As a core investment, the $IWDA (-0.02%) makes perfect sense, no question. Now opinions are divided on other (niche) ETFs and there are some emotional discussions XD ... What about the $WSML (-0.38%) ETF? Does it make sense as a supplement to savings or not? Keyword: Is it better to look for small up-and-coming companies yourself and invest in a targeted manner (time expenditure/benefits)?

Dear Community,

Yesterday you were able to help me quickly and effectively. I sold the tiny positions $MATIC (-1.64%) with a considerable loss and $ETH (-0.96%) with a small profit and set up a weekly savings plan on $BTC (-1.14%) set up a weekly savings plan.

In order to simplify and streamline the portfolio even further, I now have the following question for you...

To help you understand my portfolio better, here is a brief explanation:

The main portfolio (currently approx. 150k) is a core-satellite portfolio with 56% $IWDA (-0.02%) , 20% $GGRP (-0.01%) , 12% $WSML (-0.38%) and 12% $XMME (-0.09%) .

With just under 20k is still the $CSPX (+0.07%) in the portfolio.

I have also been holding a separate div growth portfolio (currently approx. 34k) with these stocks for some time:

$MMM (+0.9%) approx. 1500€

$MSFT (+1.04%) approx. 1400€

$ABT (+0.61%) approx. 3300€

$JNJ (+0.63%) approx. 2800€

$PEP (+0.03%) approx. 2700€

$PG (+0.58%) approx. 3300€

$TDIV (-0.49%) approx. 3900€

$WQDS (-0.2%) approx. 3850€

$FGEQ (-0.21%) approx. 3800€

$VWRL (-0.03%) approx. 3750€

$FUSD (-0.35%) approx. 3750€

I save the ETF fraction constantly, nothing should or will change.

I'm just wondering how I should structure the ratio of individual stocks from now on. Should I increase all individual stocks to 5000€ per position or all stocks except Microsoft to 6k? Any other suggestions or ideas? If I simply leave the individual stocks untouched, the money would go into the div ETFs in tranches.

Total TER at 0.22 (which is quite acceptable for me) - and the overlaps are known and also okay for me 😄

Once again, thank you from the bottom of my heart and have a nice rest of Sunday 😎

Best regards

EvD

Part 5 - Size... does matter?! (Small/mid-Cap & Growth ETF)

The series continues Friends,

Reading time: 8-10 minutes

Disclaimer: No investment advice or recommendation, this article is for information purposes only. Before you decide on an ETF, take a closer look at it in terms of positions, sampling, regions, etc. I can't describe everything here as it would go beyond the scope of this article

Part 1 (Definition, Categories & Z-Score and Quality Factor): https://getqu.in/RCSY4a/

Part 2 (Value ETF): https://getqu.in/Nfnhqb/

Part 3 (Low Volatility ETF): https://getqu.in/Ub7KpG/

Part 4 (Momentum ETF): https://getqu.in/CNMgGw/

What are Growth and Small Cap ETF?

Growth ETFs place a special focus on the growth of the company. This growth is usually represented by an increase in earnings per share, price/earnings ratio and sales per share over time. Growth ETFs generally take into account both past and expected future values. In other words, unlike the value premium, the focus is not on stocks that are as undervalued as possible, but on those that are showing strong increases in their profits or sales.

Small cap shares are defined by their market capitalization. This is determined by multiplying the number of shares in a company by the share price. Depending on the resulting value, the shares are classified as small, mid or large cap. These limits change from time to time (even the best-known small-cap index, the Russel 2000, sometimes contains stocks with a market capitalization of around USD 10 billion), but the following general rule still applies:

• Small cap: < USD 2 billion
• Mid Cap: 2- 10 billion USD
• Large Cap: > 10 billion USD
• Mega Cap: > 200 billion USD

Relative classifications are also frequently used due to the rapidly aging boundaries. The Vanguard Mega Cap ETF, for example, is based on the CRSP US Mega Cap Index, which is based on the top 70% of companies with the highest market capitalization in the USA. Growth and small-cap ETFs often have a similar stock selection, as it is easier for smaller companies to show strong growth. For example, if Amazon wants to achieve 10% growth in sales per year, it would have to grow by around USD 60 billion each year (double SAP's total annual sales).

Why invest in small-cap or growth?

