Build and run an ETF portfolio

Set your asset allocation, choose and compare ETFs, rebalance by rule and run the portfolio from a written plan.

You bought your first ETF. Now what? Most people stop there, add a second fund on a friend's tip, and end up with a pile of holdings and no plan for a crash. This course turns one fund into a portfolio you can run for decades. You set the split between shares and bonds first, then pick indexes and funds to fill it, compare ETFs on cost, tax and domicile, and decide how SRS and CPF fit in. It ends with a written investment policy statement, so the next market fall meets a plan instead of a panic.

What you'll be able to do

• Set a target asset allocation from your horizon, required growth and tolerance for losses
• Choose the indexes that fill your allocation and check the combined country exposure
• Compare ETFs on TER, tracking difference, domicile, withholding tax, size and spread
• Choose accumulating or distributing share classes and a currency hedging policy with reasons
• Write a rebalancing rule and test it against a made-up crash
• Place holdings across cash, SRS and CPF accounts as one portfolio
• Write and maintain a one-page investment policy statement with a yearly review

Syllabus

Module 1: Make asset allocation the first decision

Set the split between shares, bonds and cash that drives most of your portfolio's ups and downs, based on your time horizon, the growth you need and how you behave in a fall.

• 1.1 Your allocation does more work than your fund choice
• 1.2 What shares, bonds and cash each do in a portfolio
• 1.3 Set your split from horizon, need and nerve
• 1.4 Draft your target allocation

Module 2: Choose the index before the fund

Understand how indexes are built and weighted, compare world, US, emerging market and Singapore indexes, and decide which ones fill the share part of your allocation.

• 2.1 What an index is and how it decides weights
• 2.2 World, US, emerging or Singapore: what each index gives you
• 2.3 One world fund or a set of building blocks
• 2.4 Map indexes onto your allocation

Module 3: Compare ETFs that track the same index

Compare ETFs on what they really cost you: expense ratio, tracking difference, domicile and withholding tax, fund size and trading costs, and pick the fund for each part of your plan.

• 3.1 Expense ratio and the costs it leaves out
• 3.2 Tracking difference is what you actually lost to the index
• 3.3 Domicile and withholding tax on dividends
• 3.4 Fund size, trading volume and the bid-ask spread
• 3.5 Build an ETF comparison sheet

Module 4: Decide between accumulating and distributing funds

Understand how each share class handles dividends, compare them on tax, admin and behaviour, and choose the right one for each holding in your plan.

• 4.1 Two ways a fund can handle its dividends
• 4.2 Tax, costs and the behaviour each one encourages
• 4.3 Choose the share class for each holding

Module 5: Settle home bias and currency exposure

Decide how much to hold in Singapore versus the world, understand what currency moves do to an SGD investor's returns, and choose whether to hedge.

• 5.1 Home bias: holding too much of what you know
• 5.2 What currency moves do to your returns in SGD
• 5.3 Hedged share classes: when they help
• 5.4 Set your home and currency limits

Module 6: Rebalance by rule, not by mood

Choose between calendar and threshold rebalancing, use new contributions to rebalance cheaply, and write a rule you will follow in a crash and a boom.

• 6.1 Why your allocation drifts
• 6.2 Calendar or threshold rebalancing
• 6.3 Rebalance cheaply with new contributions
• 6.4 Test your rule on a made-up crash

Module 7: Invest through SRS and CPF with care

Understand how SRS and CPFIS work for ETF investors, what each costs you in lost interest or flexibility, and which parts of your plan belong in which account.

• 7.1 How SRS works for an ETF investor
• 7.2 CPFIS: what you can buy and what it costs you
• 7.3 Which money goes in which account
• 7.4 Draw your account map

Module 8: Write your investment policy and review it every year

Write an investment policy statement that sets your allocation, funds and rules on one page, and run a yearly review that changes the plan only for real reasons.

• 8.1 What goes in an investment policy statement
• 8.2 Rules for when markets fall and when they boom
• 8.3 The yearly review: what to check and what to leave alone
• 8.4 Write your investment policy statement

Frequently asked questions

How long does the course take?

About nine hours across eight modules, including the exercises and the final project. Most people finish in four weeks at two to three hours a week.

Will you tell me which ETFs to buy?

No. The course is education and does not replace financial advice. Examples refer to types of fund, such as a world equity ETF, and you choose your own funds with the comparison method taught here. For advice on your situation, speak to a licensed financial adviser.

How is this different from Investing 101 and Investing in US and global markets from Singapore?

Investing 101 gets you to your first account and first ETF. This course builds the full portfolio and the rules to run it. Brokers, custody and US estate tax detail are covered in Investing in US and global markets from Singapore.

Do I need a large sum to start?

No. The method works for a monthly savings plan as well as a lump sum. Lesson 3.1 shows how to check that fixed fees do not eat a small regular investment.

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