Putting it simply, an ETF is just a collection of stocks that track a market index. By being proportionally averaged among many companies, the growth of ETFs is also slower than a stock that suddenly grows a lot.
These can really represent anything:
- Top 500 companies of USA
- Top 100 companies of London
- Asian market
- Europe Property Yield
- US Commodities
- anything you can imagine…
Unlike mutual funds which are actively managed by a group of people that try to time the market, ETFs follow a more passive direction beyond also having lower fees.
ETFs can be bought or sold just like stocks. They’re also a safer approach because there’s less volatility in the prices.
Accumulating vs Distributing
There are two types of ETFs: accumulating and distributing.
In the first, all the interest gained is being reinvested in the stock that you already hold.
On the other, you receive interest from the dividends in your account. This can also have some implications in the taxes you pay, as the dividends received by the ETFs tend to have to be reported depending on where you live.
How am I diversifying my ETFs portfolio?
My long-term strategy is to invest in ETFs that represent the global economy, but by choosing market indexes that have had good returns since their foundations.
AMUNDI ETF MSCI EMERGING MARKETS
This ETF represents the emerging world markets (might be across all continents), i.e., markets that have potential in the future but are not yet considered so good as other.
iShares Asia Property Yield UCITS ETF
The Asian market is a growing market since the 2008 crisis that affected all world. I also like to hold some shares of property yield to diversify my range of assets.
iShares Core FTSE 100 UCITS ETF
This ETF represent the top 100 companies of London, something that definitely has potential in the long-term.
iShares MSCI Europe UCITS ETF
This one reflects the best companies in Europe. As an European, I don’t mind supporting our companies, specially the ones with more reputation and with more potential.
iShares MSCI Japan UCITS ETF
In this ETF I’m tracking the best Japanese companies, a developed country from the Asian market that I am specially interested in.
iShares MSCI Korea UCITS ETF
Another developed Asian country that I believe has a great potential.
iShares US Property Yield UCITS ETF
Due to USA economic power and history, I also want to participate in its property yield investments.
iShares Core MSCI World UCITS ETF
I also had to follow the markets that represent the best companies in the world.
Lyxor Nasdaq 100 UCITS ETF
This ETF represents the top 100 technologic companies from the USA. As we know, year by year a lot of innovations are happening that improve our lives in general. I couldn’t skip on this one.
Vanguard FTSE All-World UCITS ETF
Represents some of the best companies in the developed world as well as some from the emerging market.
Vanguard S&P 500 UCITS ETF
SP 500 is the most recognised market index in the world with a return on average of 11% per year, since 1920.
Even though I think the previous ETFs are a good investment, always do your own due diligence. And please, don’t forget that past performance is no guarantee of future results!
Feel free to share your ETFs with me in the comments section below and the reason why you added them to your portfolio.