I'm going to take the liberty of making an excursion into portfolio theory here, a bit of a number crunching, but it's worth it for the sake of understanding.

The original capital asset pricing model (CAPM) was developed in the 1960s and serves, among other things, to reflect a risk-adjusted expected return on the portfolio.

The expected portfolio return is calculated as follows: Rp = Rf + Beta x (Rm ./. Rf)

Where: Rp = return on portfolio/security, Rf (risk-free interest rate), beta (beta factor of the portfolio/security) and Rm = expected market return

Beta simplified (portfolio volatility divided by overall market volatility), or can be found on equity analysis websites (yahoofinance,..)

Risk-free interest rate = usually government bonds (e.g. 10-year federal bond) or can be obtained from auditors (https://www.dhpg.de/de/newsroom/blog/basiszinssatz)

Example:

Expected return of MunichRe

Beta 5j = 0.85 (less volatile than the overall market)

Risk-free interest rate = 2.5

Expected market return = 7%

Rp = 2.5 % + 0.85x(7%-2.5%)

Rp = 6.33 %

MunichRe's expected return is therefore - as it is less volatile - 6.33% p.a.

In fact, MunichRe's past return over the last 5 years was approx. 13.5% p.a.

This represents a risk-adjusted outperformance (alpha) of almost 7%.

... or to put it another way, the CAPM is perhaps not really suitable for deriving a return expectation here, as only one single factor is included as a risk premium: beta.

The deviation of the market return is established in the CAPM only via the beta and thus via the volatility as the only risk criterion, the so-called > systemic risk <. Dies ist bewusst der Fall, da die – durch Studien gestützte – Annahme getroffen wurde, dass > unsystemic risks < would be diversified away in portfolios, so that only the systemic risk would remain in the overall context. However, the CAPM was often not suitable for explaining market movements, which is why it was developed further.

The Fama-French model / birth of smart beta investing

Eugene Fama and Kenneth French - two names that send a shiver down the spine of every business economist - also recognized the insufficient validity of the CAPM model in explaining returns and extended the model by 2 factors, which made it possible to explain significantly more price movements (90% of the previous 70%). The extension was based on 2 observations:

- Size-Premium: smaller companies tend to achieve higher returns than large companies

- Value premium: companies with a low price-to-book/earnings ratio tend to generate higher returns than companies with a high kbv/kgv.

The CAPM has thus been extended: Rp = Rf + Beta x (Rm ./. Rf) + smb +hml

Smb = small minus big (market capitalization / size premium)

Hml = high minus low (kbv/kgv / value premium)

In addition to the volatility premium, size and value premiums are also integrated in the model. In the MunichRe example, for example, a value premium would have brought the expected return closer to the actual realized return.

There are always discussions as to whether there are other - significant - premiums such as a liquidity premium, e.g. for private equity, with which a higher return is to be priced in as the money is not available.

Working out these "premiums" is the basis of many smart beta investing approaches (quality, dividend & value = value premium, growth and small-cap = size premium, low volatility = volatility/risk premium).

Why should we now invest in small-cap and growth?

Because there is a size premium - historically observed & proven by studies - that allows us to potentially outperform the market. Since growth often goes hand in hand with size, this also applies here, even if a purely growth-based approach has historically not been able to achieve any consistent excess returns, but has repeatedly done so in certain market phases.

Historical size premium

There are various studies on the size premium by the major investment houses:

- VanEck, for example, has highlighted a long-term outperformance of small-caps compared to the world index or even compared to emerging markets. Interesting paper here: https://www.vaneck.com.au/globalassets/home.au/home/vaneck_whitepaper_global-smallcaps_fv3.pdf

- MSCI also confirms this with an observed outperformance of the MSCI World Small Cap Index of 2.69% p.a. compared to the MSCI World Index since 1998. They also see an outperformance especially after reviews. Over an investment period of 15 years, small caps have outperformed large caps in around 9 out of 10 cases, as measured by the respective MSCI indices. (https://www.msci.com/www/blog-posts/small-caps-have-been-a-big/03951176075):

- A very long study since 1900 shows that the size premium often comes in waves. The following chart for the US market shows an outperformance of the size premium with an upward arrow, underperformance with a downward arrow (https://www.finanztrends.de/russell-2000-vergleich-mit-dem-sp-500-fuer-sie-zusammengefasst/):

Recent performance of the size premium:

As can be seen in the last chart, the size premium has underperformed larger companies in the recent past. As we all know, the current high valuations are primarily driven by the large tech companies. These are the Magnificient 7 for the US market/world, 1/3 of the DAX performance this year has been driven only by SAP. (https://www.quoniam.com/artikel/comeback-small-caps/)

There are many reasons for the underperformance: Interest rate policy, short interest of smaller companies, market power of the big players, quality factor, etc.

