Knowing what you invest in, is important. At the start of my formal FIRE journey, I had a look at my asset allocation. I selected 3 ETFs as my core index portfolio. After some analysis, I considered it diversified enough.Inspired by Tristan from Dividends down under, I decided to push my limit a little further and do a sector break down. At the same time, it is a good excuse to migrate my old analysis sheet to a google docs sheet. I can now access it from everywhere.
Looking at the major sectors, I do have the impression that I am well diversified across all sectors. The biggest by far is the Financial Sector. Compared to the S&P 500, I have the top 2 inverted. As one needs to be the bigger one, I am ok with this: it does not worry me too much.
A further analysis has shown me that the financial sector individual stocks are not in the top 5 of the IWDA (Apple, Microsoft, Exxon are some of the top 5 holdigs). The same goes for EMIM. Financials are the biggest sector, when looking at individual postions, they are not the biggest… A good balance. In the CESL, the first financial stock pops up at postion 2, creating an overall portfolio weight of 0,246 pct in my portfolio. The IWDA top financial holding creates a 0,56 pct representation. The top 5 of IWDA is approx 4,5 pct and is not financial.
Plotting all my holding on a world map is fun to do. It is actually amazing how easy it is with Google docs.
Almost the whole world is covered. I am invested in 39 named countries, as seen in the map.3,63 pct is invested in non named countries.
A more regional splits brings the following.
Now that the analysis is complete, I am happy with what I have. There are no outliers in the industry allocation and the geographical allocation is in line with my goals.
Are you happy with your diversification?