits on 1st of each month, but then again I wonder is it has any benefit paying a tenner a month with relation to my “low” amount invested.
To complicate my thoughts even further I have no ISA and and are well aware of how important and beneficial it is to get one. Add to that I have so many overlapping ETF’s (your comments ringing in my ears again ). I have a bias towards Vanguard so have a lot of them, but also in duplicate. Meaning distribution as well as accumulating eg, I have vukg, vuke, vwrl, vwrp, vuag, vusa, verx, veur, not forgetting vuta and vuty and a few others…
To cut a long story short, I want to cut my losses and start afresh with a smaller, well balanced portfolio. As of this moment I am down to 61
Everyone gets carried away and buys stuff that weeks later you’ve forgotten your rational behind it. One tip when it comes to trimming stuff down is to think about what each one is doing there. My pension for instance has some $T & $GLAD that don’t fit my overall ETF thesis but I like the idea of the income paying for the management fee.
I too have a bias towards vangaurd. I don’t really know why they had my pension before it was actually cheaper at @ , they feel like the good guys.
I went ISA, SIPP then Plus. Getting the ISA might be the fresh start your looking for, then you can sell everything get over the emotional attachments before making considered purchases in your new shiny ISA. Having too many stocks means you can’t keep up with the news and you’re spread so thin. For me 10 - 15 works okay.
Thought I’d jump in on this as I’m also concentrating on 80%(ish) ETFs. At the moment I’m currently:-
FTSE North America (VNRT) 30%
FTSE Dev Eur ex UK (VERX) 9.2%
FTSE Emerging Markets (VFEM) 7.4%
FTSE100 (ISF) 7%
APAC Ex Japan (VAPX) 4.7%
FTSE Japan (VJPN) 3.8%
MSCI India (IIND) 2.2%
MSCI World Small Cap (WLDS) 6.4%
Realty Income ($0) 14.2%
Global Clean Energy (INRG) 2.3%
Individual Stocks (Pod Point, Molten Ventures, Kanabo Group) account for 12.1% combined
Current thoughts are to increase VNRT and WLDS in terms of holding % and keep property (Realty) at around 15%