Small caps are currently trading on historically favorable price/earnings ratios (https://www.quoniam.com/artikel/comeback-small-caps/, https://e-fundresearch.com/newscenter/193-dpam/artikel/52817-bewertungsdifferenz-zu-large-caps-chance-auf-doppeltes-alpha-bei-europas-small-caps, https://www.dasinvestment.com/usa-aktien-entwicklung-large-mid-small-caps/)

Conclusion:

Historically, small-caps have outperformed (partly due to increased growth prospects). In recent years (since the 2000s), however, they have underperformed, resulting in historically favorable valuations. If one believes in the validity of the size premium, there are favorable entry opportunities here.

Which ETFs are available?

There are significantly fewer ETFs for growth and the investment volumes here are still very low (around 1 billion total volume). For small caps, the selection is significantly larger and the investment volume in the ETFs is more than 10 times as high.

👉Size-ETFs:

- $WSML (-0.38%) (World | TER 0.35 % | Tracking Difference 0.06 % | EUR 5 bn invested volume | 3Y underperformance vs. MSCI World - 20 %pt | 5Y underperformance vs. MSCI World - 37 %pt)

o Index methodology: 15% of the lowest market cap

- $ZPRR (US | TER 0.30 % | TD -0.12% | EUR 5 bn invested | 3Y underperformance vs. S&P 500 -28 % | 5Y underperformance -58 %pt | 10Y underperformance - 180 %pt)

o Index methodology: 2000 smallest listed US companies

- $XXSC (+0.31%) (Europe | 0.30 % | TD n.a. | EUR 2 bn inv. vol. | 3Y underperformance vs. Eurostoxx 600 -22 %pt | 5Y underperformance - 21 %pt | 10Y outperformance + 14 %pt)

o Index methodology: 15% of the lowest market cap in Europe

👉Growth-ETFs:

- $IE0005E8B9S4 (+0.66%) (US | TER 0.19 % | TD n.a. | EUR 0.8 bn invested vol. | 3Y outperformance vs. S&P 500 + 12%pt | 5Y outperformance + 54%pt | 10Y underperformance - 50%pt)

o Index Methodology: First, the 1000 largest US companies by market capitalization are selected from the Russell 3000 Index to form the Russell 1000 Index. They are then weighted according to growth criteria:

(1) Price-to-book ratio (P/B): Companies with lower P/B ratios are favored.

(2) Medium-term earnings growth forecast: Based forecasts for 2-year earnings growth. Higher growth forecasts lead to a higher probability of inclusion.

(3) Sales growth per shareCalculated on the basis of historical 5-year sales growth. Stronger sales growth increases the chances of inclusion in the index.

- $IQQG (+0.86%) (Europe | TER 0.40 % | TD -0.09% | EUR 0.3 bn invested volume | 3Y underperformance vs. Eurostoxx 600 -4%pt |5Y outperformance +8%pt |10Y outperformance +20%pt)

o Index methodology: Index is based on the STOXX Europe Total Market Index (TMI). Stocks are analyzed based on six factors to determine their growth characteristics: (1) Forecast P/E ratio, (2) Trailing P/E ratio, (3) Price-to-book ratio, (4) Forecast earnings growth, (5) Historical earnings growth, (6) Dividend yield. Based on these values, a growth score is determined for each share and the 40 best are included in the index. The weighting is also based on the growth score (maximum 15%).

- $EL4C (+1.25%) (Europe | TER 0.65 % | TD n.A. | EUR 0.2 bn invested vol. | 3Y underperformance vs. Eurostoxx 600 -44 % | 5Y underperformance - 30 % | 10Y outperformance +8%)

o Index MethodologySimilar to $IQQG, except that only 20 companies are selected and each of these is included in the index in roughly equal proportions (5% each).

Conclusion:

What remains?

