Diversification & Overlap concerns

Hello! It’s great to hear that you’ve started investing and are considering diversification for your portfolio. Diversification is key in managing risk and achieving a balanced investment approach.

Since you already own VAS (which tracks the ASX 300), VOO (which tracks the S&P 500), and VEU (which provides exposure to stocks from developed and emerging markets outside the U.S.), you have a solid foundation in equities across different geographic regions. To further diversify, you might consider adding bond ETFs or sector-specific ETFs, depending on your investment goals and risk tolerance.

Bond ETFs: Adding bond ETFs can provide income and reduce portfolio volatility. Some options include:
– Vanguard Australian Fixed Interest Index ETF (VAF): This ETF provides exposure to high-quality, income-generating securities in the Australian market.
– iShares Core Composite Bond ETF (IAF): This offers diversified exposure to the Australian bond market, including government and corporate bonds.
– SPDR Bloomberg Barclays Global Aggregate Bond ETF (WBND): For global bond exposure, WBND includes a mix of government, corporate, and securitized bonds across multiple countries.

Sector-Specific ETFs: If you’re interested in specific sectors that may offer growth opportunities, consider sector-specific ETFs such as:
– Global X Lithium & Battery Tech ETF (LIT): Focuses on the lithium mining and battery production sector, which is pivotal for electric vehicles and renewable energy storage.
– BetaShares Global Robotics and Artificial Intelligence ETF (RBTZ): Invests in companies worldwide that are likely to benefit from increased adoption of robotics and AI.

Diversified ETFs: Since you mentioned being new to investing and the challenge of dealing with overlaps, a diversified ETF could simplify your portfolio management. The Vanguard

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Hi Miranda.

Great question. To be perfectly honest, you already have a completely diversified portfolio with thousands of companies all around the world. So there’s not really much to add in the shares/ETF universe that isn’t doubling up somehow.

You’ve actually done what most people cannot – built a simple, low cost, well diversified portfolio that you can simply add to over time and grow your wealth in a low fuss manner. Too many people overcomplicate it, when the main building blocks are where all the action happens.

Adding bonds is basically like adding cash. That can make sense if you would like to reduce the volatility of your portfolio. Keep in mind this comes at the expense of long term returns.

I wrote about bonds a bit in this Q&A article (down the page), which you might find useful: https://pearler.com/explore/learn/blog/septem...

If it was me, I would keep it as is and enjoy the simplicity :)

All the best.
Dave