@Cameron. One thought occurred to me: if you downsize your FTSE 100 exposure, given your preference for accumulating ETFs you might wish to consider FTAL, though this is all of the FTSE not just the 100.
What are people’s thoughts on these 3 new iShares “Active” Multi-Asset ETFs
They have a 75/25, 50/50 and 25/75 Equity to Bond split respectively, are all 0.25% TER and have an ESG focus
-
At least 80% of the Fund’s assets will, at the time of purchase, be invested in funds tracking indices that meet the following ESG Criteria, namely that
(1) exclude certain investments based on ESG-related characteristics; or,
(2) are comprised of government bond issuers with an ESG sovereign rating of BB or higher (as defined by MSCI or another third party data vendor).The Fund will use quantitative (i.e. mathematical or statistical) models in order to inform its approach to stock selection. -
The composition of the Fund’s investments is determined based on: consistency between the risk profile of the Fund’s portfolio and the investment objective; ESG Criteria; the IM’s investment models; and the IM’s discretionary insights.
They’re not for me personally but I can see a use for them.for passive investors that don’t want to spend even 5 minutes managing their portfolio’s balance and asset mix. Will be interesting to see if they generate any inflows (or not)
They are not for me either, I would prefer to make my own ETF choices.
One thing that I particularly dislike about the fixed ratio is that, as I understand it when a particular asset goes down, lets say bonds, they have to buy more of that asset (to maintain the ratio),despite the fact that it may continue to go down. And when a good asset goes up they have to sell off some of it to maintain the ratio.
But that’s what you want, from a buy low, sell high perspective. It’s giving you the equivalent of manually maintaining a strict asset split based on your risk tolerance, but you buy once, not every day. The Vanguard Lifestrategy funds do this rebalancing every day I think.
1 Like
But lets say that a particular asset, eg Bonds, has a very bad decade. You would constantly be buying “the new low” and losing more money.
I personally prefer to select my own ETFs, even if I include bonds lets say, and leave it as it is. Lets say I start with 20% bonds, if they go down (or don’t go up as quickly as shares) then that is fine, but I don’t agree with the rebalancing, particularly not on such a short timeframe. I can understand if you might want to rebalance slightly once every year or so (subject to your judgement) but I don’t understand why you would want to do so daily. This is just my opinion though.
Rebalancing seeks to achieve increased returns over the long term - see this article on the Monevator website. How frequently a portfolio should be rebalanced is subject of much debate - another article from the Monevator site.
Daily rebalancing is extreme. That said, Vanguard might have to do it on their Lifestrategy funds otherwise, say, a 60/40 fund could well not live up to its description.
A good list of things to consider when starting to build an ETF portfolio. Topics covered include DCA, Drift & Rebalancing. Would be good if FT do a similar topic
3 Likes
1 Like
Hi @Cameron. I see that VVAL is being closed down next year (which you mentioned in another thread). Where are you going to reallocate to in its place? I see there are some iShares alternatives (e.g. IWFV). NB I’m hoping you give us an end-of-year update on your ETF portfolio. 
1 Like
Yup, I’ve actually finishing moving from VVAL to IWFV, I split it over ~4 transactions, trying to pick days where VVAL was slightly outperforming IWFV that day.
Here’s a link to my ETF breakdown:
Here’s my allocations, targets and 3 month return.
