Exchange-traded funds ETF great for conservative investors, including from the point of view of the formation of a passive portfolio.
There are two options for using such funds.: from them you can make a portfolio ("Diversification of diversification") or balance other investments with ETF securities.
Let's talk about the first option - a set of ETFs for a passive investor. For Russian investors, you can offer two options - on the Moscow Exchange and on American markets.
Moscow Exchange - a balanced option
From the point of view of currency diversification, it is better to balance dollar and ruble investments. For this, the first two instruments - without a currency hedging mechanism, and the second two - with a ruble hedging mechanism (allows you to get rid of currency risk).
• FXWO - fund for the global stock market, which is the most diversified and tracks the dynamics of the Solactive Global Equity Large Cap Select index. The portfolio includes US stocks, Germany, Japan, Uk, China, Australia and Russia. Includes more 500 companies.
• FXGD - allows you to invest in gold, which is considered insurance against crises and high inflation (in this case in the USA). It is a good alternative to impersonal metal accounts., because ETFs are much easier to buy or sell, without going to the bank. Compared to gold futures, FXGD has less risk due to lack of leverage.
• FXRB - tracks the index of Russian corporate Eurobonds EMRUS Bloomberg Barclays. The fund includes more than 20 Papers, including Gazprom Eurobonds, Russian Railways, Sberbank, VTB, Lukoil. The fund uses a ruble hedging mechanism. The bond coupons received by the fund are reinvested (Invested) in the same papers.
• FXMM is a money market fund, based on short-term US government bonds, with built-in foreign exchange hedging mechanism. A kind of "money pillow" - it resembles a ruble deposit for a period of one night, whose interest is calculated every day. FXMM's profitability is at the level of a short-term ruble deposit with a bank.
American exchanges - option in dollars
There are more ETF choices on US exchanges, but investments will be dollar. Some of these securities are traded on the St. Petersburg Exchange, they are available to investors, qualified.
• Vanguard Total World Stock ETF (VT) - allows you to "buy" the global stock market. ETF represents about 8700 Papers, including American (58% assets for August 2021 G.), other developed, as well as emerging markets. Fund's key assets are US stocks, where is the most developed stock market. The tech sector accounts for 25% assets. This is a certain risk due to the bias towards more volatile securities.. At the same time, none of the securities "weighs" more than 3% in ETF.
• SPDR S&P Dividend ETF (SDY) - keeps track of the S index&P High Yield Dividend Aristocrats. It includes the American "dividend aristocrats" with the highest dividend yield (more 100). "Dividend aristocrats" in this case - companies, increased annual payments of at least 20 consecutive years. Dividend yield: 2,8% per annum.
• SPDR Gold Shares (GLD) - allows you to buy gold. Underlying asset - gold bars. GLD shares move similarly to spot gold prices.
• iShares Core US Aggregate Bond (AGG) - invests in highly reliable US government and corporate bonds. An extremely conservative instrument with a low dollar yield. Compared to stocks and speculative bonds, AGG securities are much less volatile, the risks of default or bankruptcy of the issuer are close to zero, but also the potential profitability is lower.