From a historical perspective, there is a size premium that is derived from the greater growth potential of smaller companies, among other things. However, this size premium has tended to develop in waves and there is currently an underperformance compared to large companies. So for those who believe that smaller companies can continue to outperform with a size premium in the future, there are favorable entry opportunities. There is a wide selection of small-cap ETFs for World, US, Europe, but also other countries that I have not shown here (e.g. UK & Japan), there is also a small-cap ETF for emerging markets, but I personally would not invest here, as in addition to the size risk, an additional country/political risk would be too much of a good thing for me.

If you want more growth as a pure play (and therefore not implicitly in the size premium), you can take a look at the growth ETF. I find the $IE0005E8B9S4 particularly exciting, as it also focuses on large companies with strong growth.

Let me know what your thoughts are? Do you take the size/growth effect into account, and if so, how do you reflect this in your portfolio?

#smartbeta
#etf
#sizepremium
#capm
#portfolio
#smallcaps
#growth

The big world ETF guide

Reading time: approx. 12 min

1) INTRODUCTION

Anyone entering the world of investing and wanting to start investing often wants one thing above all else: Simplicity.

A globally diversified ETF offers just that: an uncomplicated way to participate in global economic growth at low cost without having to familiarize yourself with complex investment strategies. But when it comes to choosing the right global ETF, many beginners are faced with the question: Which is the right one for me? me?

In this article, I will introduce you to various options for building a diversified world ETF portfolio. We start in the first section with the "one ETF for everything" solution, which is particularly suitable for investors who prefer not to deal with the topic at all. These one-ETF solutions can be saved like a piggy bank and are probably the most passive form of investment.

For investors who find the single-ETF solution too boring or under-complex, we turn to so-called multi-ETF solutions - i.e. investment ideas that include several ETFs. In the final section, we will take a closer look at a special variant that can be considered complex and requires more activity.

If you are a beginner, you can safely stop reading after the first section on the one-ETF solution, as this section contains all the information you need for a simple but effective investment in ETFs. The interested and advanced reader will then get their money's worth in the last section.

2.) THE ONE-ETF SOLUTION

Let's start with the simplest of all conceivable options: one ETF for everything. But even with the simplest form of building a world portfolio, it's the small but fine details that count. Each variant includes specific ETF suggestions with which you can realize such a one-ETF solution.

2.1 MSCI World

Probably the best-known world index is the MSCI World Index. This focuses on the largest companies in the so-called developed markets. The index contains the 1500 largest companies from 23 industrialized countries and comprises around 85% of the market capitalization of the world's industrialized nations [1]. The USA has by far the highest weighting, accounting for around 70% of the entire MSCI World Index. The second-highest weighted country is Japan with around 6%, followed by the UK with around 4%. German equities account for just over 2% of the index. The largest 10 positions - with illustrious names such as Microsoft $MSFT (+1.04%) Apple $AAPL (-0.55%) or Nvidia $NVDA (+4.41%) - already make up 24% of the overall index.

The easiest way to invest in the MSCI World Index is via an ETF. The most cost-effective option is the Amundi $MWRD or SPDR $SPPW (+0.01%) which only incur annual costs (TER) of 0.12% [2]. These are accumulating ETFs that do not distribute the income from the individual shares but reinvest it at fund level. If you prefer regular distributions, you can also choose a distributing ETF such as $MWOE (+0.02%) or $HMWO (-0.01%) you can also choose a distributing ETF.

2.2 FTSE All World

Another classic in the field of world indices is the FTSE All World. In addition to the industrialized countries, it also includes so-called emerging markets (emerging markets). The index includes the 4000 largest companies from around 50 countries [1]. In addition to the industrialized nations, the index therefore also includes shares from China, India, Brazil and Taiwan, for example. The total weighting of the USA in the FTSE All World is around 60% and the 10 largest positions account for around 21%. About 90-95% of global market capitalization is covered by the FTSE All World.

The biggest difference to the MSCI World Index is that the FTSE All World also includes emerging markets and is therefore even more broadly diversified worldwide. According to [3], the cheapest accumulating ETF on the FTS All World Index with an expense ratio of 0.15% is the one from Invesco $FWRG (-0.02%) . However, the FTSE All World ETF from Vanguard $VWCE (-0.03%) enjoys enormous popularity here on Getquin (@Lorena). Distributing variants would be the $FTWG (+0.02%) from Invesco or the $VWRL (-0.03%) from Vanguard.