| Ticker | Name | ISIN | Current Weighting | Target Weighting | Return (3M) |
|---|---|---|---|---|---|
| LON:IWFV | World Value | IE00BP3QZB59 | 18.50% | 18.00% | 10.41% |
| LON:WLDS | World Small Cap | IE00BF4RFH31 | 10.56% | 9.00% | 16.13% |
| LON:INRG | Clean Energy | IE00B1XNHC34 | 5.77% | 5.00% | 39.46% |
| LON:VNRT | FTSE North America | IE00BKX55R35 | 35.31% | 39.96% | 5.53% |
| LON:VERX | FTSE Developed Europe ex UK | IE00BKX55S42 | 8.43% | 9.19% | 4.10% |
| LON:VFEM | FTSE Emerging Markets | IE00B3VVMM84 | 6.95% | 7.45% | 9.57% |
| LON:VAPX | FTSE Developed Asia Pacific ex Japan | IE00B9F5YL18 | 2.66% | 3.37% | 15.38% |
| LON:ISF | FTSE 100 | IE0005042456 | 7.22% | 2.86% | 8.19% |
| LON:IIND | MSCI India | IE00BZCQB185 | 2.04% | 2.00% | 11.25% |
| LON:VJPN | FTSE Japan | IE00B95PGT31 | 2.54% | 3.16% | 9.97% |
Which gives a ~10.3% 3 month return (vs 6.4% for VWRL). 3 months is way too short to measure returns, but that was about my last update and the I haven’t made any change other than swapping value ETFs since. This short-term outperformance has just been lucky timing with the huge recovery in value, small cap from the vaccines and green energy from the election.
The biggest change in my thinking was adding Global Clean Energy in September, I still dislike sector-focused ETFs but I just decided to go for it for lack of a better option, bit hypocritical of me but I just went for it.
I also sold a bit of FTSE 100 on Friday as it’s recovered well recently and with Brexit news looming over this weekend it felt like a good time to rebalance it.
3 Likes
Thanks for the update, Cameron.
Don’t see anything wrong with picking sector-specific ETFs if it meets an investing preference of one sort or another. I would invest in that just because I think it’s ethically sound rather than because I was chasing a target return. Not that I have a target return, or an edge to pick likely high-returning sectors. 
Wouldn’t it be cool though to get a bunch of passive investors each one specialised in one of the parameters Cameron listed and share an active portfolio of subject matter experts? They call it investors club I think?
I really like this topic, though I’m still learning everything as it is.
Looking over the questions for myself I would say;
-
Geography - I’d like to be investing world-wide (who wouldn’t?), I’d like to invest in the world and the various regions. The only places I’m somewhat lukewarm about is the UK due to Brexit, though I probably shouldn’t discount it.
-
Sectors - There are two that I’m drawn to at the moment; Clean energy (or renewables) as that ultimately has to be the future of the world, ergo these companies really should be safe(ish) bets in the long run. (Maybe that is super naïve of me?
) The other is robotics, as a field that has a lot of use, militarily, in the medical and industrial areas, automation etc. I’m cautious about robotics though, it’s not something I’d be desperate to invest in, but it’s an option I’d like. -
Asset classes - For me, I’m thinking 80/20 equities and bonds. I’m not ‘young’, on the investor scale I guess, but I want to push the risk for now as I’m slightly late to the game. I’m nowhere near retirement in any case.
-
Factor - No idea.
-
Passive/Active - Passive 90%, 10% active I guess? There are maybe one or two small companies I’m interested in, but I think that I would prefer to hand off to ETFs and not have to worry too much about researching individual stocks in-depth.
-
Timing - I’m hoping to put in regularly rather than ‘timing’ the market. The hope is that the gains will win out in the end regardless. I don’t want to be hooked on watching for the dips to buy in etc.
-
ETF choices;
I struggle with this one, I am perhaps overthinking things a bit in my theories because it is still early days for me - I haven’t made any considerable or major investments at this point in time, so everything has the opportunity to be fluid.
I have got four ETFs on the hook;
- Vanguard All World - VWRL (Large, world and developing)
- Vanguard Gilts - VGOV (UK Government Bonds)
- Global Corp Bonds - CRHG
- Global Clean Energy - INRG
That’s my tiny portfolio at the moment, reasoning?
VGOV - I elected for this one as my bond option, Government bonds seems to be the sensible choice for a bond opener, at least that’s what everything has been telling me.
CRHG - Actually got this as a free share. I don’t know if I’d keep it, but I was going to put in for Corp debt as my next buy anyway… So, FreeTrade seemed to read my mind in some ways. The tracking error is a bit poor though and the fee is a bit high? I dunno, I may keep the free share but not re-invest into this one, I need to have a look around at the options on offer.
