Thread by @MoneyRehab_

ETF101 - Always read the Minimum Disclosure Documents(MDD). They tell you what companies countries and sectors make up the ETF.

If you are thinking of adding a new ETF to your portfolio, compare that with what you already have, and see if adding the new ETF adds any real value..

Example 1: ETF issuers
The main issuers have global ETFs that track the "MSCI World Index", therefore holding more than 1 of the following offers no benefit (diversification or otherwise)
1nvest MSCI World
Satrix MSCI World
Sygnia Itrix MSCI World

Just pick 1 and buy more of it

Example 2: S&P 500
All the following track the "S&P 500 index"
Sygnia Itrix S&P 500
Satrix S&P 500
CoreShares S&P 500
1nvest S&P 500

Again, no real benefit to holding more than 1 of the above.
Just pick 1 and buy more of that preferred ETF

Now the country contributors; Approximately 60% of the MSCI World Index is USA, so if you buy the S&P 500 index as well, be aware that you are almost doubling up on USA makeup, and not necessarily diversify as much as you might think you are. there'll be approx. 60% correlation

Example 3: JSE Top 40

All the following track the "FTSE/JSE Top40 Index":
- 1nvest Top 40
- Ashburton Top 40
- Satrix Top 40
- Sygnia Itrix Top 40

Again, no real benefit to holding more than 1 of the above.
Just pick 1 and buy more of that preferred ETF

Example 4: In an earlier tweet, you will see the property ETFs of the different issuers move in similar fashion as well, even though the tracked index is not the same one. In this case, the sector/benchmark is the same

Understanding economic relationships between ETFs, companies, sectors and countries if very important.

Example 5: The relationship between 4IR and IT sector. The success of 4IR will naturally come through the IT sector. No real benefit in owning both

Top: ETF5IT - bottom:SYG4IR

Hope this will be useful to especially novice investors. There is no wrong or right way, Just being fully aware of what you are buying and why you are buying it..

P.S - i just hate a messy dashboard that adds no value, when 1 or 2 will do just as good a job😖

It is important to have a defined strategy, then aligning to that strategy whenever you're adding to your portfolio
#ETFs #FinancialHealth2020

A good place to find all the TFSA etfs MDDs when doing your research:
etfsa.co.za/ETFs.htm