I am a CFA Level II Candidate and I am creating a portfolio (European Investor) to enjoy about it (for me it is fun).
I have considered my risk appetite and I would like to receive what do you think about that portfolio.
I did not hedge currency risk in equity (in the long term perspective I think is better), more Europe than MSCI World because Europe is my area and I control the currency risk by this side.
Also, I have considered multiple factors (balance between low size, yield, etc.) and I have overweight Emerging Markets not for market cap (much more about GDP Attribution).
High Yield, Emerging Markets Bonds are good assets to have for a long term perspective.
Zero percent to hedge funds huh? There’s your problem.
Also: long term - super long term that is - the dollar will trade at parity with the Euro. However, for now, we’re all licking our chops at Sunday trading bringing a $1.15 euro.
Basically, monetary policy doesn’t even matter in the long term. We’re talking about a country that can’t even hit inflation targets with negative yields on debt, and, fiscal policy that’s completely ineffective.
Unless this is just an intellectual exercise and not an actual long term portfolio, I’d advice you to simplify your approach. Like you’ve found out, iShares has some pretty low TER ETFs that give you a solid global exposure, for example the basic 80% Core MSCI World ETF + 20% Core MSCI Emerging Markets ETF combo portfolio. If you have specific views on the markets’ direction, change the weightings to fit those. You’re an European investor so you can even choose the Accumulation version of these ETFs to make your portfolio very tax efficient.
Side note: if you went forward with your proposed portfolio, there’s absolutely no way you could keep those weightings at a reasonable band of your target weights without transaction costs killing you.
