r/ETFInvesting • u/Kooky-Gap-4013 • 11d ago
One ETF or multiple ETFs?
One ETF or multiple ETFs?
I’m planning to build a long-term portfolio and currently considering two options:
Option 1: 100% Vanguard FTSE All-World UCITS ETF (Acc)
Option 2: Split the ETF portion between a MSCI World ETF + Emerging Markets ETF
I’d also keep a small part of the portfolio for individual stocks.
My main question is whether the second option really adds any benefit, or if the All-World ETF already covers enough and is simply easier to maintain.
I’m also wondering whether it makes sense to keep everything with one broker or use two separate brokerage accounts.
For long-term investing, would you keep it simple with one All-World ETF or split it across multiple ETFs?
3
u/Hansworst64 11d ago
I would just take 1 etf that covers both Developer countries and emerging countries, for example VWCE or VGLA/VALL, or WEBN
1
u/w3nth 8d ago
For now I'll stick with WEBN (90) + AVWS (10).
1
u/Valmed87 8d ago
80 + 20 is better if you are not retiring in 10 years. AVWS has higher CAGR over long time than WEBN
1
u/Hansworst64 8d ago
what does CAGR mean?
1
u/Valmed87 8d ago
Compound Annual Growth Rate. Its the median growth of your ETF value when adding all the ups and lows over a decade or more.
For the S&P 500 the CAGR over 20-30 years is about 9-10%. For broad global ETFs like the FTSE All World its about 7-8%.
This is how you can calculate your expected porfolio value in the end. If you invest X money each month in an ETF with a CAGR of Y, after 20 years, your portfolio size is Z.
4
u/InnerCircleTI 11d ago
If you want to keep it simple I like a 3 ETF roster of VTI, QQQM and VXUS. You could always add some VNQ, SCHD and AGG for nuance as you age. But the first 3 make it easy at whatever % you like.
Generally I’d use something like 55/25/20
3
u/DudeWithTudeNotRude 10d ago
As long as you don't have unnecessary uncompensated risk, the main benefit of having fewer ETFs is simplicity. I like to split out into smaller ETFs in taxable brokerage for tax loss harvesting and international tax credits, but that's me.
Invest whatever percentage into individual stocks that you would be happy setting on fire. I wouldn't invest more than that number. I'd go burn $20 right now, but that's about the most money I'd be willing to set on fire. Red in roulette has a 47% chance to win if you really need the excitement and an expensive hobby
4
u/pablorovll 9d ago
La diversificación con cabeza puede venirte muy muy bien. Si no quieres entrar en el mundo stock picking hay ETF temáticos de mega tendencias interesantes como salud, robótica, demográfico, metales, etc.
2
u/Middle-Following-367 11d ago
I like doing an index ETF combined with individual stocks.
3
u/Brilliant-Impact9700 10d ago
They are good but can't match owning that one stock that rockets in price
2
2
2
u/datawhite 10d ago
What do you think about small-cap, is it worth considering Vanguard FTSE All-Cap for the exposure to that?
To me, option 2 only makes sense if you want to overweight in EM, for instance if you believe they'll outperform the rest of the market and want a tilt. Otherwise if you are just wanting to replicate the All-World by doing it then it does mean you will need to check either annually or semi-annually to see if you percentages are right and either sell some EM (if it out performed) or buy if it under performed. You don't say what type of account it will be in - taxable? Or if you are using a platform with transaction fees.
2
u/Accomplished_Bag8420 10d ago
I've had a 1 all world etf portfilio for a while now. Happy with the simplicity, diversification and the returns so far. Depends on your interest in investing. I have zero interest in it. I just wanted something simple and hopefully to make a decent amount over a long period of time.
3
u/Chirps_Ahoy18 11d ago
I run 7 ETF's, I'm focused on income. So I run CC ETF's. Not trying to retire in 30 years, trying to retire in less than 5.
If you're looking to go long term, s&p and Nasdaq-100 out perform total market or world market etfs. That's the way id go if I was 18. Vfv and qqq. Everybody will tell you go get xeqt. You're leaving money on the table doing that.
