Can you please comment your thoughts on this pie?
If this is your only unvestment then I would say it it too heavily weighted to US tech stocks.
I agree. I guess iShares and Invesco are almost same type of companies.
I might be wrong but isn’t EQQQ a shorting ETF? Feel like setting up an auto-invest into something like that might be dangerous - aren’t they recommended to be held 1 day only?
I think TQQQ and SQQQ are for the day trading. But I don’t know I’m new into this as well.
I think the triple Q is the clue here and if you look at the name, it says NASDAQ**-100**. Not sure if the dash is a minus symbol but I don’t invest in ETFs so hopefully @chantal or @Richard.W can shed some light.
EQQQ is not a shorting ETF, it’s just the UK version of QQQ. held it myself for a few years and has outperformed S&P 500 for quite a few years now.
Great thanks for confirming. Is it simply a NASDAQ tracker?
yes, with reasonable fees too.
@trader787 I’d like to know your thoughts on the pie as well.
This unless that is your intent. It would be good if there was a website out there or something, that would show you your portfolio weightings by means of a look through to drill down into the underlying investments.
hmmm not sure about this.
I would go CSP1 - an iShares S&P500 ETF @ 0.07% OCF. I also think the tech rally has slowed, so I would maybe remove EQQQ for the time being considering it’s also 0.30% OCF. I will be adding EQQQ back into my PIE at a later date as I believe the tech stocks will never stop innovating.
Ill share my pie with you in terms of ETFs
|iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc)||EMIM||IE00BKM4GZ66||EM||0.18%||USD||22.00%|
|iShares Core MSCI Japan IMI UCITS ETF||SJPA||IE00B4L5YX21||JAPAN||0.15%||USD||10.00%|
|iShares Core S&P 500 UCITS ETF (Acc)||CSP1||IE00B5BMR087||US||0.07%||USD||45.00%|
|Vanguard FTSE Developed Europe ex UK UCITS ETF Distributing||VERX||IE00BKX55S42||EUROPE||0.11%||EUR||13.00%|
|iShares Physical Gold ETC||SGLN||IE00B4ND3602||GOLD||0.15%||USD||10.00%|
There is also a site where you’re able to put the ISIN numbers and allocation in…to see your weighting this is mine using the site…ill dig out the link
Nice infographics. What site is this?
I would say it’s OK but as others have mentioned maybe not quite diverse enough and too much ‘Apple’ & ‘Microsoft’ type reliance. Similar to mrpbennet portfolio you could add some UK, Europe, or Emerging Markets in there or even gold to get more diversification to offset the US tech. something like this…
<something else like gold or add to one above 10%>
finally found it -
You need the ISIN numbers.
I don’t really see the point of doing a pie with different products roughly containing the same US tech stocks… I might miss something though.
I mean there’s nothing wrong being heavily US tech oriented (if this is what you want) but in that case, you should stick with the cheapest related ETF and that’s about it. (dunno which of the tech ETFs has the lowest maintenance costs - look on justETF.com)
Just my 2 cents about it
This might help…this was an article in IC about the top 50 core ETFs for 2020. I have copied and pasted the article.
By Dave Baxter
UK EQUITIES (FOUR ETFS)
Mass dividend cuts and a slumping oil price have seen UK equities suffer more than most this year, with the FTSE All-Share losing around 17 per cent of its value in the first five months of 2020. But investors still have good reason to focus on their home market, from seemingly cheap valuations to a sense of familiarity and the convenience of holding sterling assets. A lingering home bias means that many investors start here before focusing on other equity regions.
A flagship offering from ETF giant iShares, this remains a firm favourite among our panel of experts. The fund had £7.9bn in assets at the end of May, making it extremely liquid for those looking to trade in and out. This liquidity results in a low bid/ask spread which, combined with the ETF’s annual fee of just 0.07 per cent, translates into an extremely low total cost of investing. The ETF can also generate some extra returns via securities lending.
Because ISF is a distribution share class, investors will receive those dividends generated from the FTSE 100, with the shares on a dividend yield of 5.5 per cent at the end of May. But remember that, as with some other names in the list, dividends and those companies that pay them are under severe pressure.