2.3. MSCI ACWI IMI

Probably the most broadly diversified index is the MSCI ACWI IMI. The somewhat unwieldy name stands for MSCI All Country World Index (ACWI) Investable Markets Index (IMI). This comprises over 9000 shares from industrialized and emerging countries.

The biggest difference to the FTSE All World apart from the fact that the number of shares in the index is more than twice as high, is that the MSCI ACWI IMI also includes small caps and thus achieves an even broader diversification. According to MSCI, the index covers approx. 99% of global market capitalization.

With an expense ratio of only 0.17% and at the same time the only accumulating ETF on the MSCI ACWI IMI is the $SPYI (-0.03%) from SPDR. The distributing variant has also been available since June 2024 $SPSA (+0.01%).

In my opinion, the MSCI ACWI IMI the all-in-one package when it comes to broadly diversified global investing. I therefore personally use the $SPYI (-0.03%) and the $SPSA (+0.01%) for my child's custody account.

The following chart provides an overview to illustrate this:

To calculate the real performance, I have created sample portfolios with the corresponding ETFs. For the MSCI World I chose the $SC0J (+0.01%) as it has been tradable in Germany since June 2009. For the FTSE All World, I opted for the classic $VWCE (-0.03%) from Vanguard, which has been available in Germany since July 2019. For the MSCI ACWI IMI, I opted for the $SPYI (-0.03%) which has been available to buy in Germany since 2011.

As a result, the maximum comparison period is July 2019 to the present day. During this period of just over 5 years, the MSCI World ETF $SC0J (+0.01%) has performed best with a performance of around +102% (+13.6% CAGR). The FTSE All World $VWCE (-0.03%) follows with a performance of +90% (+12.4% CAGR) and in last place is the $SPYI (-0.03%) with +85% (+11.8% CAGR).

Unsurprisingly, the MSCI World is ahead in the selected comparison period. This is mainly due to the significantly higher weighting of the USA in the MSCI World and the absence of the emerging markets, which performed comparatively poorly in this period. Although the ACWI IMI is similar to the FTSE All World, it performs somewhat worse, as the small caps also lagged behind the broad market in the comparison period.

As past performance is no guarantee of future performance, this does not automatically mean that the MSCI World will perform better than the other two variants in the coming years. That is why I personally continue to prefer the MSCI ACWI IMI for long-term investment $SPYI (-0.03%).

3.) THE MULTI-ETF SOLUTION

Why keep it simple when you can make it complicated? That's what many investors think - myself included. There are several ways to construct a global portfolio with more than one ETF to allow a certain degree of flexibility. However, this is only necessary if you consciously over- or underweight certain countries, factors or sectors. This may be because you have a very positive view of emerging markets or because you consider the 70% US share in the MSCI World to be too high.

However, flexibility and personal views also entail more complexity and work than the one-ETF solution. As soon as we have more than one ETF in the portfolio, the question of weighting, rebalancing and when to rebalance at all automatically arises. This also increases transaction costs, and rebalancing can lead to early taxation and an interruption of the compound interest effect. To justify this, you should be very sure that the one-ETF solution is not the ideal solution for you personally after all.

A detailed performance comparison is provided after the presentation of the world portfolio solutions at the end of this section.

3.1. 70/30 Portfolio MSCI World & Emerging Markets

A classic variant to cover the emerging markets missing from the MSCI World is a portfolio consisting of an MSCI World ETF and an MSCI Emerging Markets ETF. A weighting consisting of 70% MSCI World and 30% emerging markets is established and often quoted.

Compared to the FTSE All World, this is a higher proportion of equities in the emerging markets, as this is only around 10%. You should therefore consider a 70/30 portfolio above all if you want to overweight the emerging markets compared to the FTSE All World.

The cheapest MSCI Emerging Markets ETF with a TER of 0.18% is the $AEME (-0.35%) from Amundi. China is the largest position with a weighting of 24%. It is followed by India with a good 20% and Taiwan with around 19%. In the 70/30 portfolio, the country weighting is currently 48% USA, 7.2% China, 6% India, 5.6% Taiwan and 4.1% Japan. Germany is represented with around 1.6%. The total expense ratio of the 70/30 portfolio is 0.187%.

