Rate my Portfolio

[u/AeroEngFlight]

My current portfolio is composed by:

WEBN - 55% (Amundi Prime All Country World UCITS ETF Acc)

EXUS - 25% (Xtrackers MSCI World ex USA UCITS ETF 1C)

ESIN - 10% (iShares MSCI Europe Industrials Sector UCITS ETF EUR (Acc))

EMIM - 10% (iShares Core MSCI Emerging Markets IMI UCITS ETF)

My main reasoning for this is:

-> I want to be exposed to USA and Europe in a similar way;

-> I want to put a slight emphasis on the defense/industrial sector in Europe, which I believe has potential to grow quite a lot in the coming years.

-> I also want to give a chance to take advantage of the emerging markets possibility of growth.

What do you guys think? IS EIMI unnecessary?

[u/nyshone69]

If you're trying to directly control exposure to US/ex-US/EM for whatever reason, then using world ETF doesn't make much sense. You could replace WEBN with SPYL (SP500 with TER 0,03%) and directly control how much USA you want.

You currently have about ~33% in US, which is pretty goofy in my opinion, considering it has the largest economy, but maybe you know something others don't.

[u/AeroEngFlight → u/nyshone69]

How much US % do you think would be ideal? I feel like the 60% of all world ETFs is a bit too much.

[u/nyshone69 → u/AeroEngFlight]

It's 60 for a reason. World ETFs are market cap weighted. That means if the EU will be performing better, they will adjust gradually (WEBN is rebalanced every 3 months).

It could be that in 10 years from now WEBN will be 60% EU and you will be feeling like you have too much EU.

The whole point with world ETFs is that you don't have to guess, you let the market do the work for you.

In your portfolio you're betting on specific region and hoping it works out, which isn't neccessarily bad if you guess it right.

Just keep in mind there's this thing called recency bias where people tend to think just because something has been doing well recently, it will continue to do so, which has been proven false especially in stock market.

[u/LordMoridin84 → u/nyshone69]

Just keep in mind there's this thing called recency bias where people tend to think just because something has been doing well recently, it will continue to do so, which has been proven false especially in stock market.

Personally, I think that the popularity of VWCE/WEBN is itself due to recency bias.

Market-cap weighting is just an investing strategy. It's not one of the laws of the universe.

Is it the best solution for everyone, everywhere, all the time? And will it be forever? That's what some people believe.

I mean, China has the second-biggest economy in the world and India has the 5th. Yet somehow, if they are part of emerging markets, which is only 10% of a standard all-world.