VWRL - A global ETF, I would like this to be the core of my equities, I don’t know how much I would allocate to it - I’ve heard various theories about how much you should have in any one place, 20% seems to be the upper limit for some people, whilst 50% seems to be the thinking in other sites. I don’t know where to put my own number at the moment.
INRG - To align with the Clean Energy goal I mentioned above.
Where would I go from there?
I do want to add other ETFs to the portfolio. Some places I’ve been thinking of; Finding small caps ETFs is a major priority, but the ones I’ve seen on the list at the moment have a price I’m not too keen on paying right now at the start.
India and China would be my two risky ETF choices, and then would I add Europe, the UK250 and further Emerging Markets?
Why? The VWRL is almost 58% into North America as it is, so additional exposure to other regions makes sense to me in theory. I’d like to get small/mid businesses in these regions, leaving the VWRL as the main ‘large cap’ investment if that makes sense at all? - These would all be smaller investments than the VWRL in the long run, if I went with that plan in anycase.
Commodity ETFs: I don’t know if I would bother with this at this stage. If I absolutely was going to add one I’d pick a basket ETF and max it at 5% in total. I’m still uncertain about Commodities (and real estate as well) this early on.
Hmm, well, I’ve written a lot. What do you think? Do I need to go back to the drawing board and re-read the books!? 
None of what I’ve written is set in stone btw, just me trying to work out how I’d plan things going forward.
4 Likes
So interestingly I noticed that recently some ETFs have become part of the top 10 weekly buys on Freetrade. I actually assumed that Freetrade just didn’t include ETFs in their top 10, but clearly that’s not the case. I’m amazed that they have hardly made the top 10 before now. My guess is that with the ISA cut over there were a lot of people using their old/new allowances and they tend to be more of the passive crowd.
I hope this is the start of a trend as I think for most people a mostly-passive portfolio makes sense even if it is less fun.
5 Likes
Sorry for the very slow response I missed this, but I think your ideas are good and you picked up on the same thing as me - lack of small cap exposure.
As you mentioned you have are considering add a small cap fund (like WLDS) which is what I did another option to consider would be swapping from VWLD to an all-cap index like FTSE Global All Cap or the ESG variant (if you like & if FT adds it)
Update
My portfolio is mostly unchanged although I did buy a couple of things in my SIPP that overlap which has messed up my weightings a bit. Mostly my SIPP is a simpler version of this: Developed (VEVE) + Emerging (VFEM) + Value (IWFV) + Small Cap (WLDS)
| Ticker | Name | ISIN | Current Weighting | Performance (3M) | Performance (6M) |
|---|---|---|---|---|---|
| LON:IWFV | iShares World Value Factor | IE00BP3QZB59 | 22.68% | 9.51% | 23.85% |
| LON:WLDS | iShares MSCI World Small Cap | IE00BF4RFH31 | 15.46% | 6.31% | 23.70% |
| LON:INRG | Clean Energy | IE00B1XNHC34 | 4.32% | -31.53% | 2.76% |
| LON:ESPO | VanEck Gaming | IE00BYWQWR46 | 2.78% | -0.37% | 14.06% |
| LON:IIND | iShares MSCI India | IE00BZCQB185 | 1.41% | 1.48% | 13.51% |
| LON:VNRT | Vanguard FTSE North America | IE00BKX55R35 | 27.43% | 6.11% | 12.70% |
| LON:VERX | Vanguard FTSE Developed Europe ex UK | IE00BKX55S42 | 6.66% | 2.73% | 12.50% |
| LON:VFEM | Vanguard FTSE Emerging Markets | IE00B3VVMM84 | 9.88% | -0.10% | 10.40% |
| LON:VAPX | Vanguard FTSE Developed Asia Pacific ex Japan | IE00B9F5YL18 | 2.64% | 0.22% | 19.66% |
| LON:ISF | iShares FTSE 100 | IE0005042456 | 5.03% | 0.76% | 15.73% |
| LON:VJPN | Vanguard FTSE Japan | IE00B95PGT31 | 1.70% | 1.06% | 9.63% |
Overall:
As I hoped the recovery has boosted small cap and value stocks which has helped offset the underperformance of my sector-ETFs
| Portfolio | Performance (3M) | Performance (6M) |
|---|---|---|
| Selected ETFs | 3.69% | 16.59% |
| VWRL | 4.18% | 12.87% |
I feel a bit silly for buying those sector-ETFs as I’m generally less keen on them (especially given how they’ve performed in the short term). For compliance reasons they are simpler for me to trade than single stocks so that’s why I opted for them.
