What ETFs would I choose for a 'hands-off' Junior ISA?

Recently, a friend asked me about how to open a Junior ISA for their child and what stocks they should buy within their ISA (max. deposit £9k per child per year). When their child reaches 18, they hopefully would have a nice fund on which they can draw on for college or a car or whatever. Another objective however, was to hopefully interest the child in the power of investing in the stock market (and the earlier they start, the better).

They wanted minimum maintenance (at least to start with). This led me to think about a world ETF as a core and perhaps one or two satellite ETFs. They would have to be accumulating ETFs based in Ireland for low tax and have a low TER since they will be running for 15 years or so. It would also be nice to have some weighting for UK\EU to allow for Fx rate fluctuations.

The chart below shows SWDA as the core ETF (though I would actually buy the equivalent but cheaper ETF HMWS) and a few of my favourite high-return index ETFs as satellite holdings.

Because the future of the USA is uncertain in my opinion (in terms of political stability, lack of regulation, rife corruption, poor Fx rate for UK and inflation), for a long term portfolio I want to avoid a pure USA ETF like EQQB (NASDAQ) or the high-performer Tech USA S&P 500 ETF IITU.

So I suggest a mix of:

• HMWS  Core World MSCI
• IWFV    Edge MSCI World Value Factor
• BNKE   Euro Stoxx Banks

Some people may argue that this portfolio favours larger companies and is not diversified across smaller companies or emerging markets. It is a valid point and I could include these but it would bring down the overall performance for the sake of lower volatility. Since the ISA cannot be cashed out for 15 years, I am not too concerned about any volatility and the portfolio can always be revised at any time (say after 10-13 years).

As for the mix, I would suggest 60% HMWS, 20% IWFV and 20% BNKE.

I would encourage the parents to dollar cost average into the ISA (perhaps on birthdays and Xmas) and buy more of whichever of these three ETF seems to be good value or is expected to perform well in the next year. If they are not sure, then just buy all three in the same ratios.

ChatGPT says this ratio should return 15% to 18% per year (based on last 5 years).

Let us assume that they add £1000 every year for 15 years - we get...

£61,000 tax free by the time they are 18. Due to inflation however, £61k will probably be worth 40k in todays value, but hopefully it's still enough for college!

So if the parents save just £20 a week (£1k/yr or £80/month) and keep adding that into the JISA, it could be enough for their higher education (or a car) by the time they leave the nest!