3.2 FTSE All World & Smallcaps

As already described in the previous sections, the FTSE All-World already contains a 10% share in the emerging markets. Only the global small caps are missing. In order to still cover these, an MSCI World Small Cap ETF can be used. In so-called factor investingthe small-cap factor is one of the best-known factor premiums [4] - small-cap stocks should achieve higher average equity returns. However, the details of factor investing will not be discussed here. You are welcome to use the source cited [4].

A portfolio consisting of 85% FTSE All World and 15% small caps is an example of a possible world portfolio that takes small caps into account. The practical implementation could be realized with the FTSE All World ETF $VWCE (-0.03%) from Vanguard and the MSCI World Small Cap ETF $WSML (-0.38%) from iShares. However, the expense ratio for the $WSML is already comparatively high at 0.35%. The overall portfolio has a TER of 0.24%.

3.3 Modular portfolio

If you want even more leeway when creating a global portfolio with ETFs, you can take the next step and put together a portfolio based on the modular principle. Instead of using the traditional division into industrialized countries and emerging markets, you select the individual world regions separately and determine their weighting yourself. This approach offers great opportunities and freedom, but at the same time significantly increases complexity.

Such a modular world portfolio could look like this, for example:

• 50% USA via S&P500 ETF $SPXS (+0.05%)
• 20% Europe via MSCI Europe ETF $XMEU (+0.36%)
• 20% emerging markets via MSCI Emerging Markets ETF $AEME (-0.35%)
• 10% Japan via MSCI Japan ETF $LCUJ (-0.15%)

The selected weightings and regions are of course subjective and depend on the individual preferences of the investor. The world's strongest stock market in the USA is represented by the well-known S&P500 index. The entire European region, including non-EU countries, is covered by the corresponding ETF. The advanced industrial nation of Japan is represented by a special ETF, while China, India and Taiwan are included in the portfolio via the Emerging Markets ETF. The total expense ratio of this example portfolio is 0,097%.

3.4 Performance comparison

Due to the start dates of the ETFs used, a performance comparison is possible here from August 2019. For the performance comparison, I have created corresponding sample portfolios here on Getquin and rebalanced them at annual intervals. rebalancing at annual intervals.

The rebalancing proceeded as follows:

• the weighting of the portfolio is checked once a year
• if an individual weighting deviates by more than 30% from the target weighting, the entire portfolio is adjusted back to the original target allocation

Specifically, I have (arbitrarily) chosen June 15 as the cut-off date for rebalancing. The annual review of the weighting is a compromise between effort and cost. Rebalancing too frequently would cut profits too quickly; rebalancing too infrequently, on the other hand, would blur the intention behind the portfolio, as the weightings of the positions would move too far away from the original weighting.

Overall, the 70/30 portfolio was rebalanced once during the period mentioned, as the share of the MSCI Emerging Markets had fallen below 21% (30% below the target weighting of 30% in the portfolio). No rebalancing was necessary in the FTSE All World & Smallcap portfolio. By contrast, the modular portfolio had to be rebalanced twice. As you can see, more ETFs usually mean more work.

The performance of the individual world portfolios over 5 years was:

• 70/30 portfolio+80% (+11.7% CAGR)
• FTSE All World & Smallcaps: +86% (+12.3% CAGR)
• Building block portfolio: +87% (+12.5% CAGR)

No portfolio has outperformed the MSCI World (+102%) over the last 5 years, which is hardly surprising given the lower proportion of US stocks in the portfolios. In retrospect, the best performance over the last 10-15 years would probably have been achieved with a 100% US allocation. However, the aim of a global portfolio should not be to achieve the maximum possible return, but to achieve the return of the global equity market with the lowest possible risk.

4) CAN IT BE A LITTLE MORE EXCITING?

Some people may now be thinking: why always just these boring ETFs when Bitcoin $BTC (-1.14%) exists? Interest in Bitcoin has continued to grow worldwide in recent years and Bitcoin ETFs now offer easy ways for private and institutional investors to invest in Bitcoin. Just recently, Blackrock rated a Bitcoin allocation of 1-2% in a portfolio of 60% stocks and 40% bonds as risk neutral compared to investing in the Magnificant 7 Stocks [5].

Furthermore, the US share in the portfolio cannot only be represented by the supposed standard index S&P500. Many more risk-averse investors also like the NASDAQ 100, which primarily contains high-growth tech companies.

