Risk Management in 2026

Alexland

chiang_mai said:

I went back and forth between HSBC FTSE All World and Vanguard's Global All Caps. I think that VG's 7,000 company fund is probably too much when it only reduces concentration from 25% to 22%, over the All World option. The other reason is that I'm very comfortable with my EM allocations at present and adding another EM layer to that is not something I want. Either solution is far better than what I have presently, although others may have different needs in this respect. Equal weight index looks like far too much trouble and whilst it would reduce risk substantially, it generates a new risk of not being able to realise a decent return. 

I wouldn't worry how many thousand holdings it holds. Some people assert that you can even diversify an equity portfolio with just 30 shares although I wouldn't go that low. Once you are in the thousands that's more than fine.

Maybe you might prefer a Developed World + EM fund combo to retain your existing EM holding(s)?

If so for Developed World my favourite fund is Fidelity Index World and favourite ETF is Vanguard VEVE (or VHVG for accumulation) although I have some accumulating SWLD which is also good.

aroominyork said:

An equal weight ETF, eg for the S&P, has the theoretical advantage of selling high and buying low, but it's buying everything low; there is no smart beta-type filter. There seems too much risk of overweighting junk. 

Yes there are a lot of small companies whose business is getting eaten by Amazon, Microsoft, etc as that's where some of the extraordinary growth is coming from. Rather than going equal weight it might be better to hold a small-cap fund alongside a medium/large cap global tracker if you wanted to dilute the large cap but then small caps tend to be more economically sensitive so it might be better to just underweight the US or given that global markets are increasingly synchronised in terms of crash-impact simply hold less equities to reduce risk.

[Deleted User]

Alexland said:

chiang_mai said:

I went back and forth between HSBC FTSE All World and Vanguard's Global All Caps. I think that VG's 7,000 company fund is probably too much when it only reduces concentration from 25% to 22%, over the All World option. The other reason is that I'm very comfortable with my EM allocations at present and adding another EM layer to that is not something I want. Either solution is far better than what I have presently, although others may have different needs in this respect. Equal weight index looks like far too much trouble and whilst it would reduce risk substantially, it generates a new risk of not being able to realise a decent return. 

I wouldn't worry how many thousand holdings it holds. Some people assert that you can even diversify an equity portfolio with just 30 shares although I wouldn't go that low. Once you are in the thousands that's more than fine.

Maybe you might prefer a Developed World + EM fund combo to retain your existing EM holding(s)?

If so for Developed World my favourite fund is Fidelity Index World and favourite ETF is Vanguard VEVE (or VHVG for accumulation) although I have some accumulating SWLD which is also good.

aroominyork said:

An equal weight ETF, eg for the S&P, has the theoretical advantage of selling high and buying low, but it's buying everything low; there is no smart beta-type filter. There seems too much risk of overweighting junk. 

Yes there are a lot of small companies whose business is getting eaten by Amazon, Microsoft, etc as that's where some of the extraordinary growth is coming from. Rather than going equal weight it might be better to hold a small-cap fund alongside a medium/large cap global tracker if you wanted to dilute the large cap but then small caps tend to be more economically sensitive so it might be better to just underweight the US or given that global markets are increasingly synchronised in terms of crash-impact simply hold less equities to reduce risk.

Thank you for those thoughts, I'll add them to the mix. I try to model each of the options to see what the impact will be on my existing holdings and what the likely outcome may be, I confess to going into full nerd overdrive mode when I do such things, but at least it keeps me off the streets. 

nakie999

Nothing like a bull market to make you feel smart until you look closer and realize your portfolio’s basically one trade in a trench coat lol. If you’re trying to check whether you’re actually diversified or just lucky, I used AltsWire for alts coverage since it’s decent at framing stuff without the hype. And yeah, if you’re concentrated, I’d fix that first, everything else is kind of secondary.