13 ETFs in the portfolio – financial expert still sees risks

13 ETFs in the portfolio – financial expert still sees risks

“This is a return-oriented investor,” observes Decker. Allocation across different asset classes such as stocks, bonds, commodities, real estate and even cryptocurrencies goes a long way toward minimizing risk. Investments in bonds from emerging markets and euro government bonds as well as money market investments in particular help to reduce the risk, even if the proportion of these more defensive positions is low at around eleven percent.

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Around 70 percent of the portfolio is made up of stocks in sectors such as technology (Nasdaq 100, Artificial Intelligence and Big Data), Healthcare (MSCI Europe Healthcare), Luxury goods (Global Luxury) and energy (hydrogen) are invested. “Investments in promising sectors such as artificial intelligence, hydrogen and luxury goods show a thematic focus on long-term growth opportunities,” emphasizes Decker.

Geographically, the portfolio is global, with a focus on emerging markets, Europe and the USA.

Is there an overweight?

“With an equity share of almost 74 percent, there is a high risk, but also potential for above-average growth,” comments Decker.

She points out that although only around 9.75 percent of the portfolio is invested in cryptocurrencies, they represent a risk due to their high volatility and comparatively high costs (TER between 1.49 percent and 2.5 percent).

The expert sees these strengths

Decker also recognizes some strengths. “The portfolio includes stocks, bonds, real estate and raw materials, which balances the risk and potential for returns,” praises Decker. She emphasizes that investments in promising sectors and the relatively low costs of stock ETFs (between 0.17 percent and 0.35 percent) have a long-term positive effect on returns.

With just 6.25 percent in bonds, it could be difficult to adequately mitigate risk in down markets.

However, Decker also sees weaknesses: “The portfolio is heavily concentrated in the USA and Europe, which increases the risk should there be a downturn in these markets.” She recommends broader geographical diversification, especially in regions such as Asia and emerging markets. The high costs of cryptocurrency ETPs also reduce potential returns. “With only 6.25 percent in bonds, it could be difficult to adequately cushion the risk in down markets,” explains Decker.

The high equity quota makes the portfolio volatile, especially in uncertain times. Decker advises: “Increasing the bond ratio through corporate bonds or global government bonds could reduce the risk.” Reducing the proportion of cryptocurrencies would also be a sensible measure to reduce the overall risk. “Overall, I see the risk of the portfolio as moderate to high,” says Decker.

In addition to the ETFs: Decker would complement these investments

Decker advises increasing the proportion of bonds to bring more stability to the portfolio. “Greater geographical diversification through investments in Asia-Pacific or Latin America would also help to spread the risk further,” she says.

Infrastructure or private equity funds could also offer uncorrelated returns to traditional investments. She also suggests replacing the Global Luxury ETF, which is highly cyclical, with a broader global or emerging markets ETF to support the long-term growth strategy.

Decker gives our investor these three tips

Finally, Decker has three key tips for investors:

  • “Increasing the bond ratio could help reduce risk, particularly during times of market volatility.”
  • “The portfolio should be reviewed regularly (e.g. quarterly) to ensure that it still meets the original investment objectives. Market changes can cause certain areas to be over- or undervalued.”
  • “A large part of the portfolio is invested in US dollars. If the investor spends primarily in euros, currency risks could be mitigated through currency hedging. For example, Euro-hedged ETFs could be used.”

Disclaimer: Stocks, real estate and other investments generally involve risk. A total loss of the capital invested cannot be ruled out. The articles, data and forecasts published are not a solicitation to buy or sell securities or rights. They also do not replace professional advice.

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