New to Trading 212- Pie Advice

šŸ„§ Pies & AutoInvest
1

Hello trading 212 community,

Im new to investing and have put together a first draft pie. With my inexperience I have no idea if there any issues with it.

For context, Iā€™m looking to invest for around 20 years and (to begin with) invest in equities. Iā€™ve tried to create a low cost pie that covers most of the world.

Please pass on your thoughts!

65% Vanguard S&P 500 Accumulating
15% Vanguard FTSE developed Europe
10% ishares core MSCI emerging markets IMI
5% Vanguard FTSE developed Asia ex Japan
5% ishares MSCI Japan

Go easy on meā€¦.

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2

You might be better off with just a single, low TER World ETF.

You can explore here (no sign up) using filters.

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3

I agree.

If I could go back, I would start with just 2 or 3 holdings max , and the largest one (70-80%) would certainly be a global index tracking ETF: either VWRL / VWRP or FWRG / FTWG.

This is because there is no guarantee that the S&P 500 index will continue to outperform global indexes like FTSE All-World for the next 10, 15 or 20 years. A safer option.

That said, I LOVE THE S&P 500 !!!

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4

Thanks for your suggestions Jedi. The reason I have allocated as I have is it seems (unless I have miss calculated) that splitting the world into 4-5 funds has a lower TER than a full world fund.

With your suggestion of 70-80% in a pre made global fund what would you partner it? As you have most mid and large cap stocks covered I would imagine

5

Thanks Philby,

Assuming I have calculated correctly this allocation of funds has a lower TER than the Pre made world funds.

Big thing here isā€¦. IF I have calculated correctly

6

Have you considered how often you might want to rebalance?

FWRG/HMWO/VWRP are worth the fees for the simplicity imo.

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7

I did some basic maths on this once, though using only VG ETFs. If I remember rightly, it was actually more expensive to hold separate ETFs when you consider the total cost of ownership.

The TER doesnā€™t include transaction costs, for example.

The sweetspot cost-wise was holding developed and emerging market ETFs, eg VHVG and VFEG.

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8

Hi Topher,

Thanks for response and advice.

I looked at calculating a weighed ongoing charges for this pie and worked it out to be 0.092 (assuming you do this by multiplying the ā€˜ongoing chargeā€™ by the % allocation and then adding each weighted ongoing charge together to give you the cost of all the funds combined).

The two quoted funds have higher ongoing charges than this at 0.12 and 0.22.

Can you tell me more about transaction costs? I have seen these referenced in Key Information Documents but donā€™t fully understand them yet. How are they calculated? And are they visible on the trading 212 platform?

Thanks for your help

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9

Hi Dougal,

I had planned to rebalance maybe once every two months?

Are there any drawbacks to rebalancing?

Thanks for advise

10

No worries.

Transaction costs are not easy to find. AJ Bellā€™s website used to show them but it no longer did the last time I checked.

Vanguard lists them in this document which will give you an idea.

11

A global tracker does the splitting and balancing for you, the split is built in the index itself. I recommend you take a look at the details of the 8 ETF discussed in this guide here: https://www.justetf.com/uk/how-to/invest-worldwide.html

Also, without a deep knowledge of markets and stocks, those percentages are very much random. Like rolling a dice or throwing darts blindfolded at the financial page of the local newspaper (semi-quote). No offense, I do throw darts myself, and occasionally I pick the right stock or fund :stuck_out_tongue: one of my lucky darts was BRK.B, the oldest and largest holding in my portfolio.

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12

As I understand you are trying to create your own all world pie with a cheaper OCF?

Have you back tested the performance drift / how often would you check an index to rebalance?

https://www.portfoliovisualizer.com/backtest-portfolio

I get 8.8% average return back testing.
MSCI World gives 9.3%
FTSE All World gives 8.3%

Would you consider adding something the all world indexes might be missing - private equity/growth capital?

https://www.theaic.co.uk/aic/find-compare-investment-companies?sec=PE&sortid=SPTR10Y&desc=true

13

Hey Luke, did you set up your all-ETFs pie?
Just curious to know how it will look like :slight_smile:

Here is a very interesting discussion on a bogleheads style portfolio, including a proposal with two main options and several possible variants: The World of ETFs

Iā€™m looking for approaches and blueprints for all-ETFs pies to fit into my portfolio, as Iā€™m not taking for granted that the one-ETF approach is the best for me on the long term (or even in the short term).

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14

Could you please elaborate further on what you are trying to achieve? Thanks

15

More than half of my portfolio on T212 is allocated to dividend equities. There are risks associated with holding a bunch of BDCā€™s and other high income/low growth stocks, and I am changing the tilt of the dividend side of the portfolio to mitigate the risks. Mainly, Iā€™m

  • Building a covered call strategy bucket (and pie), to partially address the downwards volatility risk
  • Pulling together a balanced core set of dividend ETFs, funding it mainly with the income from the high income stocks.

The covered call strategy funds can only be QYLP and XYLP, this is the easy decision. The question is: what dividend ETFs should be part of the core set? Ideally, a blend of growth and income, and diversification is a must. Still looking for ideas :slight_smile:

16

Iā€™ll be upfront with you @Jedi_Investor, by saying that I am not an expert on this subject; however, I did some digging and found an interesting YouTube channel and related video (see link below)

Apparently, investments like QYLP and XYLP are most suitable for someone trying to maximise cash flow rather than preserving the future value of the investment. Moreover, this seems to be more suited for investors already starting from a large amount of cash, which might be your situation.

In a nutshell, it looks like if you are okay with the idea that your potential Ā£100,000 investment might be worth less in 10 or 15 years, but youā€™re getting a good cash flow now, QYLP and XYLP might work for you.

That said, according to what I have found so far, while these investment vehicles could work, you could also consider a DIY approach with something like QQQ. By buying QQQ and selling covered calls yourself, you have more control and could generate more income than sticking to QYLP and XYLP. Apparently (however, I cannot vouch for it), this method should not require much more effort than just buying QYLP and could give you nearly double the cash flow, or you could tailor it to your needs and risk tolerance.

Ultimately, QYLP and XYLP are best suited if you want something hands-off. However, with a bit of effort, you might be able to achieve better results by managing a covered call strategy yourself. According to this YouTuber it shouldnā€™t take more than 5-10 minutes a month, and as a consequence, it could significantly boost your cash flow compared to relying solely on these ETFs.

I will be honest with you by saying that I am taking a deeper dive into the world of covered calls, and hopefully, I will be able to learn more. In the meantime, I would appreciate it if anyone with more knowledge could chip in.

I might have a few ideas regarding the rest of your strategy and pulling together a balanced core set of dividend ETFs. However, confirming that you intend to trade on the LSE in GBP would be helpful before moving forward.

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Thanks for sharing the YouTube channel and your thoughts, much appreciated.

It will take me some time to get my head around all this, the angles are very different from my default one and thereā€™s a deep knowledge gap Iā€™m still working on.

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18

The Average Joe has published quite a few videos on Global X covered call strategy ETFs, all showing what you are likely to get in 10-15 years is. Basically, a steady monthly income at the price of a massive loss of value of the invested capital, some sort of annuity substitute for income oriented investors. The very opposite of capital accumulation.

Although QYLD is the best performer of the Global X covered call ETF family, it turns out to be quite a niche instrument, more suitable for retirees without heirs or as a pocket money generator for rich investors.

The point about directly selling call options is certainly a valid oneā€¦ A bit of a ā€œnext levelā€ from where I am now, something to work towards. Again, thanks for your response, very instructive.

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