Example may-be-somewhat-more-exciting-world-portfolio:

• 25% NASDAQ 100 over $EQAC (+0.36%)
• 25% S&P500 Equal Weight over $XDEW (-0.47%)
• 20% Europe over $XMEU (+0.36%)
• 15% Emerging Markets over $AEME (-0.35%)
• 10% Japan over $LCUJ (-0.15%)
• 5% Bitcoin $BTC (-1.14%)

The total 50% US share in the portfolio is divided into the NASDAQ 100 and an equally weighted S&P500. The equally weighted variant was chosen to avoid too much overlap with the heavyweights in the NASDAQ 100 and to create a broader base. The 5% Bitcoin weighting corresponds to a more risk-averse approach than the 1-2% suggested by Blackrock and still keeps the volatility of the overall portfolio within a reasonable range.

As in the previous examples, I have created a sample portfolio on Getquin and carried out an annual rebalancing check. As Bitcoin is generally somewhat more volatile, I set a wider range than the 30% deviation from the target weighting: the rebalancing was only triggered when Bitcoin accounted for either more than 10% or less than 2% of the total portfolio on the reporting date.

According to these rules, a rebalancing was triggered exactly twice in the period from December 2018 to date: 2021 and 2024. In June 2021, the Bitcoin share in the overall portfolio reached 20% and 75% of the BTC position was sold. The rebalancing also triggered the sale of a smaller share of the NASDAQ 100 ETF. The proceeds were then used to reallocate the remaining ETFs. In June 2024, Bitcoin also reached the upper limit and another rebalancing took place.

In the selected period from December 2018 to the present day, the may-yet-be-somewhat-more-exciting world portfolio achieved an overall performance of +176% (18.4% CAGR), clearly outperforming the MSCI World (+122%). The main drivers of this outperformance are firstly Bitcoin (which traded at around €3,700/BTC in December 2018) and secondly the NASDAQ 100, which clearly outperformed the MSCI World during this period.

The outperformance would of course have been much greater with a higher Bitcoin or NASDAQ100 share. In my opinion, however, the chosen overall weighting of 30% reflects a good compromise between opportunity and risk. The highest maximum drawdown of the overall portfolio in the period under review was around -20%.

5) CONCLUSION

Despite the wide range of investment options, I believe that for most investors the world ETF is the best solution for long-term wealth accumulation. Nowadays it is easier than ever to acquire a low-cost world portfolio based on an ETF.

For investors who want a little more spice, numerous options have been presented to build their own world portfolio - you don't have to build your own ETF like @Simpson 🙃

Which portfolio do you find most interesting? If you are interested, I would be happy to provide you with the (more complex) sample portfolios on Getquin for you to view.

Stay tuned,

Yours Nico Uhlig (aka RealMichaelScott)

#etfs
#stocks
#guide

Sources:

[1] Stock Finder: https://aktienfinder.net/index-profil/MSCI%20World-Index#:~:text=Der%20MSCI%20World%20ist%20ein%20globaler%20Aktienindex%20und,im%20Dezember%202024%20-%20Alle%20wichtigen%20Infos%20hier.

[2] justETF: https://www.justetf.com/de/search.html?search=ETFS&index=MSCI%2BWorld&sortOrder=asc&sortField=ter

[3] justETF: https://www.justetf.com/de/search.html?search=ETFS&index=FTSE%2BAll-World

[4] Gerd Kommer Website: https://gerd-kommer.de/factor-investing-die-basics/

[5] Forbes: https://www.forbes.com/sites/digital-assets/2024/12/12/115-trillion-blackrock-recommends-a-2-bitcoin-allocation-comparing-it-to-the-mag-7/

Hello dear Getquin Community,

I would like to share my portfolio with you as an update.

You are welcome to give your opinion or suggestions for improvement.

Briefly about me:

I am 19 years old, live in Austria, work in an apprenticeship as a design engineer and have a monthly savings rate of 51.60% and 32.25% I invest, which is a total of €500 as an investment.

I started investing in mid-January 2024.

At my last update 6 months ago, my portfolio was still about 2.4k euros.

Deposits:

Etf - Depot (Flatex)

55/25/10/10

55% $XDEM (+0.49%)

25% $FVSJ (+0.16%)

10% $WSML (-0.38%)

10% $C6E (+0.4%)

Crypto - Depot (Bitpanda)

I know that my crypto positions are somewhat high and risky.

