Hi everybody, I’d like your feedback about my ETF ideas for a mid-term portfolio (10 years). I’m in Degiro.
What do you think about investing in water?
Thanks a lot for your feedback guys
Céline
Recency bias and performance chasing.
Big fees for big investment ideas. With a sprinkle of greenwashing.
Hello there
I think it would be easier to advise or discuss if you provide your rationale for choosing Water & Technology ETFs in addition to World ETF
what is the rationale and what is the expected outcome?
As you know the easiest way to invest is simply pick the World ETF and chill. Since you decided to go for three ETF strategy, you should clarify what you believe is added value of doing so.
Well! We are a couple. I chose to follow the classic and “chill” path: a World ETF + 1 CH.
To diversify, my boyfriend (he works in tech) wants to add a more specific value. So water (which seems to be a resource with high added value soon) or tech (because he knows this field particularly well). For this specific ETF that he will choose, he expects a slightly better result than a common ETF.
Okay. Thanks
Regarding Tech
World ETF is already dominated by Tech companies, so adding a tech etf be a big overlap. MSCI ACWI is already 25% exposed to Tech sector if you have a look at the fact sheet.
Regarding Water -: I think the main points to check would be
The key point is that if a company is focussed on a high value resource, it doesn’t qualify them to be good investment. Reason being that for it to be a good investment for you, you need to buy it at right price, they need to grow earnings over the investment horizon and when you sell the stock, hopefully it would be worth more.
Often people mix the business of a company with attractiveness of the stock of the company. But the challenge is that stocks can often get carried away with market sentiment and then not really reflecting their fair value.
This would need quite some analysis or willingness to trust the portfolio manager of the ETF. If it’s the latter, then 0.65% is not bad expense ratio. Of course it’s then an active bet on the fund, so important to understand their investment strategy. I don’t know much about this field other than the fact that I know water is important 
but thought to share my view nevertheless
Another idea could be to pick one or two companies from the Water ETF and try to understand their financials, growth plans, expected future cash flows, management and then if it’s attractive, then just buy stock of those companies. This is how normally active investors operate. It might work or it might not, but when you are actively betting on something or some sector, there is always a risk of underperformance that should be kept in mind. We have a few active investors on this forum @Your_Full_Name might be able to advise.
Something to watch Thematic ETFs
Keep in mind that if you overweigh tech, you are double screwed when the tech bubble would burst. Not only would the portfolio lose in value more than market average, but he might also lose his job in the worst case.
Tech is a huge part of world ETFs already, so from a risk perspective I personally wouldnt overweigh it, and aim for more diversification instead.