4G·

Diversification of ETFs

What do you think about diversification within an ETF? Specifically, I have $TDIV (+0,07%) and $VHYL (+0,22%) in the portfolio. The performance of TDIV is unbeatable for dividend ETFs, but only around 100 positions are held. In contrast to VHYL, where over 2000 companies are represented, but the performance leaves a lot to be desired.

I would like to increase my position in TDIV and save on VHYL. I know from the charts that the risk is already quite low from 30 companies in different geographical and economic sectors. Nevertheless, I would be interested to know what you think about this and whether the risk with TDIV is nevertheless estimated to be somewhat higher than with VHYL.

Have a good start to the week!

7 Commenti

Thomas@Thomas_1963

The $TDIV is also my favorite ETF. Nevertheless, I have reduced the weighting in my rebalancing. Due to the high weighting in the financial sector. My core ETF is now $VWRL.
I also have $ISPA in the same weighting as $TDIV.
I think the three complement each other incredibly well.

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MoneyIncinerator@DoppelSchlechtMinus

The best way to achieve great diversification is with a broad market ETF. For a complementary dividend ETF, 100 stocks are perfectly fine.
I see no sensible place for the VHYL in a portfolio with an investment horizon greater than zero, as it is a lazy compromise. The strategy it implements can only underperform in the longer term anyway.

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Metis@Metis

It is also always a question of your own risk perception.
An ETF with fewer companies fluctuates more than one with more companies.
And you have to be able to withstand that.

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Sina@lawinvest

As the previous speakers have already said: TDIV is an admixture and not a core. Cluster risk in the financial sector. With falling US interest rates, there could also be lower returns at some point. TDIV has managed to outperform the MSCI World over a few years. That's great, but it's still not a core investment because it is too heavily weighted towards one sector.

To talk briefly about the number of companies. If you add up the first 100 holdings in the world, please take a look at how many % have already been fulfilled. I'm guessing you're at 90 or 85 or so.
So 10-15% of your capital is distributed across 1900 companies. In fact, the capital is used much more efficiently in the VanEck.
That's why I don't invest in an MSCI World with 1800 companies, for example, but in the actively managed equivalent from JPM with only 600 companies. There are not so many corpses in there, which tie up 10% of my capital but contribute nothing to performance

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Luc700@Luc700

@lawinvest Thank you for the detailed explanation! Can you link the JPM alternative with $?

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Sina@lawinvest

@Luc700 sorry... you can't always find them by simply writing and I don't have the ISIN in my head yet $JREG
Recently somewhat worse than the World. Better in the long run

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Abteilungsleiter D.@AbteilungsleiterDerLiebe

@Luc700: I saved in $VHYL for a long time because I wanted the broadest possible ETF. In my view, it is the best, albeit underperforming. I have therefore changed my strategy: The main ETF will be $VWRL and $TDIV as an addition, because it only holds 100 stocks with a high financial component. Whether to weight it with 10 or 20 or 30 percent is the next question. At the moment I am at 10 percent. Why? Because I mainly want to cover the average return of the market and I'm better off with a broad ETF. For the dividends, then the VanEck - choose the ETF depending on your goal, so to speak

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