I want 30 stocks and 20 bonds to make up my portfolio. Can I use the same bond 20 times or do I need 20 different bonds? What’s the difference?
Given your question, may I ask why do you want 20 bonds? Apparently you don’t have any more formulated criteria than just “20 bonds”, so why this number?
On a tangent line, are you aware that T212 does not offer bonds, and bonds ETFs behave very differently to bonds?
What is your strategy?
Growth, Income, Diversification, Duration (Bonds), Credit Risk (Bonds), Countries, Currency, Type, etc.
Or a simple strategy for newbies, would be a lazy portfolio with a few ETFs. For example, the traditional 60/40 Stocks/Bonds Portfolio. Although I’m not a fan of Bonds for the long run portfolios, only as a source of income.
I’m trying to generate a steady income and retirement.
30/20 is a 60/40 mix.
If you want a simple 60/40 portfolio, you can buy 2 Global ETFs, with 60% in a Stocks ETF and 40% in a Bonds ETF.
As you want regular income, choose ETFs that distribute dividends.
If you are an UK investor, there are tax wrappers that could benefit you.
Also there are specialized ETFs/mutual funds with the retirement goal.
What currency do you need?
I don’t like Funds of Funds due that they compound fees.
That fund has a total expense ratio (TER) of 0.25% p.a, add to that the TER of the various funds inside their portfolio.
It would be cheaper to go straight to 2 Global ETFs (Equity + Bonds).
I’ve lazily picked out 20 different bonds. I’m afraid most of them aren’t very profitable. I’ll have to do some research. I might just have a few of each and study since I’m so new. What’s so great about bond ETFs?
It doesn’t work like that - the European guidance is that a synthetic OCF should be used when the underlying positions are material and carry their own expenses and they are known as in the ESMA guidance, its one of their guidance rules that is actually clear for a change.
What that means is 0.25% is the full blended ongoing charges for running the ETF.
Even so, 2 Global ETFs could be cheaper, e.g. (EUR biased ETFs):
- iShares MSCI ACWI UCITS ETF (Acc) (IE00B6R52259) → TER 0.20% p.a.
- iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) (IE00BDBRDM35) → TER 0.10% p.a.
A 60/40 portfolio would have a TER of 0.16% (60% * 0.20% + 40% * 0.10%), even with the hedging costs of the Bond ETF, better than the 0.25% of Vanguard mixed ETF.
Note: I would prefer a MSCI Word ETF than a MSCI ACWI ETF, although the MSCI ACWI has more diversified World exposure (it includes Emerging Markets).