Today, I’m sharing the details of my three ETF pension portfolio. If you’re new to investing or have heard about ETFs and want to learn more, you’re in the right place! ETFs, or Exchange Traded Funds, are a fantastic way to invest, especially for beginners. They offer a low-cost, passive way to build a diverse investment portfolio with minimal effort. All the figures are correct as of Jan 2025. If you’re looking at investing in any of these ETFs then please do your own research. When you invest your capital is at risk and past performance isn’t indicative of future performance.
What is an ETF and Why Choose One for Your Pension?
ETFs are a type of investment fund that trade on stock exchanges, much like individual stocks. They pool together assets such as stocks, bonds, or commodities, allowing you to invest in a variety of assets with a single purchase. The best part? They’re passively managed, which means they often have lower fees compared to actively managed funds. This makes them an ideal choice for building long-term wealth, particularly in a self-invested personal pension (SIPP).
A few years ago, I decided to take control of my retirement by setting up a SIPP. I brought together all my old workplace pensions and consolidated them into one place. This allows me to make investment decisions myself and track my future pension growth with full visibility.
Why AJ Bell?
I chose AJ Bell as my SIPP provider after a thorough analysis of different providers and their fee structures. It came out as the most cost-effective option for my needs. However, there are plenty of other SIPPs available on the market, and I recommend you do your own research before making any decisions.
Before diving into the specifics of my portfolio, I want to clarify that this is not a sponsored post, and I am not affiliated with AJ Bell in any way. This is simply my personal choice after researching multiple options.
Portfolio Breakdown: The Three ETFs I Invest In
Now, let’s get into the three ETFs that make up my SIPP. I’ll also share some details about the performance and returns of each ETF so you can see how they’ve been doing for me.
1. UBS S&P 500 ESG ETF (38.5% of Portfolio)
The first and largest holding in my portfolio is the UBS S&P 500 ESG ETF (code: S5SD). This ETF makes up 38.5% of my SIPP. It tracks the S&P 500 index, but with an ESG screen. ESG stands for Environmental, Social, and Governance, and this ETF only includes companies that meet specific sustainability and ethical standards.
What interests me about this ETF is that its 5-year annualized returns are higher than those of a simple S&P 500 ETF, which means I get the added benefits of ESG investing without sacrificing performance.
- 1-Year Return: 29.42%
- 5-Year Annualized Return: 16.44%
- Ongoing Charges: 0.10%
- Three-Year Standard Deviation: 12.31% (Lower standard deviation means lower risk)
- Equity Holdings: 314
2. Invesco FTSE All-World ETF (38.3% of Portfolio)
The second largest holding in my portfolio is the Invesco FTSE All-World ETF (code: FWWRG). This ETF makes up 38.3% of my SIPP and offers broad global exposure by tracking the FTSE All-World Index. It includes companies from all over the world, providing excellent diversification.
I chose this ETF because of its lower fees compared to other similar ETFs, such as the Vanguard FTSE All-World ETF. Additionally, it has performed well in recent years.
- 1-Year Return: 22.79%
- Equity Holdings: 2,416
- Ongoing Charges: 0.15%
3. iShares S&P 500 Information Technology Sector ETF (23.0% of Portfolio)
The third ETF in my portfolio is the iShares S&P 500 Information Technology Sector ETF (code: IIT). This ETF focuses specifically on the technology sector within the S&P 500, holding just 69 tech stocks. Given the strong performance of tech stocks, this ETF has made up 23% of my SIPP, even though I hadn’t initially planned for such a large proportion.
While this ETF has had excellent returns, it comes with higher risk due to its focus on tech, which is often more volatile.
- 1-Year Return: 44.36%
- 5-Year Annualized Return: 25.23%
- Ongoing Charges: 0.15%
- Three-Year Standard Deviation: 19.31% (Higher standard deviation indicates higher risk)
- Equity Holdings: 69
Understanding Crossover in My Portfolio
It’s important to note that there is crossover between the different ETFs in my portfolio. For example, both the Invesco FTSE All-World ETF and the UBS S&P 500 ESG ETF have significant exposure to US stocks, meaning there’s overlap in my holdings. As of now, around 86% of my portfolio is in US stocks, which I’m comfortable with, given the performance and stability of the US market.
However, if you’re aiming for a portfolio with no crossover between different ETFs, you should carefully consider your investments to avoid this overlap. Additionally, I’m aware that my portfolio is tech-heavy, which has worked well for me so far. If you’re not comfortable with this concentration in technology, you may want to diversify further.
Top Holdings in My Portfolio
While I don’t directly own individual stocks, the top 10 holdings within my ETFs are some of the most well-known companies in the world. These stocks make up a large proportion of my pension portfolio.
- Apple: 10.86%
- NVIDIA: 9.52%
- Microsoft: 9%
- Broadcom: 2.22%
- Alphabet (Google): 1.80%
- Tesla: 1.75%
- Alphabet C-Class Shares: 1.48%
- JP Morgan Chase: 1.08%
- Amazon: 1.02%
- Eli Lilly & Co: 1%
Final Thoughts
Overall, I’m happy with the performance of my self-invested personal pension and look forward to seeing how it grows as I approach retirement. While I currently hold a mix of ETFs with significant exposure to US stocks and technology, I plan to revisit my portfolio regularly. As I get closer to retirement, I may adjust my allocation to include more bonds or cash for a more stable portfolio.
I may also consider diversifying into other assets such as commodities, like gold and silver, as I near retirement. For now, however, I am comfortable with my current three-ETF strategy.
If you’re considering opening a self-invested personal pension or are already invested in ETFs, I’d love to hear about your experiences. Feel free to leave a comment with any questions or insights you have!
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