Instagram community ETF portfolio
It all started with an idea to go on a journey together. What better way to learn about building an investment portfolio than to actually build one together?
Over a two week period we voted on Exchange Traded Funds (ETFs) from a range of different categories. The aim was to create a balanced portfolio covering several countries and market sectors, while learning along the way about the things to consider when building a portfolio of your own.
Check out @investingwithchris to learn more about how we did it and track progress each week.
Before we dive into what’s included in the portfolio, let’s take a look at our (hypothetical in this case) investment plan.
Investment Plan
Investment Goal: Primarily capital growth (the increase in value of the portfolio)
Risk Profile: High growth (aggressive)
Time Horizon: Long term (10+ years)
Asset Allocation: 100% equities (stocks)
Portfolio Strategy: ‘Core’ and ‘Satellite’
Number of ETFs: 8
How did we select our ETFs?
We selected our ETFs by voting on a number of categories.
“Core” of broad index ETFs to provide a reliable and diverse base:
Australian market ETF
World market ETFs
Emerging markets ETF
“Satellite” of more targeted ETFs to provide the potential for higher returns (with a higher risk):
Technology themed ETF
Sustainability themed ETF
Other themed ETFs
Alternative asset ETF
Core ETFs
We selected 4 core ETFs that combined give us good diversification across global markets. Together they make up approximately 70% of the total portfolio.
1. Vanguard Australian Shares Index ETF (VAS) - 22.5%
VAS is the most popular ETF with Australian investors. It provides access to 300 of the biggest companies listed on the ASX at a reasonable cost.
In this portfolio, VAS gives us broad exposure to the Australian market, with diversification across multiple industry sectors.
Expense ratio: 0.10%
Annual return (3 year average): 9.8%
2. Vanguard US Total Market Shares Index ETF (VTS) - 20%
VTS provides access to the entire US stock market. That’s over 4,000 companies, including big names like Apple, Microsoft and Google.
In this portfolio, VTS gives us broad exposure to the US market with the diversification of many different companies across all sectors.
Expense ratio: 0.03%
Annual return (3 year average): 21.1%
3. BetaShares Global Sustainability Leaders ETF (ETHI) - 17.5%
ETHI is one of the most popular global ETFs with investors looking for a more ethical and sustainable approach to investing. It applies strict screening criteria to exclude companies identified to be engaging in activities not deemed socially responsible, such as fossil fuels, tobacco and human trafficking. It also applies positive screening to apply greater weighting to companies identified as ‘sustainability leaders’ in their field.
The vote for international ETF was so tight that we decided to include both VTS and ETHI. VTS gives us the exposure we want to the US market, while ETHI gives us exposure to international markets as well, with a focus on a sustainability.
Expense ratio: 0.49%
Annual return (3 year average): 27.2%
4. Vanguard FTSE Emerging Markets Shares ETF (VGE) - 10%
VGE is one of the leading ETFs for emerging markets, which includes countries like China, Taiwan, India and Brazil. Emerging markets are typically considered more volatile but offer strong growth potential.
In this portfolio, VGE fills a gap left by the combination of VAS, VTS and ETHI, all of which only cover ‘developed’ markets.
Expense ratio: 0.48%
Annual return (3 year average): 9.0%
Satellite ETFs
We initially selected 4 satellite ETFs to give us higher potential returns at a higher level of risk.
Combined they make up approximately 30% of the total portfolio.
5. ETFS Battery Tech & Lithium ETF (ACDC)
ACDC focuses on one of the hottest trends in investing - battery technology. It is central to the growth of renewable energy and electric vehicle usage, so many investors consider this as an investment in environmental sustainability.
For our ETF, ACDC offers a tilt towards emerging technologies and electric vehicles in particular. In the vote in beat HACK, FANG and ESPO, all of which are very popular in their own right.
Expense ratio: 0.69%
Annual return (3 year average): 30.5%
6. Betashares Climate Change Innovation ETF (ERTH)
As the name suggests, ERTH focuses on the future of our Earth. This ETF contains 100 leading global companies that derive at least 50% of their revenues from products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions.
In the vote, ERTH beat CLNE, FAIR and HGEN which all offer a different take on sustainability.
Expense ratio: 0.65%
7. eInvest Better Future Fund (Managed Fund) (IMPQ)
IMPQ is a managed eInvest, a relatively new and forward-thinking provider of active ETFs in Australia. IMPQ invests in up to 70 quality small cap stocks from Australia and New Zealand. Companies are selected based on their balance sheet performance and their contribution to ESG outcomes.
For our portfolio, IMPQ offers something a little bit different - exposure to smaller companies with a focus on quality and sustainability.
Expense ratio: 0.99%
Annual return (1 year): 16.8%
8. Betashares Crypto Innovators ETF (CRYP)
The plan was to stop at 7, but while we were voting BetaShares launched Australia’s first cryptocurrency themed ETF. We decided as a community that we should add it as an 8th ETF. It’s a much riskier investment, given the volatile nature of the crypto market, but we felt that we had a strong core and could afford to take the risk.
CRYP focuses on companies operating in the crypto economy, rather than investing in crypto currencies directly.
Expense ratio: 0.67%
Where to from here?
We’re tracking progress of this portfolio each week on my instagram page - @investingwithchris.
The aim is to help everyone see how a real portfolio behaves, with ups and downs over time.
This is a long term investment so the approach is very much “buy and hold”. But there may be opportunities to add to what we have here. Maybe another vote or two?