Lyxor Core Morningstar UK, which entered the list last year, continues to showcase its original merits. While ISF focuses on the largest UK-listed companies, this product tracks the broader market. The index it uses, Morningstar UK, focuses on the large- and mid-cap segments of the market, with around 320 holdings.
This ETF continues to impress us on price, charging just 0.04 per cent and coming in much cheaper than a FTSE All-Share tracker. Having only launched in 2018 it remains fairly small, with just £37m in assets. But this product could achieve greater scale in future thanks to its eye-catching price tag.
Some of our panel had issues with this ETF, given that elements of the FTSE All Share index can be difficult to track and cheaper forms of sources of UK exposure, such as LCUK, are available. But we have retained it in our list for those investors familiar and comfortable with the All Share as a play on UK equities.
Investors get exposure to a broad range of UK equities, taking in the FTSE 100, FTSE 250 and FTSE Small Cap indices. This ETF’s underlying index contained nearly 600 stocks in early June. FTAL is of a reasonable size, with around £500m in assets, and has an ongoing charge of 0.2 per cent that remains competitive among those tracking this market.
New: L&G UK Equity UCITS ETF (LGUK)
Investors who want to add an environmental, social and governance (ESG) twist to their UK exposure without deviating too drastically from the market might consider this L&G ETF, which tracks the Solactive Core United Kingdom Large & Mid Cap index.
In order to sit in this index, companies must meet certain liquidity requirements and refrain from engaging in areas such as pure coal mining and the production of controversial weapons, as well as not breaching the UN Global Compact principles – global standards covering human rights, the environment and corruption.
Like some other ESG products, this fund is not currently as large as we would like. However, it only launched in late 2018 and could see an uptick in growth, given its mainstream ESG focus and a highly attractive 0.05 per cent charge.
US EQUITIES (THREE ETFS)
US equities have outpaced other stock markets for several years and the coronavirus crisis has done nothing to stop that so far. It is also a region that has tended to reward passive investors: the efficiency of the US market, and the difficulty of establishing overweight positions in the big tech firms that already make up a large part of the index, has made this a harsh environment for active managers. While such trends may not last forever, we believe this is an area where ETFs can really stand out.
This well-established iShares offering remains a popular core holding among our panellists because of its liquidity and low costs. With around $36.5bn (£29.1bn) across its various share classes in late May, it provides a very liquid route into the S&P 500, one of the main US markets and a home to the tech giants that have generated huge returns in recent years. The ongoing charge comes to just 0.07 per cent.
Currency fluctuations can have a significant impact on the end returns from overseas investments, and this is a risk worth monitoring when it comes to US equity exposure. With sterling likely to remain volatile as we move through the Brexit process, investors may wish to offset these moves.
The vast majority of our panellists continued to back this option. The Xtrackers ETF continues to stand out, in part because it has a ‘dynamic’ strategy that involves hedging continuously, rather than daily or monthly as other products tend to do, meaning currency fluctuations are mitigated more thoroughly.
New: Invesco S&P 500 ESG UCITS ETF (SPEP)
This ETF may appeal to investors who wish to build a more ESG-friendly portfolio without deviating too drastically from traditional markets. Invesco S&P 500 ESG still gives investors exposure to some leading companies in the market, from the FAANG stocks to Microsoft (US:MSFT) and Visa (US:V) , but it also comes with a light ESG overlay. The index tracked by this ETF excludes companies involved with tobacco and controversial weapons, as well as businesses with a low United Nations Global Compact score and those in the bottom quartile by S&P Dow Jones Index ESG Score. The fund comes with a fairly competitive ongoing charge of 0.09 per cent.
GLOBAL EQUITIES (THREE ETFS)
As appealing as it can be to pick (or avoid) specific geographical regions, some investors prefer the simplicity of using a global equity tracker. This can provide a straightforward and diversified source of returns – but those simply using a global tracker as a core holding should be wary of duplicating positions with any fund or stock picks elsewhere. US equities, in particular, make up a large chunk of global indices, creating a risk of overlap.
HSBC MSCI World UCITS ETF (HMWO)
This ETF continues to appeal as a highly reliable global equity core position. With a 0.15 per cent charge and notable assets, this is a cheap and easily traded source of exposure to the most well established global equity index.
