facebookIf my investment portfolio consists of mainly ETFs, do I still need to add bonds, since stocks ETFs are considered a relatively less risky form of equities? - Seedly

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Anonymous

04 Aug 2020

General Investing

If my investment portfolio consists of mainly ETFs, do I still need to add bonds, since stocks ETFs are considered a relatively less risky form of equities?

I am currently 35 years old.

My current portfolio allocation are as follows:
20% in STI ETF
5% in Syfe’s all REITS portfolio
35% in CSPX
40% in IWDA

As my risk appetite is moderate, would just like to know how risky is such a portfolio seeing as how it is technically 100% into equities

Discussion (3)

What are your thoughts?

Since you mentioned that your risk appetite is moderate, I'd recommend adding some bond etfs to your portfolio mix and/or maybe a gold etf. Stocks, bonds, gold have typically exhibited uncorrelated performance in various market conditions (proabably with the except of the recent liquidity drawdown in mid-Mar'20). Google image "Ned Davis Secular Trends" and the top search result will show you that in any given time, at least 1 of the 3 asset class will be in a bull market, which provides some cushion to your overall portfolio performance if the other asset classes are performing poorly.

So diversifying your holdings away from 100% to equity to a mix of the 3 might be a better option for your risk profile.

Don't overdo the diversification, no more than 20% allocation to bond+gold will be sufficient for your current age and you can rebalance along the way.

Just my two cents, you can consider reducing your SG allocation. 25% to SG market might be a little too high and the Straits Times constituent will see inclusion of more and more SG-REITs so there might be a bigger overlap with the SYFE composition over time. I'm assuming the SYFE REIT only holds SG-REITs. Reallocate to some Asia focused ETFs.​​​

Your CPF monies are your pseduo long-term bonds

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