Building your ETF portfolio
The following is not financial advice. Everybody’s personal situation is different and you may wish to seek professional advice. However, as a broad indication, many investors recommend a core-satellite strategy where 70-80% of your portfolio consists of broad market index ETFs (the core), with the remaining 20-30% in specialised ETFs targeting specific themes, sectors or strategies (the satellites).
Your core holdings might include the Vanguard FTSE All-World or Amundi Prime All Country World for comprehensive global exposure, while your satellite holdings might include a gold ETC for inflation protection, an emerging market ETF for growth potential, a dividend ETF for income, or sector-specific ETFs for tactical positions. You can also consider money market ETFs as a cash-like holding within your portfolio.
Your asset allocation should reflect both your time horizon and comfort with volatility. Aggressive portfolios suited for young investors with 30+ year horizons might consist of 90-100% global equity ETFs. Moderate portfolios for mid-career investors with 15-25 year horizons typically include 70-80% global equity ETFs, 10-20% bond ETFs and 5-10% in gold or alternative assets. Conservative portfolios for those near or in retirement generally hold 40-60% global equity ETFs, 30-40% bond ETFs, and 10-20% in gold, dividend stocks or defensive assets.
