Your opinion on my portfolio

[Fanfan]

Hi,

I am a 33 years old, Swiss resident and planning to stay in Switzerland in the long term.

I decided to unfortunately drop VWRD because it is 57% exposed to USA which is too much in my view.
Tax wise, I only picked Irish-domiciled ETFs. No synthetic ETF. I favored major funds. I did not prioritize accumulating or distributing.

My goal is to balance geographically and on currencies (USD / EUR / CHF).

The portfolio I consider at the moment is:

• S&P500 => VUSD (IE00B3XXRP09). TER 0.07%. Distributing.
• Europe => IMEU (IE00B1YZSC51). TER 0.12%. Distributing.
• Switzerland => CHSPI (CH0237935652). TER 0.10%. Distributing.
• Emerging markets => EIMI (IE00BKM4GZ66).TER 0.18%. Accumulating.

Average TER: 0.12%
Geographical distribution: Switzerland 29%, USA 25%, Europe (excl. CH) 21%, Asia 17%, others 7%.
2 are in USD, 1 in EUR, 1 in CHF.

What do you think ? Is it too much effort to have 4 different ones or how would you fix this dilemma ? Should I add bonds ?

Thank you to all of you for your help

[Giff]

@Fanfan

Tax wise, I only picked Irish-domiciled ETFs.

Are you sure this is the best move? In particular I think for US funds it’s suboptimal, but I might be wrong. Anyway, there have been many posts on this topic in the forum.

Just a couple of comments on the funds you chose:

SP500 can be had for 0.03% TER (e.g., VOO)
Instead of IMEU, consider also MEUD (LU0908500753) which costs 0.07% and has a bit more companies inside.
For emerging markets, I own VWO, which costs 0.12%.

Overall you miss some geographical areas such as Japan, Australia, Canada.

Bonds are IMVHO needed in every portfolio, but perhaps you can consider your 2nd pillar money as one (which would mainly be invested in CHF though - something I need to fix on my side).

G

[nabalzbhf]

@Fanfan

I decided to unfortunately drop VWRD because it is 57% exposed to USA which is too much in my view.

If that’s just gut feeling, you might want to revisit that. You’re betting that US headquartered companies will underperform compared to the rest of the world, so there’s definitely some market bet going on that you should probably justify instead of “it just sounds like it’s a lot”.

[Fanfan]

It’s not that I bet that they will underperform (I don’t have the knowledge to assess that), only the fact I do not think having 57% on USA makes sense when they contribute to 24% of world GDP. Does it make sense for you ?

[Patirou]

@Giff

Canada

Some people say you can approximate Northamerica (US+Canada, Mexico is EM) with S&P 500 since USA is 95% and Canada 5%, and that they are pretty much parallel… So I would not make too much about it.

But yeah the whole pacific developed area is missing

However, I would like to suggest that depending on his savings rate and actual capital, operations and rebalancing could be hell…

It’s not that I bet that they will underperform (I don’t have the knowledge to assess that), only the fact I do not think having 57% on USA makes sense when they contribute to 24% of world GDP. Does it make sense for you ?

I think you do not take into account that companies like Apple are also active in Asia, but noted in the US, so of course part of the GDP of the Asian Market will be transferred to a US noted company.

[nabalzbhf]

@Fanfan

Does it make sense for you ?

As @Patirou says, where a company is headquartered or listed doesn’t necessarily relate to GDP. Most of the world largest companies are truly global, if tomorrow Novartis decides to move its headquarter to the US or UK why should it matter to your investment?

[Fanfan]

I get what you mean, by market localization they mean the HQ of the company integrated in the ETF. They simply select the top 3500 companies worldwide and for 57% of them they are HQ in USA…

[wapiti]

Bad move. Your logic doesn’t make sense.
Go full VT (or VWRD/VWRL suboptimal due to taxes). I will say this one more time:

• Switzerland market is highly concentrated and the main companies are doing more than 95% of their revenue outside CH. If Novartis sells medicines in the USA, you will be impacted by the currency exchange anyway. Also, CH companies distribute more dividends, so more tax to pay

• The listing currency of the ETF doesn’t change anything on the returned, except paying more exchange fees

BTW, IE00B1YZSC51 does include Switzerland