The six ETFs I'd pick if I was building a portfolio from scratch

David C Stevenson explains how to put together a simple, no-nonsense portfolio of ETFs from scratch.

This year is already shaping up to be grim for investors. The oil price and China's woes are likely to get worse over the next few weeks, while the profitability growth of big businesses has been stalling for months. But while that might suggest a recession, my gut (nothing more scientific) tells me that equity investors have just run ahead of themselves and pushed up valuations it doesn't feel like the start of a global slowdown (yet). However, I certainly wouldn't be 100% long (bullish) on equities developed-world equities definitely feel fragile, with little sign we're due a massive leap in profits.

If I had to build a portfolio of funds from scratch, using sensible "asset allocation" (diversifying across regions and themes), I'd mostly favour passive exchange-traded funds (ETFs listed funds that track an underlying index or asset class). Bar some key areas, I don't see how, in the main, active managers can do any better than the market. Sticking with a simple 60/40 equities/bonds split, I would go for the six funds in the table below. I'll explain why.

Swipe to scroll horizontally
Fund/ETFTicker/detailsPortfolio percentage
Row 0 - Cell 0
Lyxor ETF SG Global Quality IncomeLSE: SGQL30%
State Street SPDR Euro Stoxx Low VolatilityLSE: LOWE10%
Somerset Emerging Market Dividend Growthwww.somersetcm.com10%
Source Technology S&P US Select Sector fundLSE: XLKS10%
iShares $ Treasury seven to ten yearLSE: CBU025%
TwentyFour IncomeLSE: TFIF15%

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.