1Yr·

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Does anyone care to give an opinion on my ETF allocation?

Feel free to dismiss my choices. I am looking for a better distribution long term - 20years + with reduced risk (20% drawdawn/year is acceptable to me, more is painfull).

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19 Comments

AlexSch@AlexSch

1Yr

Oh hell no man wtf have you done to your portfolio

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Mihai@mihaipr

1Yr

@AlexSch please elaborate. What is wrong, what would you do differently?

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AlexSch@AlexSch

1Yr

@mihaipr You have wayyy to many ETFs. I understand if you have 1-3 but this is way to many. You either have 1-3 ETFs to track the market performance or you go in single stocks. But this..? I don’t know why you are doing that.
+ Fees are higher on theses sector ETFs.

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Mihai@mihaipr

1Yr

@AlexSch my TER is 0.22% per year. Is that very high? I am trying to reduce the geographic risks as well as the sectorial risks. If I would aim for the highest return and go all in (i.e. for Tech industry) I fear I could not endure the downs. This is some variation of an all weather portfolio meant to bring some low risk return, not the best return possible. However I don't know how to evaluate my risk adjusted expected returns.
7% per year would be nice, but maybe thats too optimistic for this portfolio and for the coming period.
A single stock can easily go up and down 50% or more. An ETF is far less likely. Am I wrong?

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AlexSch@AlexSch

1Yr

@mihaipr Just buy the $HMWO, its even safer and should bring higher returns.

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PowerWordChill@PowerWordChill

1Yr

One question: why the bonds? With a time horizon of 20 years or more, I would not recommend them unless you plan to use them as a cash reserve for stocks in the event of severe drawdowns.

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Mihai@mihaipr

1Yr

@PowerWordChill my idea was to make use of active reballancing at some point. sell bonds to buy equities. and reduce my overall risk

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Lucrash@KapriolenCapital

1Yr

Hell nah over diversification leads to underperformance lil bro

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Mihai@mihaipr

1Yr

@KapriolenCapital thanks for your answer. Would you say there is some particular ETF choice which is bad? I know some of them have overlaps, but not all. And if most of the equity ETFs are correlated why is it bad?

I also see in you portfolio that you have most of it in $CL2 . This has a TER at 0.5% (high!), and a max drawdown since inception of almost -60%. This is not particularly attractive to me. Too high risk.

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Lucrash@KapriolenCapital

1Yr

@mihaipr My portfolio is not synced here as I use a custom build tracking solution. The leveraged ETF I use comes with active buying rules that are based on moving averages and are not as simple as a normal saving plan. It only marks up to 20% of my portfolio but I agree it needs high risk appetite and I wouldn't recommend it to you.

I would kick the dividend ETFs as they underperform accumulating ETFs. Did you consider going into dividend aristocrat stocks or buying corporate bonds? Also I would drop the europe ETFs as I don't see any outperformance compared to the US ETf peers besides choosing specific stocks.

Keep it simple and don't collect ETFs like pokemon. When they are highly correlated it makes no sense. Rather dive into other asset classes like crypto or look into alternative investments. I make concentrated bets in several assets classes and with that comes real healthy diversification and not that illusion that appears with those highly correlated ETF collections.Also this bond/equity allocation seems to be outdated.

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Mihai@mihaipr

1Yr

@KapriolenCapital which other asset classes? I have ~5% in commodities, ~8% in gold and ~7% reits (all etfs). Gold and commodities should offer me some protection in black swan events (which is what I fear the most for the coming 2 years). Crypto is not something I'm keen on, I would not put more than 2% and not in this portfolio. It seems very speculative, and I don't see the added value of it, besides transferring huge sums of undeclared money when going in another country.
Thank you for the answer, it means a lot to hear some feedback!

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Mihai@mihaipr

1Yr

@KapriolenCapital there are 2 etfs on dividend aristocrats. one is S&P US and S&P Euro dividend aristocrats. I consider getting rid of those. The idea was that a small stream of income through dividends would be nice, as money now is worth more than money in 20 y.
Corporate bonds are included in the global aggregate bonds. $0GGH

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Lucrash@KapriolenCapital

1Yr

@mihaipr Isnt the best protection againt black swan events a multi currency cash position to buy the dragged down assets? I respect your risk level for crypto.My mindset is that I have time as I'm young so that I can take risks. In Germany you can sell crypto after a one year holding period without paying taxes on it. The same goes with Watches as Watches are defined as day to day good. Maybe you have such attractive tax rulings where you live for some assets just as an idea. Commodities can be great but the mostly underperform and cost performance as they tend to be cyclic. Collectibles, whiskey, wine ... there is so many options which need research and setup but can flourish.

Btw. the shady players in crypto get less and less. I ignore the noise of picture NFTs and rather applaud the regulation and integration into traditional financial markets(see ETF BTC approval and oversee rules for transfers) Cash has a much higher portion of undeclared money transactions. But I can still understand your choice here.

Remember I'm not a licensed advisor I just wanna give you ideas ✌️

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Mihai@mihaipr

1Yr

my overall TER is at 0.22% which is not too high I think. Why would I get under performance? wouldn't I benefit from all the different classes with an active re-balancing strategy

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Ruud@Rsoeters

11Mon

Buna Mihai. I would indeed agree with Alex that I'm not seeing the reason for each of the ETFs. What is the reasoning for each position? I would, like you did a bit, focus on an All World ETF in the core and add 2 or 3 ETFs as flavor makers, depending on your risk profile. If you don't want to lose a lot the heavier I would go in the All World, like 70-80% of the portfolio. For the other 20-30% you can go riskier in Europe and Emerging Markets. Bonds I think are too early (unless you want a fixed income that is 3,5-4% annually, but you are still building a portfolio); Commodity markets I don't know, so I stay away from it. Then you got small caps and dividend-focused ETFs; those could be interesting strategies to follow (small versus big and growth versus dividends), but I think you complicate it when combining. On morningstar.com you can create an account and put all your positions in there, and run a scan to see how your portfolio is performing / overlapping in positions.

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Mihai@mihaipr

11Mon

@Rsoeters thanks, I am working on reducing the number of ETFs, getting rid of distributing ones, and the commmodities one. It seems that I am too appocalyptic indeed. And it is true that commodities will not bring me any income long term. I used it only as precaution expecting a market crash. Now I don't want to sell it at a loss, but rather keep it and sell it later, without buying anymore.
Your feedback is much appreciated.

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Ruud@Rsoeters

11Mon

A question back. I would love to invest in Romanian stocks, but my current broker is not great in showing that. Which broker are you using in Romania? And do you know a good website that can give me more insight in the Romanian stock market?

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Mihai@mihaipr

11Mon

@Rsoeters Tradeville is the one I use, but only for buying government bonds (which are not taxed btw). Another broker I know is Goldring.

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Mihai@mihaipr

11Mon

@Rsoeters I don't know any specfic website for analysing the romanian market. The fact is that it is too small and risky for me (the main index fell 80% in 2008). And since I live here, I dont want to duplicate my geographic risks: I already earn here, hold a place to live here, I dont want extra idiosyncratic risks

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