Rival offerings have failed to dislodge this entrant so far: iShares offers its own large, liquid global equity ETF, but this comes at a higher price of 0.2 per cent, and some investors may wish to diversify away from the market’s biggest provider, where they can.
With US equities making up a significant portion of the MSCI World index and plenty of other overseas stocks included, investors again run the risk of currency fluctuations distorting their end returns. It can be worth paying a little extra to manage this risk at a time of lingering uncertainty for the UK economy (and currency).
For those who wish to hedge out such risks, this remains a reliable option. Large, liquid and with a reasonably low cost of 0.3 per cent, iShares Core MSCI World retains the backing of our panel.
New: iShares MSCI World ESG Screened UCITS ETF (SAWD)
As with our other core ESG picks, this ETF was highlighted as a way to get cheap, simple market exposure that applies an ESG tilt without deviating too drastically from conventional indices.
The fund’s underlying index screens out exposure to controversial weapons, tobacco, thermal coal and nuclear weapons, among other areas. But the fact that it relies on a light ESG screen means it retains “all the core benefits of a global tracker”, one panellist adds. Investors are also not compromised on cost: the ETF has an ongoing charge of 0.2 per cent, the same fee levied on its non-ESG equivalent.
As with our US ESG pick, this fund retains exposure to some of the big tech names that have driven returns. For those with qualms about any of these companies, it is worth remembering that plenty of funds do avoid some of these stocks as part of ESG processes. As such, an active fund or a passive with a more stringent ESG process may be a better fit for some.
JAPANESE EQUITIES (THREE ETFS)
Often further from investors’ thoughts than the previous categories, Japan is worth consideration in part because its corporations are making a slow but steady move towards a more shareholder-friendly approach, with dividends among the areas designated for ongoing improvement. Japan also acts as a gateway to growth, through its dealings with expanding economies in Asia and its own innovation in areas such as robotics.
Like many of our core equity ETF picks, this iShares product has caused no real discord between the panellists. Still large and liquid with nearly $3.5bn in assets, the fund is now even cheaper than when it featured in last year’s list. Its ongoing charge comes in at 0.15 per cent, down from 0.2 per cent when our last list was published.
The fund’s underlying index, MSCI Japan Investable Market Index, is well diversified, with nearly 1,300 holdings, covering almost all of the country’s market. It features some globally established names in its top positions, from automaker Toyota (JPN:7203) to Sony (JPN:6758), manufacturer Keyence (JPN:6861) and the Softbank Group (JPN:9984) conglomerate .
New: Lyxor Core MSCI Japan UCITS ETF GBP Hedged (LCJG)
As one panellist noted, investors have limited options when it comes to Japanese equity indices. The Nikkei 225, for example, can be heavily weighted towards its 10 largest constituents, leaving investors overly exposed to the fortunes of a handful of companies.
Looking for a sterling-hedged ETF can further limit your options, but one name highlighted by some panellists was Lyxor Core MSCI Japan. The underlying index is more concentrated than SJPA’s, but still fairly broad, capturing the performance of the large- and mid-cap segment of Japan’s equity market. It covers around 85 per cent of the market and included 321 companies at the end of May.
This is an attractively priced hedged ETF, with an ongoing charge of 0.2 per cent, and its daily hedging process means you are consistently adjusting for currency moves. It had just shy of £600m in assets under management at the end of May, suggesting ample liquidity, with one panellist expecting this product to grow further.
New: L&G Japan Equity UCITS ETF (LGJG)
Strictly speaking, L&G Japan Equity is not a new entrant on our list, but it does enter our core category as a ‘light’ ESG option. This ETF’s underlying index,Solactive Core Japan Large & Mid Cap, is similar to the MSCI’s index in giving you fairly broad exposure. The Solactive index covers around 85 per cent of the market.
But the index also applies some limited ESG screening, shunning companies involved in pure coal mining or the production of controversial weapons such as cluster bombs, as well as those deemed to have breached at least one of the UN Global Compact principles. Having only launched in 2018, the ETF has already built up a decent level of assets and has a reasonably low ongoing charge of 0.1 per cent.
