AN ETF-BASED PASSIVE PORTFOLIO FOR THE AGRESSIVE INVESTOR:
25% in Emerging Markets Equities
Shareholder of several companies from countries such as South Korea, China, Mexico and Russia.
Selected asset: NZX´s Smartshares Emerging Markets Equities ESG ETF (EMG).
Justification: NZX´s ETF that is designed to track the return on the MSCI EM IMI ESG Screened Index. Fee: 0.59% per year.
Selected asset: NZX´s Smartshares Emerging Markets Equities ESG ETF (EMG).
Justification: NZX´s ETF that is designed to track the return on the MSCI EM IMI ESG Screened Index. Fee: 0.59% per year.
25% in Australian Equities
Shareholder of shares from Australia´s 200 largest companies.
Selected asset: NZX´s Smartshares S&P/ASX 200 ETF (AUS).
Justification: Low fee (0.30% per year) NZX´s ETF that is designed to track the return on the S&P/ASX 200 Index (in NZD).
Selected asset: NZX´s Smartshares S&P/ASX 200 ETF (AUS).
Justification: Low fee (0.30% per year) NZX´s ETF that is designed to track the return on the S&P/ASX 200 Index (in NZD).
25% in Developed Markets Equities
Shareholder of companies from countries such as United States, Japan, UK, Germany, etc.
Selected asset: NZX´s Smartshares Global Equities ESG ETF (ESG).
Justification: ETF that is designed to track the return on the MSCI World ESG Screened Index. Fee: 0.54% per year.
Selected asset: NZX´s Smartshares Global Equities ESG ETF (ESG).
Justification: ETF that is designed to track the return on the MSCI World ESG Screened Index. Fee: 0.54% per year.
25% in New Zealand Equities
Sharesholder of New Zealand´s 50 largest companies.
Selected asset: NZX´s Smartshares S&P/NZX 50 ETF (NZG).
Justification: Low fee (0.20% per year) NZX´s ETF that is designed to track the return on the S&P/NZX 50 Index.
Selected asset: NZX´s Smartshares S&P/NZX 50 ETF (NZG).
Justification: Low fee (0.20% per year) NZX´s ETF that is designed to track the return on the S&P/NZX 50 Index.
STEPS TO IMPLEMENT THE PASSIVE STRATEGY?
Step 1: Objectives and portfolio
- Based on your investment goals (for example, an average return of 1% per month), build a portfolio with ETFs (or other financial assets) that have the (statistical*) capability to achieve these goals.
*Learn which ETFs have confidence intervals that contemplate, for example, a return of 1% per month, on average, over the long term.
Step 2: Stay invested
- Contribute regularly to your portfolio, using the broker of your choice.
Starting from scratch and investing $1,000 per month, with an average return of 1% per month, it is possible to reach one million by the end of 20 years.
- Rebalance* (whenever necessary).
*For example, put your next contribution in the financial asset (i.e ETF) with the lowest current balance. This way, you will always "buy cheap", one of the "golden rules" of investing.
Step 3: Time and opportunities
- Do not panic in crises or negative news: seize opportunities and take advantages from market conditions/cycles.
- Wait for the time to act, protecting and monetizing your capital in the long run.