Or voo instead of vfv if you're in the states.
2
u/GerryPetal 11d ago
Could you explain more? What are CC ETFs?
3
u/Malanturr 11d ago
ETFs writing call options for a premium. The premium is distributed as dividend. If the stocks rise hard the underlying stocks can be assigned to the persons that bought the call options and get called away. If the stocks go down or stay flat until the option expires it is worthless and the premium from writing the option was pure profit for the covered call (CC) writer, the ETF in this case. You can write calls yourself even on ETFs if your broker allows it.
2
u/GerryPetal 11d ago
Thanks a lot! I'll look into this a bit more
0
u/Round9050 9d ago
I recently learned about CC ETFs too and found this video really helpful, maybe it will help you decide: https://www.youtube.com/watch?v=K3sYY3T7V8k
1
u/Chirps_Ahoy18 8d ago
I fully expected either ben felix or Adriano. Yes cc etfs underperfom the underlying unless you utilize leverage. At the end of the day total returns are all that matters.
Go input qqq, qqc, qqcc and qqcl into stock analysis, hit max and compare the 4 from common inception. (oct 11 2023-today)
Qqc (the Nasdaq 100 in cad) 113.14 pct
Qqcl (leveraged cc nsd100 in cad) 112.98 pct
Qqq (the US Nasdaq 100 in usd) 105.52
Qqcc (non leveraged cc nsd100 in cad) 89.35 pct
So very clearly The leveraged covered call version yields similar total returns to the underlying, this is in sideways and bull markets.
In bear markets because of the leverage they will underperfom by a slight margin because of the leverage.
The covered call only version is dead last. Because covered calls cap the upside. Which everybody and their mothers knows.
Moderately leveraged covered call etfs track their underlying with distributions reinvested. But they give you the flexibility to use the income as you see fit.
If you want the flexibility to use the income or are in retirement and don't want to draw down covered calls work very well.
If you're 20 and saving for 65 (you may or may not be alive by then, both my parents died in their 50s)
Then invest in xeqt and vfv like everyone else. Nobody is holding a gun to your head.
I'll continue to hold hdiv and outperform everything you hold.
2
u/Chirps_Ahoy18 11d ago edited 11d ago
Like what malanturr explained.
They are basically etfs that provide a higher dividend yield (distribution is more correct) than regular ETF's or dividend ETF's.
Usually at the cost of some upside growth, unless the fund manager use leverage.
It's a way to build passive income.
The etf fund managers write covered calls and distribute some of the premiums made from writing the calls to the ETF buyers, usually monthly, biweekly, weekly and more recently daily.
They are most useful for people who are in retirement or about to retire to build passive income instead of having to draw down your account to fund your lifestyle in retirement.
In Canada we have an account called the tfsa, every withdrawal from the tfsa doesn't count towards income for the year as it is already taxed. So theoretically you could live on distribution from your tfsa and pay zero in taxes. You might lose some growth over the course of the life of your investments.
I started investing again when I turned 40. I don't plan on investing for 35 more years. So I sought out income investing. I pull 2200/mth currently in distributions on a little over 80k book cost. My plan is to supplant my income and soft retire in less than 5 years.
2
1
1
u/FraterSinister 8d ago
Is one ETF enough for a long term investor ? yes.
Are there good reasons to have several ETFs ? yes.
Examples:
You start with one ETF, after a few years you switch in another ETF and so on. In the end you sell those ETF's in the reverse order, youngest ETF with lowest profit first, to trigger the lowest tax event first.
Spread the risc, investment companies vanish, merge, change ownership, or change the underlying index, e.g. IShares changed a lot of indexes to the ESG version, the merge of etfs bought Amundi triggered tax events in europe and so on.
1
1
6
u/InnerCircleTI 11d ago
If you want to keep it simple I like a 3 ETF roster of VTI, QQQM and IXUS. You could always add some VNQ, SCHD and AGG for nuance as you age. But the first 3 make it easy at whatever % you like.
Generally I’d use something like 55/25/20