But I can cope well with this risk 🤣

Nevertheless, I have given up my altcoin position and don't hold that much of it and the only ones I have now are

$BTC (-1.14%)

$ETH (-0.96%)

$SOL (-0.3%)

SC Depot savings plans:

• 1.300€ $VWRL (-0.03%)
• 
  400€ $WSML (-0.38%)

Savings plans TR Depot:

• 360€ $HMWO (-0.01%)
• 
  140€ $HMEF (-0.11%)

In the $XEON (-0.01%) is my "nest egg". The money is not invested but serves as a reserve for unplanned expenses.

My cash reserve is currently very high, so I don't yet know how to invest it. Immediately, in tranches, wait for a setback?

I am slowly building up my TR portfolio, as I want to spread my risk somewhat (portfolio provider, ETF provider)

Dividends will be reinvested and the depots will hopefully one day be my retirement provision.

Hello everyone 🙋🏻‍♂️

Since I have been more of a silent reader and admittedly have not been investing in equities for very long (since April 24), I would like to take this opportunity to briefly introduce myself and my portfolio.

About me:

I am 25 years old, live and work in Germany and share a household with my girlfriend. I've been looking into investing for a while, but didn't dare to take the plunge for a long time until the aforementioned deadline due to negative reports from friends and horror stories on various websites.

Now I'm here and I'm extremely happy to have taken the plunge after all.

My decision was confirmed by the fact that I recently broke through my all-time performance loss limit. I stuck with it and was not impressed by the correction. On the contrary, I saw it more as an opportunity to buy more.

My intention:

Initially, I would rather focus on growth. My investment horizon extends into my retirement age. I may add more dividend stocks to my portfolio at a later date to generate a little income.

About my portfolio:

After some initial mistakes, I quickly settled on the following ETFs:

$VWCE (-0.03%) (70%)

$EIMI (-0.26%) (20%)

$WSML (-0.38%) (to 10%)

My aim was to cover the majority of the market with large, mid and small caps in order to achieve greater diversification.

These ETFs should also become the main component of my portfolio in the medium term.

I also wanted to include a few strong individual stocks. Here $AMZN (+0.46%)
$AMD (+0.83%)
$AVGO (+2.02%) were chosen as blue chips. These are to be increased through individual purchases at a suitable price.

With $VOW3 (+0.1%) the original idea was to increase dividends and diversify my portfolio.

I think the share price will recover in the long term. Unfortunately, my entry point was a little too early. I would like to reduce my buy-in somewhat in the near future by buying individual shares.

$SHOP (+1.5%) I see the share as a growth stock and should continue to hold it.

The two copper shares are my youthful sins, so to speak. I actually wanted to sell them, but the value of the shares is so low that I would even pay the order fee if I sold them.

That's why I'm keeping them in my portfolio as a souvenir for the time being.

$NKE (+0.04%) is still a strong company for me and will rise again in my opinion.

The company was chosen to expand a tech-heavy portfolio into other sectors. Keyword: diversification.

$AVAX (-0.83%) was basically an initial gimmick. I would actually like to either remove crypto completely from my portfolio or switch to $BTC (-1.14%) and then add to it with a savings plan.

In the near future, I would like to diversify further with strong stocks from Europe and Asia so as not to overweight North America.

If you have any suggestions for improvement, criticism or further questions, please feel free to post them in the comments!

Until then!

Scaramouch

Hello everyone,

I would be interested in your opinion on my portfolio and possible optimization options. In addition to individual short-term trades, the aim is primarily to build up long-term assets.

In addition to my positions in the portfolio, I have an OSKAR 90 ETF savings plan, which is made up as follows and should generate an average return (p.a.) of approx. 8.5%

$SPEP (-0.08%) ==> 22%

$SAEU (+0.4%) ==> 19%

$SAEM (-0.06%) ==> 15%

$LGAG (+0.21%) ==> 14%

$WSML (-0.38%) ==> 13%

$SAJP (-0.01%) ==> 5%

The focus in the portfolio on tech and a certain amount of crypto is intentional, but not set in stone.

I will sell the $CLSK (-1.46%) I will sell the position soon, as it is also part of the $BLKC (-1.03%) ETF.

I also want to get rid of $WEW (-1.66%) , $LHA (-0.48%) and $VOW3 (+0.1%)

Thank you very much!

Last buy.

In my opinion, small caps have room for growth with the lowering of rates....