1 ETF portfolio with VT

Hi there! Question about my portfolio:

These are my assets:

  • 2nd pillar
  • 3rd pillar with VIAC (100 Global sustainable)
  • VT

Would you add another ETF after reaching, for example, 200k or 300k with VT? Or just keep buying VT?

If you would add a second one: Which one? Why?

Thanks!

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I would double-check if 100% stocks corresponds to your risk tolerance, in particular when you arrive to higher amounts, in order to avoid selling in a downturn.

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I have about 500k in VT at IB and I’m considering to continue investing all further funds in VWRL at PF. The reason being convenience and independence from US laws and services, but I know this comes at a cost.

Once I have saved enough on my 2+3 pillar and once the real estate market escaped bubble territory, I would consider taking a mortgage. Other than this I think total World ETF is the most carefree solution and in order to justify changing this allocation, you would need to get into lengthy and complex arguments.

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a) IXUS.

Why: US already accounts for over 55% of VT. That’s more than enough.

b) Any broadly diversified ETF that does not include TSLA. See a) for an example.

Why: Given its fundamentals, such a stock should never make it to, let alone become the 6th biggest single component of any - geographically and economically - broadly diversified World index/portfolio for an unopinionated investor.

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While true its a flaw the VT holders also enjoy the nice run-up of “irrational” valuations like current day TSLA.

I guess it’s a bigger problem when adding more money but every now and then something will deliver that may justify it long term. Also they are still only a few % so probably not worth losing sleep over.

For @lorenzogm if you are young with a long time horizon and are certain you can stomach years of crashes and sideways markets while continuing to DCA in then keeping it simple with your strategy is ideal imo.

Once you get closer to needing the money for a property/etc. or needing some more stability for withdrawals in retirement you can begin reconsidering how to shift your assets/asset classes and reducing volatility.

After watching Ben Felix´ newest video I actually think about moving my ARKK allocation to WSML (iShares MSCI Wolrd Small Cap):

So maybe that could be your additional ETF too?

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VIAC also has a 0.09%-TER “Pension Fund” World Small Cap fund.

Why not AVUV and AVDV if you look for small cap funds?

They also have exposure to companies with robust profitability and value and avoid companies with negative momentum.

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5x/7.5x more AUM in WSML for not much different TER. Also WSML holds GME and we like the stock :smiley:
What would be in favor for AVUV and AVDV is the US domicile and the dividends vs. WSMLs ireland domicile and accumulating… hmmm… need to think over it.

You need to compare the AUM of AVDV+AVUV it is roughly 3x that. Although I don’t see why that would be an important metric for the fund selection.

The major reason for AVUV and AVDV is their systematic aproach in selecting companies with low book to price and robust profitability compared to the market.

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Not just small cap, but it’s the value part that is key (too).

Thank you everyone for your answers.

@hippo I’m 34, so probably I still have time to go with a high % of stocks. To keep investing monthly on VT or a 2nd ETF.

What would be the reasons to decide which ETF could be the best 2nd ETF to add to the portfolio?

To sum up a bit the “candidates”:

  • To reduce the exposure to the US market (IXUS or VXUS) as @San_Francisco mentioned, it makes sense to me.
  • Small cap funds (WSML (from @MrCheese), AVUV or AVDV (from @xorfish) Why small cap funds would be important for a 2nd ETF?

And, why WSML, AVUV or AVDV when the TER is a lot higher than IVUX or VXUS?

What do you think about SMMCHA SW, which is in @_MP portfolio? It would be to much allocation for CH, isn’t it?

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Buy AVUV and AVDV only if you understand their aproach and believe the academic research that is behind it.

Here is a good starting point:

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Isn’t it true that investing in small caps comes with an even higher risk than that of VT? Higher volatility and even longer waiting times for a positive return? What you need for small caps to succeed is a toss-up at the top, maybe some bankruptcies. In an environment of ever more complicated law and stimulus/bailout programs for the big guys, it’s hard to succeed as a small company.

You can get the returns data for different academic portfolios here:

http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html

Thank you for bringing the SCV topic and for those videos. I had to watch them a few times and I think I don’t completely understand them yet.

At the end, looks like the academic research supports having some exposure to SCV. This is the new vehicle that I was looking for, with a different focus than VT.

So AVUV and AVDV look like the best way to invest on SCV. Probably I’m not selling VT, but I can start buying only AVUV or AVDV.

I read in the forum that VT + AVUV + AVDV underweight emerging markets. How would you fix that?

It all depends how much AVUV and AVDV you have compared to your amount of VT in your portfolio. Because VT has already 11-12% of emerging market. So the question is more how much EM should you have or would you like to have… If you believe that EM is going to outperform US for example then it would make sense to increase your EM exposure. In my case I have 12% of my portfolio in AVEM which is also from Avantis.

Thanks for the info! May I ask more info about your portfolio? Do you have 100% with Avantis?

Because this is what I’m thinking and not sure if it makes sense:

  1. I have 100% VT but si would like to have another vehicle in my portfolio
  2. Adding SCV with AVUV and AVDV sounds good after some research
  3. Then compensate EM with AVEM sounds reasonable at some point
  4. Then I see people going with AVUS and AVDE instead of VT, or VTI + VXUS

As I’m still new into this world, and I was kind of happy with VT because that many people has it and it looks the safe way to go. Which are the risks of the ETFs from Avantis? It looks like going a bit more in value stocks, small caps and profitability has only benefits (except more volatility). At least after listening to Ben Felix, reading the data from Fama & French and reading the rationale reminder community. What am I missing?

No way 100% with Avantis, that would be too much risk for me and I don’t think anyone here has 100% of his or her ETFs with Avantis, anyone? I like also to diversify among ETF providers.

25% of my ETF portfolio is with Avantis with the following ETfs: 5% AVUV, 8% AVDV and 12% AVEM. Note that VT for me is only 50% of my portfolio.

There is nothing wrong in having 100% in VT especially if you are new to this world and such tilts like mine (if I may still call it a tilt in my case) is more about where you believe the market is heading to. For instance value has under performed growth during last 10 years and now you believe this is to change based on your research and available data.

ETFs from Avantis definitely have more risk as they are small in terms of AUM compared to Vanguard/iShares/etc, then they have much less trading volume and higher spreads and there must be some other risks for sure compared to VT.

Thank you for message.

I think @xorfish is 100% with Avantis, isn’t it?

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