Many years ago I decided to entrust an inheritance to Fisher Investments. They have an annual charge of approx. 1.5%/yr and there is also an initial on-boarding fee for life planning, etc. Fisher very much believe that, provided you have other means of support (e.g. adequate pension and you own your own house), 100% equity investment is best (no bonds or cash). Their fund is basically the same as the SWDA MSCI Core Global ETF but with a few tweaks depending on the current economic climate. For instance, because of Trump's election, they increased their portfolio weighting of European stocks.
As you can see from the charts below, Fisher's fund (Purisima Global Total Return B - shaded blue line) has basically followed the SWDA ETF.
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| Year-to-Date Chart |
As an alternative to Fisher Investments, you could buy an actively managed fund such as Artemis Global Income I Acc (yellow on chart - not available on Trading 212). This has shown amazing performance YTD, and still very good over the last 3 years (but not beating EQQQ).
Another alternative is to invest in large, popular ETFs. I always recommend (at least as a solid core) a mix of SWDA (actually I recommend HMWS which is identical but has a lower TER) and the NASDAQ 100 ETF EQQQ or EQGB (EQGB is a hedged version of EQQQ) - see brown line on chart.
If you live in the UK, you may just want to invest in FTSE 100 companies. I would suggest the Invesco RAFI ETF PSRU as this has much better performance than a standard FTSE 100 ETF (PSRU is light grey line on chart).
The 3 year chart below show the recovery just after the 2022 correction.
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| 3 Year Chart |
I have a mix of all these funds. I have kept with Fisher Investments because I trust them to manage my money (and, let's face it, they really can't go wrong as they seem to simply follow the MSCI Global Core index SWDA which is bound to follow the world market and then they charge me 1.5% for it!). Fisher do not take chances or try to get the best performance, they just try to beat SWDA (even with their much higher TER) and provide a decent gain for me over time. Basically, it stops me from taking risks!
Investing in an actively managed fund is another approach. I tend to buy into one managed fund and stick to it - but I check their performance every few months. Actively managed funds are only as good as their managers and they can change over time (managers are poached by other companies). So picking one active fund is not a completely 'hands-off' choice - it needs your attention and you may have to sell it and buy a different one if the performance drops off.
Index ETFs are the answer
This leaves us with ETFs and there is a simple two-ETF solution:
- Core MSCI Global (SWDA or HMWS or IWDG)
- NASDAQ 100 (EQQQ or EQGB)
The ratio of these two depends on your attitude to volatility. If you don't intend to withdraw your invested cash for at least 10+ years, then 50% SWDA and 50% EQGB might not be a bad mix.
Performance of SWDA is not that different from Vanguard All-World VWRP which has 3,500 holdings but SWDA has generally performed better over time.
SWDA has the same top ten companies as NASDAQ 100, however SWDA invests in over 1,300 large companies worldwide which gives you broader diversification.
If you don't want too much fluctuation, then 80% SDWA and 20% EQGB might be a better solution for you.
Is this well diversified? - NO! It has the top companies in the world (which is US top heavy at present) and the top 100 non-financial companies in the US. If you want a broad diversified portfolio then look elsewhere and be prepared to end up with less than half the retirement pot that you could have had. Many investors also hold 10% of their portfolio in small cap. indexes or emerging markets, but what difference is this going to make, even if their value doubled in a single year (but barely beat inflation in the other 5 years)? If you are not intending to touch your invested money for many years, why not go for the best return possible (even if in some years, it goes down 50%)? After 10+ years, you will be way better off. Of course, this assumes you have a safety net somewhere else - safe income/investments like a state pension and/or good work pension and you (will) own your own house by the time you retire.
Non-USA investors (e.g. UK and EU investors) also really need to think about the strength of the $USD when they buy world or US stocks or ETFs.
IWDG is a currency hedged version of SWDA - IWDG has shown 80% gain vs. 55% gain for SWDA over the last 3 years. For periods when the $USD is weakening, you may want to switch to IWDG rather than SWDA or HMWS as it can make quite a difference.
EQGB is the £GBP hedged version of EQQQ and will do better when the $USD is weak (as in the last year). Over a long time, there is not much difference between EQQQ and EQGB - see chart below:
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| EQGB hedged vs EQQQ unhedged (doubled in 5 years) |
If you have the ETFs inside a tax wrapper (ISA or SIPP), then you can simply sell your non-hedged ETFs and buy the hedged versions (or vice versa) without worrying about taxes (CGT).
Just at the moment, I think EQQQ might be better for the next 2 years, whereas EQGB was better over the last 3 years.
In the last 8 years, EQQQ has gone up 300% and EQGB 'only' 280%. Sounds better than a typical default pension over the last 8 years which would have gained between 47% and 85% in the same time frame!
So I would suggest a mix of HMWS+EQQQ at least for the next two years (2026+2027), then look at forward $USD vs £GBP forecasts and see if you should switch to the currency hedged versions IWDG+EQGB (for UK investors).
Note: If you have a GIA investment account, you may prefer to hold distributing ETFs instead of accumulating ETFs like SWDA or HMWS as it saves you having to work out the ERI dividend tax each year on accumulating ETFs (UK investors). HMWO, HMWD, IWDD and WRDD are alternative Core MSCI World distributing ETFs. EQQQ is a distributing ETF and EQGB does not pay an ERI, so either of these are good for a GIA or ISA/SIPP.
If you want a highly volatile (but high gain) portfolio, then try 80% EQQQ + 20% HMWS - if you had chosen this five years ago, you would have doubled your money! It will be volatile though, so if there is a recession, your account may show a 30% drop - but it should always recover if you wait long enough! Bear in mind that (apparently) we are due for a correction or recession soon (maybe).
Of course, you may also want to buy other ETFs (defense, crypto, nuclear, minerals, finance, etc. - see my other blog articles) but HMWS+EQQQ will provide a good core for 90% of your investment pot.
This leaves you with 5 to 10% of your investment pot to play with and do stupid things like buy single companies or coffee or platinum or crypto!
Just use THIS LINK to get your free T212 shares once you have put some money into your account. I will also get some free shares too :-). You can get a free 1yr subscription for Interactive Investor here.
Good luck,
Steve
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