Hi everyone, it’s been great reading your stories and getting inspired, and I’m hoping you could help me assess whether my own portfolio idea is reasonable or too risky.
I’m a 28yr old Swiss resident with Swiss spouse, and I’m a US citizen - so like the “Frustrated American Novice” I’m essentially confined to investing through IB. My goal is long-term: retirement savings. Another constraining aspect is that SRI is non-negotiable for me. I realise this carries extra risk and higher costs (for unclear societal benefit), but this is a risk/cost I am willing to take on. If my portfolio seems a bit convoluted, it’s not because I’m trying to beat the market, but because I’m working within these constraints.
First choice portfolio (name, ticker, market, ER and launch year)
48% Vanguard ESG International Stock ETF, Global Ex US, 0.15%, expected to be launched in Sept 2018
24% iShares MSCI U.S.A. Small-Cap ESG Optimized ETF (ESML), USA, 0.17%, 2018
18% iShares 1-3 Year International Treasury Bond ETF (ISHG), Global, 0.35%, 2009 OR SPDR Bloomberg Barclays Short Term International Treasury Bond ETF (BWZ), 0.35%, 2009
10% NuShares ESG U.S. Aggregate Bond ETF (NUBD), USA, 0.20%, 2017
Second choice portfolio - longer established equity ETFs but higher ERs and ETF closure risk likelihood according to ETF.com
48% iShares MSCIU.S.A. ESG Select ETF (SUSA), USA, 0.25%, 2005
24% iShares MSCI Global Impact ETF (MPCT), Global, 0.49%, 2016
Same bond ETFs as above
The logic behind the two equity ETFs is that I would like to support socially conscious funds like ESML and MPCT, but I realise that doing so means less diversification. My thinking is to balance these “riskier” funds with more secure stalwarts, like the new Vanguard ETF and long-established SUSA.(Not positive I settled on the best ratio here either).
The logic behind the two bond ETFs is that I had trouble finding a ESG bond ETF that meets all of my criteria, so the compromise is to invest partially in an ESG bond (NUBD) and the rest in an ETF exclusively for treasury bonds (ISHG or BWZ).
Although I’m willing to assume more risk to invest responsibly, my fear is that this is just too much, especially given how many of the ETFs in the first portfolio are new this year. Does this seem balanced and stable enough that it still fulfills the mandate of a good three/four-fund portfolio? Or is this a recipe for losing my retirement?
*Edited to fix one of the portfolio components