For wealth building with ETFs, three portfolio variants are available, covering different risk levels and tailored to the investment horizon and risk tolerance:
1. Defensive Portfolio (25% Stocks / 75% Bonds)
Target Audience: Conservative investors, retirees, or individuals with a short investment horizon (<10 years).
- Stock Allocation: Globally diversified ETF such as the MSCI World (e.g., iShares Core MSCI World UCITS ETF, ISIN: IE00B4L5Y983) for broad diversification.
- Bond Allocation: Short-term government bond ETFs like the iShares Euro Government Bond 1-3yr UCITS ETF (ISIN: IE00B3F81R35) to minimize interest rate risk. Alternatively, a broader approach with the SPDR Bloomberg Euro Aggregate Bond ETF (ISIN: IE00B41RYL63), which includes corporate bonds and offers higher yield potential at moderate risk.
2. Balanced Portfolio (50% Stocks / 50% Bonds)
Target Audience: Medium-risk investors with a horizon of 10–20 years.
- Stock Strategy: Combination of developed and emerging markets, e.g., through a mix of MSCI World and MSCI Emerging Markets ETFs.
- Bond Mix: Combination of European government bonds (Lyxor Euro Government Bond 10+Y UCITS ETF, ISIN: FR0010344819) and global corporate bonds (iShares Global Corporate Bond UCITS ETF, ISIN: IE00BKM4GZ66).
3. Aggressive Portfolio (75% Stocks / 25% Bonds)
Target Audience: Young or risk-tolerant investors with a long-term horizon (>20 years).
- Stock Focus: Higher weighting in growth sectors like technology or European innovations via ETFs such as the Invesco STOXX Europe 600 Technology UCITS ETF (example ticker) or thematic funds on AI/Green Energy. Supplemented by small-cap ETFs for additional yield potential.
- Safety Buffer: High-quality corporate bonds (iShares € Corporate Bond ESG UCITS ETF, ISIN: IE00BDVPNG13) to hedge against extreme market fluctuations.
Important Principles
- Diversification: Spread over regions, sectors, and asset classes – for example, by combining Global Stocks, EM Bonds, and Real Estate ETFs.
- Costs: Use of low-cost index funds (<0.20% TER) to preserve compounding effects.
- Rebalancing: Annual restoration of target weights for risk management – automated through savings plans.
- Age-Dependent Reallocation: Reduction of equity allocation by ~1% per year starting at age 50 as a rule of thumb.
For a concrete selection, platforms like JustETF or ExtraETF are recommended for comparing tracking differences and total expense ratios. An example portfolio could have the following structure:
| Asset Class | Defensive | Balanced | Aggressive |
|---|---|---|---|
| Global Stocks | Vanguard FTSE All-World (25%) | iShares MSCI ACWI (50%) | SPDR MSCI World Tech (60%) + EM Small Caps (15%) |
| European Bonds | Lyxor Short-Term EUR Govt Bonds (75%) | SPDR Bloomberg Euro Ag |