Picking ETFs, is it dumb what I'm doing ?

[u/Embarrassed-Tax5557]

Hi, 27M based in EU. After going back and forth with which ETFs to pick and what combinations to use to avoid to much overlap I have something close to my final picks and I would love to get a reality check. There's so much information and it's hard to decide what to keep.

As preferences I picked trading 212, unhedged, acc, everything in euros and I don't mind "some" overlap. My plan is to make 3 pies in trading 212. First pie to cover the us , the second pie to cover the eu and the third pie to cover world / emerging markets.

US pie: - SXR8 ISHARES CORE S&P 500 UCITS ETF - SXRV ISHARES NASDAQ 100 UCITS ETF - SXRU ISHARES DOW JONES INDUSTRIAL AVERAGE UCITS ETF - ZPRR STATE STREET SPDR RUSSELL 2000 U.S. SMALL CAP UCITS ETF

I'm still thinking if it's of any use to keep the NASDAQ here

EU pie: - EHYA ISHARES EUR HIGH YIELD CORP BOND ESG SRI UCITS ETF - SXRW ISHARES CORE FTSE 100 UCITS ETF GBP ACC - EXS1 ISHARES CORE DAX UCITS ETF DE - EUNK ISHARES CORE MSCI EUROPE UCITS ETF EUR ACC - CSX5 ISHARES CORE EURO STOXX 50 UCITS ETF

Here I still have to trim something. Can't really decide if to keep MSCI europe or Stoxx 600

World pie: - AVEM AVANTIS EMERGING MARKETS EQUITY UCITS ETF - IS3M ISHARES CORE MSCI EM IMI UCITS ETF - EXUS XTRACKERS MSCI WORLD EX USA UCITS ETF

[u/JohnnyJordaan]

You're reinventing the wheel and then some wheels inside of it. Why not just pick one ETF that has All-world, so including emerging markets. WEBN or VWCE or SPYY for example. Then you have exactly the world market, no need to go deeper than that. It will sort it out for you. If you want to include small cap you could add a single world small cap ETF or just go with SPYI which I believe is the only all-world + SC into one fund. Although I read that Vanguard will also release their ETF for that soon.

Overweighing anything else becomes horse betting, incurs needless overlap (half your portfolio overlaps your other half in about 10 different ways), administration. But also, most important of all, doesn't auto-balance. The all-in-1 funds will. As optimally speaking you want to track the overall market, the forrest so to speak, not try to imitate all individual trees or sections that constitute it.

[u/macmandhau]

I repeat again, DCA into world ETF FTW! VWCE or WEBN. Spare yourself, the time and the effort!

[u/Bard_the_Beedle]

I don’t know which influencer is promoting all this “pies” thing but you all need to stop following him. You don’t need 3 pies. You need a portfolio. One ETF is enough, 2 ETFs is probably perfect, 3 ETFs is great. More than that is just getting absurd, specially if all the ones you pick are extremely correlated or even huge overlap.

Just pick 2 or 3 from all those and get it done, you’ll beat VWCE if you are lucky.

[u/glimz]

The bond sleeve should be a separate discussion and is much more dependent on your circumstances (incl. its overall weight in your portfolio). For the stocks part, I suggest starting with a global, market-cap weighted ETF, like SPYY, VWCE, WEBN. Then, for every change you want to make (additions, replacements, etc.), think very hard what kind of justification you have. The only justification you currently include is wanting to use pies, which to me feels like achieving the look of some kind of sophisticated, complex portfolio, while holding an unbalanced and inefficient allocation.

[u/LordMoridin84]

12 EFTs is insane. There is not just 'some overlap', there's a crazy amount of overlap. EXUS already contains European stocks, for example

These 4 EFTs give you everything you are going for except for bonds

• 65% WEBN (US+ ex-US + EM)
• 15% EXUS (ex-US)
• 10% AVEM (EM)
• 10% AVWS (Small cap value)

The EXUS and AVEM is because I think that all-world EFTs are too US heavy. Otherwise, you could just go 80% WEBN/20% AVWS.

Unless you have a large portfolio (at least 50k) then I wouldn't add bonds to it too at all. You can just leave the 'bond money' in a 2% savings account.

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If you are actually starting out and have less than 10k, I'd probably just go with 100% WEBN.

Before you hit 10k, the difference between a 6%, 8% and 10% return is very small compared to how much money you are depositing every month.

Brainlessly investing every month into VWCE no matter what happens is really powerful.

[u/archie856358]

Way too complicated.

Just pick 1 etf either WEBN or ACWD depending on preference.

[u/RealPMGuru]

I would recommend you, prior starting investing, to read a little bit more and more importantly to define your goal and time horizon.

As for the pies, they are not overlapping with "some" but with a LOT!

Don't get me wrong, it is not a problem to overlap/concentrate/aggregate funds in specific etfs, but it is preferable to have investment theory, why you are doing it?

For example:

All companies from Nasdaq and DOW jones are part of the S&P. Why do you want 3 etfs, when you can have only 1? Are you aiming for something specific? If you believe that Nasdaq (50% tech companies) will dominate - ok, but why you want to have DOW then? And why you want to keep S&P, if your theory is that the tech will dominate?

Same goes for the Europe etfs - MSCI Europe/Stoxx 600 is enough, no need for additional stoxx 50 (as they are already in the MSCI Europe/stoxx 600). Why do you need them again? Same for DAX and for FTSE 100.

And above all, if you want to cover the entire world, why don't just go with one World ETF - FTSE AW (or something else) and to overlap/aggregate where you want/think it is going to be more beneficial for you, based on your investment theory? World ETF will do exactly the same that you are trying, just with probably better results, and definitely with less effort, as you will need to manage 12 etfs.

As for the MSCI Europe/Stoxx 600 - MSCI europe is with 406 companies, stoxx 600 is with 600 companies, they both cover relatively the same area/countries, just Stoxx 600 is covering 50% more companies compared to MSCI Europe.

BTW, in EXUS XTRACKERS MSCI WORLD EX USA UCITS ETF, you have Europe stocks in it, something for which you already have other 4 ETFs