3 Likes
Just replying to my own post to see how my portfolio has changed.
Largely it’s a very similar portfolio with some minor changes.
| Out | In |
|---|---|
| VWRL | VEVE |
| AGBP | JFJ |
| IHCU | UIFS |
| RMAP | BRWM |
| SMT | |
| EWI |
UIFS and BRWM I see as cyclical trades. The rest min. 5Y holds.
I’ve learnt a lot in the past year and one of the most important lessons is to take emotion out of it. Easier said than done but I’ve gotten a lot better.
1 Like
That’s alright.
I actually spent a lot of time reviewing my research in the first place. I had felt that in my naïve, newbie excitement I had too many investments planned, so I cut them down a bit and I also re-evaluated the historical performances (I know, no-no etc) so if an ETF/index has historically underperformed compared to the All-world, then I cut it out. My aim was to create a portfolio with the All-World as a core, and anything supporting it has to be things that would potentially exceed or match the performance in general
In the end I settled on some targets;
VWRP: 60% target. Performance, +4.34%
EMIM: 15% target, Performance -0.23% (Seriously… lol)
WLDS: 10% target, Performance +1.60%
VGOV: 5% target, Perf; -2.58% (meh)
WOOD: 5% target, perf: +6.42% (This one is nice so far, I must admit…)
Because I have so little to invest, I’m just drip-feeding where I can. At the moment, I’m on my second cycle of investment, so I’m building VWRP right now until I hit my target point and then I’ll invest going down that list in the order I’ve presented it.
I still have;
INRG: -27.11% performance, absolutely phenomenal investment this, takes the shine off the portfolio. I’m just holding it atm because I never invested beyond the initial investment, otherwise the hit would be worse!
And two individual stocks I bought because I had loose change and because I wanted to entertain myself, they’re capped at 5% combined, so I don’t get silly ideas and gamble;
BooHoo -2.15% (hah)
Ferrexpo +8.09% (yay!)
So far, most of my money is being made by VWRP and I’m quite pleased with WOOD, for obvious reasons.
Fairly disappointed at EMIM at the moment, but hoping it pulls weight over time. WLDS is okay so far, nothing major. I have faith in these two as I want extra exposure to Emerging markets and Small cap, so they will remain in my portfolio. I did write down notes for future me to review the performance in two or so years time, to see if I might be better off just moving the money over into VWRP anyway, but that’s a long way off.
Fairly boring portfolio I guess, but I’m happy to have made a start with what little I have. Fingers crossed things brighten on the horizon and I can go mad with the investments but until then.
5 Likes
Ramin just published a good video comparing Global Index ETFs
1 Like
Thanks for the quarterly update, Cameron.
In a similar way, my portfolio too seems to have ‘settled down’, that is, I’ve stopped tinkering with it for the time being. Bad habits die hard! And my desire for simplification but diversification means that I switched most of my holdings from Vanguard into iShares MSCI World ETF (IWDG) - I deliberately chose hedged as counter-ballast to my unhedged equity holdings in Vanguard ETFs/funds that I hold on another platform.
1 Like
My current portfolio investment plan, what are your thoughts and any suggestions on what I’m missing would be appreciated.
VWRL 30% - Global large and medium
VUSA 30% - S&P 500 tracker
WLDS 20% - Global small cap
EMIM 20% - Emerging markets
4 Likes