Diversification & Overlap concerns

Question

Hi there, still new to investing (in my very late 40's) and have already taken the plunge to buy VAS, VOO & VEU.  To diversify my portfolio is there any other ETF or Bond ETF worth looking at?  I have tried comparing and doing my own research but getting a bit stuck with overlap.  Any suggestions are welcomed, thanks in advance ☺

Answer

Hello! It’s great to hear that you’ve started investing and are considering diversification for your portfolio. Diversification is key in managing risk and achieving a balanced investment approach.

Since you already own VAS (which tracks the ASX 300), VOO (which tracks the S&amp;P 500), and VEU (which provides exposure to stocks from developed and emerging markets outside the U.S.), you have a solid foundation in equities across different geographic regions. To further diversify, you might consider adding bond ETFs or sector-specific ETFs, depending on your investment goals and risk tolerance.

Bond ETFs: Adding bond ETFs can provide income and reduce portfolio volatility. Some options include:
– Vanguard Australian Fixed Interest Index ETF (VAF): This ETF provides exposure to high-quality, income-generating securities in the Australian market.
– iShares Core Composite Bond ETF (IAF): This offers diversified exposure to the Australian bond market, including government and corporate bonds.
– SPDR Bloomberg Barclays Global Aggregate Bond ETF (WBND): For global bond exposure, WBND includes a mix of government, corporate, and securitized bonds across multiple countries.

Sector-Specific ETFs: If you’re interested in specific sectors that may offer growth opportunities, consider sector-specific ETFs such as:
– Global X Lithium &amp; Battery Tech ETF (LIT): Focuses on the lithium mining and battery production sector, which is pivotal for electric vehicles and renewable energy storage.
– BetaShares Global Robotics and Artificial Intelligence ETF (RBTZ): Invests in companies worldwide that are likely to benefit from increased adoption of robotics and AI.

Diversified ETFs: Since you mentioned being new to investing and the challenge of dealing with overlaps, a diversified ETF could simplify your portfolio management. The Vanguard Diversified High Growth Index ETF (VDHG) is an option that provides broad exposure across multiple asset classes, including global equities and bonds, in a single ETF. It’s designed for high long-term capital growth.

When considering new investments, it’s important to assess how they fit with your existing holdings to avoid unnecessary overlap, and how they align with your risk tolerance and investment timeline.

Pearler offers a platform that can help you manage your investments and track your portfolio’s performance, making it easier to see how your investments are diversified and to make informed decisions based on your financial goals.

You can find out more about this topic here: Why Is Vdhg So Popular

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

Answer

Hi Miranda.

Great question.  To be perfectly honest, you already have a completely diversified portfolio with thousands of companies all around the world.  So there’s not really much to add in the shares/ETF universe that isn’t doubling up somehow.

You’ve actually done what most people cannot – built a simple, low cost, well diversified portfolio that you can simply add to over time and grow your wealth in a low fuss manner.  Too many people overcomplicate it, when the main building blocks are where all the action happens.

Adding bonds is basically like adding cash.  That can make sense if you would like to reduce the volatility of your portfolio.  Keep in mind this comes at the expense of long term returns.

I wrote about bonds a bit in this Q&amp;A article (down the page), which you might find useful: https://pearler.com/explore/learn/blog/septem...

If it was me, I would keep it as is and enjoy the simplicity :)

All the best.
Dave

Answer

Thanks so much Dave, I really appreciate your reply… and how great to know that it’s best not to over complicate things like you say. Now I’ll sit and wait 😉

Invest

Explore

About

Pricing

Sign Up

Back to Exchange

Previous

Next

INVESTING STRATEGY

Miranda R

Like
0

0

Follow

Comments (3)

Dave Gow - Strong Money Australia

Investor

Related posts

Investing Strategy

What happens if, in 30 years when I have hundreds of thousands or even millions of dollars in shares, nobody wants to buy them?

Investing Strategy

Best way to invest $10k for long-term growth?

Investing Strategy

I've heard that most people would only invest in VDHG if they had to choose one ETF. May I ask why?

Products

Resources

Community

Company

Support