As with our other ESG options, this could serve as an alternative to one of our other core names.
EUROPEAN EQUITIES (THREE ETFS)
With plenty of European economies facing deep-seated issues and even Germany narrowly avoiding a recession in 2019, this region was out of favour long before the coronavirus crash engulfed markets. But investors would do well not to write it off – Europe is still home to plenty of world-leading businesses and can sometimes produce surprisingly good returns.
Like other mainstream markets, it can be accessed easily and at low cost via ETFs. However, investors looking for the benefits of a good stockpicker should not rule out the merits of a more expensive active approach.
The first appearance from index-tracking giant Vanguard in this year’s list, this ETF offers broad exposure to European equities, with 479 stocks in the underlying index at the end of April. With $1.2bn in assets, it remains a substantial, highly liquid play on European stocks.
The ETF does have some competition from iShares, among others, but still looks attractive on price. VERX comes with an ongoing charge of 0.1 per cent, compared with a 0.12 per cent fee on iShares’ MSCI EMU product, which also invests in a narrower range of stocks.
Panellists were divided both on whether to keep this name in the list and what the best replacement might be, with one suggesting we reintroduce a Eurostoxx 50 tracker to the top 50.
But we are sticking with iShares MSCI EMU as a hedged option, on the basis that it still offers a reasonably diversified level of exposure to a market with plenty of troubles, with around 250 holdings. Importantly, it also does this in a cheap and liquid manner.
New: L&G Europe ex UK Equity UCITS ETF (LGEU)
Once more we are including a ‘vanilla’ ETF with an ESG twist and an attractive price tag in this core category. This ETF has attracted a decent level of assets since its 2018 launch, with $95m across its different share classes in late May. Investors are again getting a fairly broad level of market exposure, with around 330 companies in the underlying index. On top of this, a level of ESG screening is carried out.
ASIA PACIFIC EX JAPAN EQUITIES (ONE ETF)
Much like emerging market stocks, Asian equities give you a stake in companies from some of the world’s fastest-growing economies, provided you can stomach the risks. But anyone building a globally diversified portfolio should be aware that Asia and emerging market indices (and funds) can experience a high level of overlap – something we take into account with the recommendation below.
This ETF continues to justify a spot in the list in large part because of where it invests. The index tracked by this fund had a 57.8 per cent allocation to Australia at the end of May, with smaller weightings in Singapore and New Zealand. This clearly differentiates it from funds and indices with substantial exposure to emerging markets, and should add a level of diversification to our core picks. It is also a large, liquid ETF with a reasonable ongoing charge of 0.2 per cent.
EMERGING MARKET EQUITIES (TWO ETFS)
Emerging market equities have had a disappointing decade, with the region’s main index tending to trail other regions by returns. But investors might still be tempted to make a small core allocation here, given the prospect of corporate improvements and the enduring appeal of exposure to high-growth economies.
Our inclusion of an ESG product in this year’s list could give investors a more defensive play on emerging markets, because ESG metrics often reward ‘quality’ companies with good governance. These could well prove less exposed to the ups and downs of volatile markets.
Tracking the most established emerging markets index, this ETF promises broad exposure to the region for a fee of 0.18 per cent. A variety of high-growth economies are prominent here: China made up around a third of the index at the end of May, with Taiwan, South Korea, India and Brazil among the other major regional weightings.
Investors might recognise some of the index’s biggest constituents, from South Korean smartphone maker Samsung (SK:005930) to Chinese tech giants Alibaba (US:BABA) and Tencent (HK:0700) . With some $13bn of assets in the fund, it remains highly liquid.
An ESG-minded version of the above ETF, this product’s underlying index screens out exposure to areas including controversial weapons, tobacco, nuclear weapons and thermal coal. The fund is smaller than its more mainstream counterpart, but still has around $600m of assets, and should prove sufficiently liquid. It has the same ongoing charge.
Investors should note that some ESG approaches will prove more defensive than their mainstream counterparts in volatile times, although they may also fall behind in rising markets. This is the case here: this ETF suffered less than its mainstream counterpart in the coronavirus sell-off, but has rebounded less sharply since markets began to recover in April.
