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 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 ETF for inflation protection, an emerging market ETF for growth potential, a dividend ETF for income or sector-specific ETFs for tactical positions.
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, with an optional 5-10% allocation to emerging markets for additional growth potential.
Moderate portfolios appropriate 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 designed for those near or in retirement with 5-15 year horizons generally hold 40-60% global equity ETFs, 30-40% bond ETFs, and 10-20% in gold, dividend stocks or defensive assets.
Common mistakes to avoid
Even experienced investors make mistakes. These are some of the common ones:
- Over-diversification — holding too many overlapping ETFs dilutes returns without additional diversification benefits
- Chasing performance — last year’s outperformers often become this year’s losers
- Ignoring costs — even small fee differences compound significantly over decades
- Neglecting rebalancing — portfolios drift over time and should be rebalanced periodically
- Panic selling — market downturns are temporary; selling during crashes locks in losses
- Home country bias — overweighting domestic stocks increases concentration risk