Hey guys. I’ve just finished the book by Gerd Kommer “Souverän investieren…” and I’m pretty stoked on his promoted worldportfolio and I’d like to slowly transform my current portfolio to one that’s similar to his.
My current portfolio looks like this:
MSCI World 70%
MSCI EM IMI 30%
I used to keep it simple as I haven’t been in the investment-world for that long. That’d also be one of my questions: From when on is it reasonable to have a portfolio that consist of 3-5 ETFs? In my case we’re talking around 100k.
My “upgraded” portfolio template looks like this:
MSCI World 32.50%
MSCI USA Small Cap 16.25%
MSCI Europe Small Cap 16.25%
MSCI EM IMI 25%
Dow Jones Global Real Estate 10%
I mainly differ from Kommer in that I don’t use any value-ETF’s, mainly because they would replace the MSCI World which I don’t feel like selling right now as it would be replaced with another three ETF’s according to Kommer which would then be quite extensive. But as I haven’t had any Small-Caps yet, I added USA & Europe 50:50, equally weighted in sum as the “Large&Mid cap” MSCI World.
I’d really like to hear your thoughts on my template? Is it stupid not to replace the MSCI World with more value-oriented indices?
The total TER of the new portfolio would be 0.24%.
Of course not. As far as pure passive strategies go i’m a big believer in simple market cap weighting. Investment is getting increasingly competitive, factors come and go, people catch onto them and exploit quickly, especially in well-researched large cap universe. Resourceful people, Ph.D’s much smarter than you, me or Kommer. What may have worked in the past may not necessarily work in the future, or as they print in factsheets smoking kills past performance is not indicative of future results. If you don’t have time/skills/resources to do the research yourself and stay up to date, let the market do it for you and go with simple market cap weighting.
I very much share the sentiment of @hedgehog. If you think that you can choose a mix of passive index funds and keep beating VT for the next 30 years, then probably it will have to be at higher volatility, so it will be even more of a nerve-wrecking ride.
I’d consider the simplicity of VT but I thought it wasn’t (easily) available to Swiss investors. Also I can’t seem to find it on justetf.com. I know that some people here on the forum have it but I thought that they all were with IB which I’m not.
Right now I’m torn between going with VT from now on (if available) or adding my above mentioned Small-Caps ETFs for around 10% of my portfolio, though it’d complicate things as I’d have 4 ETFs to manage…
There is an equivalent to VT in Europe, the SPDR MSCI ACWI IMI UCITS ETF but it has a TER of 0.4% so quite a bit more than VT. It did outperform the more popular Vanguard VWRL though (which is missing the small caps) since inception.
Alternative way to reproduce VT is to combine:
HSBC MSCI World UCITS ETF USD with 0.15% TER
iShares MSCI World Small Cap UCITS ETF with 0.35% TER
iShares Core MSCI Emerging Markets IMI with 0.18% TER
If you do this mix according to market cap weight, you should land at an effective TER of ~0.16-0.17% but you’ll have to rebalance yourself and transaction costs will add to your effective expenses.
and sorry i forgot to point out that justetf.com shows a set of ETFs that has nothing to do with what is available in switzerland
on the webpage they say “ETFs approved for sale in europe”, maybe vanguards US-domiciled funds dont. but then, should i be able to buy them in UK?