Multi-Asset Passive Portfolio, Oct.2021

Many people want to start investing and a multi asset passive portfolio is a good way to proceed. Passive investing broadly refers to a buy-and-hold portfolio strategy for long-term investment horizons. Index investing is perhaps the most common form of passive investing, whereby investors seek to replicate and hold a broad market index or indices.

I constructed a multi asset passive portfolio model, as an alternative to my equity investment ideas. Furthermore, I plan to rebalance tactically the asset allocation once per quarter for example and see how it goes.

I consider 4 main asset classes: equities, bonds, commodities and cash and for each of them I identified a relevant index and a low cost ETF to replicate their performance. I could have added also real estate asset class, but I decided to keep it simple at the beginning.

Furthermore, I identified for each asset class investable instruments. I tried to access a broadest market for each asset class and find a passively managed low cost solution. Below is my selection for each asset class:

Equity

Index Description – The MSCI ACWI IMI Index (All Country World Investable Market Index) is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of developed and emerging markets. It covers c.9000 securities across large, mid and small cap size segments and consists of c.45 country indices, of which approximately half are developed and half are emerging markets.

Fund:  SPDR® MSCI ACWI IMI UCITS ETF (IMID.LN); The objective of the Fund is to track the equity market performance of developed and emerging markets.

More info at https://www.ssga.com/uk/en_gb/institutional/etfs/funds/spdr-msci-acwi-imi-ucits-etf-spyi-gy

Bonds

Index Description – Bloomberg Barclays Global Aggregate Bond  Index measures the performance of the global investment grade, fixed-rate bond markets. The benchmark includes government, government-related and corporate bonds, as well as asset-backed, mortgage-backed and commercial mortgage-backed securities from both developed and emerging markets issuers.

Fund: SPDR® Bloomberg Barclays Global Aggregate Bond UCITS ETF (GLAG IM, GLAG LN)

The objective of the Fund is to track the performance of global investment grade fixed rate bond markets.

More info at  https://www.ssga.com/uk/en_gb/institutional/etfs/funds/spdr-bloomberg-barclays-global-aggregate-bond-ucits-etf-dist-sybz-gy

Commodities

Commodities is a more complex asset class and are often overlooked as a component of an investment portfolio. As tangible real assets, commodities allow diversification and offer a potential hedge against inflation.

In order invest money on commodities, investors can buy the products themselves, futures contracts, companies producing them or ETFs. A very convenient and effective way to invest in commodities is through products that track a broad commodities index, for example UBS ETFs (exchange traded funds).

Index Description: DJ-UBS Commodity Index Total Return Index. The index measures the collateralized returns from a basket of 19 commodity futures contracts representing the energy, precious metals, industrial metals, grains, softs and livestock sectors. UBS Bloomberg CMCI Composite TR Index positions itself as a market-wide commodity index offering investors “double” diversification. This is because the index covers a wide variety of commodities while including all liquid contract maturities. The UBS Bloomberg Constant Maturity Commodity Index extends beyond short dated futures contracts and diversifies investment across the maturity curve.

Fund: UBS ETF (IE) CMCI Composite SF UCITS ETF (USD) A-acc

More info at  https://www.ubs.com/de/en/asset-management/etf-institutional/investment-themes/commodities.html

Please note this is not investment advice and I am not in any way promoting the underlying instruments.  I am sure there are better solutions, but we need to start from somewhere.

In conclusion here it is my initial balanced passive portfolio for $100k notional amount:

T=Target Allocation; UW- Underweight; OW=Overweight

It is investable, simple and efficient.  In the next posts I will further discuss results and asset allocation.

I or my affiliates may hold positions or other interests in securities mentioned in the Blog. Please see Disclaimer.

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