Core ETF portfolio

Question

Hey fellow Pearlers, 
This is my first question and am new to this so apologies in advance :)

If a core ETF portfolio included NDQ and JNDQ (Covers Nasdaq 200), STW (Aus 200) and FANG to double down on Tech, what avenues could be explored to round out the exposure so that it is not as heavily reliant on the US / AU whilst not being a risk off asset such as bonds / cash.

VEU was one avenue explored but thought I’d turn to the Pearler Exchange and see what could be researched further as there is a wealth of knowledge worth tapping into out there…
Thanks all, keen to do some digging

Answer

Hi Kyle.

You’re correct in thinking that VEU would offer something different to what is covered there already.  Basically anything that’s non US and non Aussie would diversify.

So VEU for global ex-US, or VGE or EMKT for emerging markets, or maybe even a real estate index such as REIT or DJRE or GLPR.

There’s a lot to choose from, it depends really how much you want to add to your portfolio, more isn’t always better ;)

Answer

Hello and welcome to the Pearler community!

It’s great to see you’re thinking strategically about diversifying your investment portfolio beyond the heavy focus on US and Australian markets, particularly within the tech sector. Considering your current holdings in NDQ, JNDQ, STW, and FANG, you’re right to consider broadening your exposure to mitigate risks and enhance potential returns.

Since you’ve already looked into VEU, which offers broad exposure to markets outside the US and Canada, here are a few other avenues you might explore to diversify your portfolio:

Emerging Markets ETFs: Consider ETFs like VGE (Vanguard FTSE Emerging Markets Shares ETF) or IEM (iShares MSCI Emerging Markets ETF). These funds invest in a diverse range of companies located in emerging markets such as China, India, Brazil, and Russia. Emerging markets can offer growth potential, though they also come with higher volatility and risk.

Global Sector ETFs: If you’re interested in specific sectors that are not overly concentrated in the US or Australia, look into global sector ETFs. For example, IXJ (iShares Global Healthcare ETF) provides exposure to healthcare companies worldwide, diversifying sector-specific risks across different regions.

International Small-Cap ETFs: Small-cap stocks are often less correlated with global economic trends and can offer unique growth opportunities. ETFs like VISM (Vanguard MSCI International Small Companies Index ETF) provide exposure to small-cap companies across developed markets outside of the U.S.

Sustainable/ESG-focused ETFs: For a different approach, consider ETFs that focus on environmental, social, and governance (ESG) criteria. Examples include ESGI (Vanguard International Shares Global ESG Select Index ETF) and ETHI (BetaShares Global Sustainability Leaders ETF). These not only offer geographical diversification but also align with sustainable investment principles.

Real Estate Investment Trusts (REITs) ETFs: To diversify away from standard equities and tech-heavy investments, consider global REIT ETFs like DJRE (SPDR Dow Jones Global Real Estate ETF). This can provide exposure to international real estate markets, offering a different type of asset class diversification.

By exploring these options, you can balance your portfolio more effectively, reducing dependence on any single market or sector. Each of these ETFs provides a way to access different geographical regions and sectors, potentially smoothing out returns and reducing overall portfolio volatility.

Remember, while diversifying, it’s crucial to align your investment choices with your overall financial goals, risk tolerance, and investment horizon. Pearler’s platform can facilitate your investments in these ETFs, allowing you to manage and monitor your portfolio efficiently, supporting your passive investing strategy while also letting you explore more active interests in specific markets or sectors. Happy investing and enjoy your journey with Pearler!

You can find out more about this topic here: Should Long Term Investors Buy Specific Companies

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

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Kyle

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Dave Gow - Strong Money Australia

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