jacob733
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Följer
3 stars
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My investment strategy is based on total market index funds. As a reference point, I will use MSCI ACWI + FM IMI to calculate weights, since this is the most comprehensive index I know of. I get the index weights by googling the index names and find the market cap for each index in the fact sheets that usually show up. I can then just calculate percentages compared to the market cap in MSCI ACWI + FM IMI.
First of all, I find that MSCI FM IMI is about 0.16% of the total market cap. Since this is an area that has very limited options for investment for me, and the available funds are too expensive for my taste, then I have chosen to exclude investing in FM for now. I am keeping it in the calculations for future reference though.
I see two possibilities for replicating the rest (MSCI ACWI IMI):
Using 3 funds
MSCI World, MSCI EM IMI and MSCI World Small cap is an exact decomposition of MSCI ACWI IMI. They have these weights relative to the reference:
MSCI World: 76.83%
MSCI World Small Cap: 11.08%
MSCI EM IMI: 11.94%
Total: 99.84%
To get this, the distribution in funds should be:
EUNL: 76.95%
IUSN: 11.09%
ISN3: 11.95%
Combined annual cost: 0.21%
Using 7 funds
Funds targeting certain parts of the world can have much lower annual cost, which can reduce the combined cost. To get this, I will decompose MSCI World into 6 parts, so the total composition with weights become:
MSCI EM IMI: 11.94%
MSCI World Small Cap: 11.08%
MSCI USA: 52.01%
MSCI Europe: 14.54%
MSCI Japan: 5.06%
MSCI Pacific Ex. Japan: 2.56%
MSCI Canada: 2.52%
MSCI Israel: 0.14%
Here, MSCI Israel is difficult to track, and it is small so I am excluding it from my funds selection, which means that the total market being targeted in this composition is 99.70%
The 7 funds should be distributed like this:
ISN3: 11.97%
IUSN: 11.11%
SXR8: 52.16%
LYP6: 14.58%
LCUJ: 5.08%
SXR1: 2.57%
SXR2: 2.52%
Combined annual cost: 0.13%
To get to this level, I have made some approximations. Which means that MSCI USA is represented by S&P 500 and MSCI Europe is represented by STOXX 600 Europe, and in both cases this is due to reducing the annual cost in those funds. There is a fund named XD9U that actually tracks MSCI USA, but it is not in the Nordnet Monthly Savings program, so I am not looking at it right now. This also applies to SXR2, so I am considering if this should be left out as well since it is a pretty small part of the market.
One important thing to note is that the difference in TER is 0,08%, which amounts to 800 per million or 80 per 100.000 (any currency applies). I am starting to consider at what level it is worth managing 7 funds instead of 3. I think the portfolio should probably have a significant size before that makes sense.
Index weights calculated based on market cap numbers from 2021.07.30.
Biografi
My investment strategy is based on total market index funds. As a reference point, I will use MSCI ACWI + FM IMI to calculate weights, since this is the most comprehensive index I know of. I get the index weights by googling the index names and find the market cap for each index in the fact sheets that usually show up. I can then just calculate percentages compared to the market cap in MSCI ACWI + FM IMI.
First of all, I find that MSCI FM IMI is about 0.16% of the total market cap. Since this is an area that has very limited options for investment for me, and the available funds are too expensive for my taste, then I have chosen to exclude investing in FM for now. I am keeping it in the calculations for future reference though.
I see two possibilities for replicating the rest (MSCI ACWI IMI):
Using 3 funds
MSCI World, MSCI EM IMI and MSCI World Small cap is an exact decomposition of MSCI ACWI IMI. They have these weights relative to the reference:
MSCI World: 76.83%
MSCI World Small Cap: 11.08%
MSCI EM IMI: 11.94%
Total: 99.84%
To get this, the distribution in funds should be:
EUNL: 76.95%
IUSN: 11.09%
ISN3: 11.95%
Combined annual cost: 0.21%
Using 7 funds
Funds targeting certain parts of the world can have much lower annual cost, which can reduce the combined cost. To get this, I will decompose MSCI World into 6 parts, so the total composition with weights become:
MSCI EM IMI: 11.94%
MSCI World Small Cap: 11.08%
MSCI USA: 52.01%
MSCI Europe: 14.54%
MSCI Japan: 5.06%
MSCI Pacific Ex. Japan: 2.56%
MSCI Canada: 2.52%
MSCI Israel: 0.14%
Here, MSCI Israel is difficult to track, and it is small so I am excluding it from my funds selection, which means that the total market being targeted in this composition is 99.70%
The 7 funds should be distributed like this:
ISN3: 11.97%
IUSN: 11.11%
SXR8: 52.16%
LYP6: 14.58%
LCUJ: 5.08%
SXR1: 2.57%
SXR2: 2.52%
Combined annual cost: 0.13%
To get to this level, I have made some approximations. Which means that MSCI USA is represented by S&P 500 and MSCI Europe is represented by STOXX 600 Europe, and in both cases this is due to reducing the annual cost in those funds. There is a fund named XD9U that actually tracks MSCI USA, but it is not in the Nordnet Monthly Savings program, so I am not looking at it right now. This also applies to SXR2, so I am considering if this should be left out as well since it is a pretty small part of the market.
One important thing to note is that the difference in TER is 0,08%, which amounts to 800 per million or 80 per 100.000 (any currency applies). I am starting to consider at what level it is worth managing 7 funds instead of 3. I think the portfolio should probably have a significant size before that makes sense.
Index weights calculated based on market cap numbers from 2021.07.30.
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