BONDS (FOUR ETFS)
Long viewed as overvalued and vulnerable to a whole range of risks, the bond market has again been vindicated as a diversifying asset class in the coronavirus sell-off. Government bonds protected investors when equity markets sold off heavily earlier this year, and while some corporate bond ETFs saw their shares trade at a discount to the value of underlying assets at the height of the volatility in March, this was the closest the ETF sector came to the existential crisis often loudly predicted by its critics. Such discounts, which relate to scarce liquidity in the bond market itself at moments of stress rather than problems with the ETFs themselves, disappeared once calm was restored.
As such, it is worth considering some core fixed-income positions in any diversified ETF portfolio. But because equities drive the bulk of long-term returns and many investors prefer a more selective approach to fixed-income instruments, we continue to run a relatively tight list of preferred bond ETFs.
A long-standing constituent of the list, this Lyxor ETF keeps its place for another year. The FTSE Actuaries UK Conventional Gilts All Stocks index tracks a variety of UK government bonds with different levels of duration, or sensitivity to interest rates.
Like many passive bond products, this ETF has a high level of duration, which came to an average of 12.94 years in late May. The greater the duration, the bigger losses a bond can make when interest rates rise. With interest rates falling this has boosted returns, but it is important to know it could be vulnerable if interest rate do eventually rise. Many active bond fund managers tend to keep a tighter grip on duration.
Importantly, the recent sell-off suggests that broad exposure to UK government bonds remains a good way to offset falls in equity markets. This ETF is a low-cost option, with a 0.07 per cent charge and strong liquidity.
New: iShares £ Index-Linked Gilts UCITS ETF (INXG)
Predicting the outlook for inflation has often seemed impossible, and you should never base your entire investment strategy around just one possible future outcome. But there is a plausible argument that the substantial fiscal stimulus carried out in response to the coronavirus could, in the medium term, see an uptick in prices – something that tends to be problematic for bonds.
With this possibility in mind we have introduced an ETF that gives investors access to inflation-linked gilts, or UK government bonds that adjust their interest payments in line with inflation. This is a large and cheap option, with a charge of 0.1 per cent. But investors concerned about an eventual hike in interest rates should remember that index-linked bonds do tend to have high levels of duration.
The panel continues to rate this as a good source of broad, sterling-hedged exposure to global bonds. The ETF is invested across a broad swathe of the fixed income universe, with nearly 5,500 bonds in the underlying index in late May. Around half of the fund’s assets are in US government bonds, with money also allocated to corporate bonds in a variety of sectors. The ETF is extremely large and liquid, with a 0.1 per cent charge.
As noted in our introduction, large corporate bond ETFs such as this iShares offering saw their shares trade at a notable discount to the stated value of underlying assets when volatility tore through markets in March. But such ETFs have otherwise weathered the crisis well, and this option continues to stand out when it comes to size and liquidity.
Investors get access to a reasonably broad array of investment-grade bonds, but it is worth noting that around half of the fund’s assets are in BBB-rated bonds. This is the riskiest part of the investment grade sector, and vulnerable companies could well see themselves downgraded to ‘high yield’ status as the coronavirus crisis continues to bite, hurting returns.
Panellists would still like to see this ETF charge less than its current 0.2 per cent fee, but conceded that few offerings that can compete with it in terms of size for the time being.
Hi my 2cents
There is nothing wrong with being overweight on a region industry or sector. Diversification for the sake of diversification kills profits. As long as you are aware that you are overweight on US and tech stocks it is ok.
There is no point in pouring in FTSE100(for example) into your investment strategy when brings a dead company like NatWest. No point buying a generalised EU or Germany tracker when it invests your money into a dead company like Axel Springer.
good point, I think it comes down to risk, a concentrated portfolio is more risky and can give bigger profits or losses. OP needs to think about risk when building any portfolio. (salary, age, goals etc come into play)
In all honestly my issue with it is your pretty much only using ETF’s and unless you’ve done your research there is going to be a chunk of companies in there that you have zero idea about…
When the covid crash happened one of the things I noticed was just how hard the ETFs crashed simply because of the mass of rubbish companies that are packed into them…
With the exception of the world and S&P 500 etfs I would go through the others and look at what you actually want to invest in…
try to be a bit more focused…