What are the largest individual shares within your Smart Portfolio?

Smart Portfolios invest in ETFs and have significant exposure to some of the most exciting and well—known growth stories from the global markets. Here we delve into the details.

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Shares

It can be difficult to find out what you own when you buy an investment portfolio, but exchange traded fund (ETF) providers are completely transparent about their weights. Owning ETFs offers exposure to some of the most exciting and innovative global companies, but in quantities small enough to allow you to sleep at night if some high profile shares get into difficulty.

IG Smart Portfolios are designed to give long—term investors the highest possible level of return for a specific level of risk. By adding different asset classes to the portfolios we can target areas of the markets which are less correlated to each other, helping smooth your returns over the investment cycle. In practice this means that when one market performs poorly, a less correlated market (such as Japan), might be performing well.

This is the key to sensible long—term portfolio management. Get long—term exposure to asset classes which reward investors with inflation plus returns, and tactically adjust portfolio weights to target pockets of relative value.

Nevertheless, the largest global companies play an important role in determining your returns.

What exposures do we take?

Looking at our most widely held aggressive (number five) portfolio, it owns 13 ETFs which between them have more than 5000 individual holdings.

In the table below we show the top 15 positions, as of 30 September 2018.

Position Name Weight Country
1 iShares Physical Gold ETC 3.7
2 Apple 1.7 US
3 Microsoft Corp 1.4 US
4 Amazon.com 1.4 US
5 Alphabet 1.2 US
6 Royal Dutch Shell 1.1 UK
7 Nestle 0.7 Switzerland
8 Facebook 0.7 US
9 Berkshire Hathaway 0.7 US
10 HSBC Holdings 0.6 UK
11 JPMorgan Chase & Co 0.6 US
12 Johnson & Johnson 0.6 US
13 Exxon Mobil Corp 0.6 US
14 BP 0.6 UK
15 Novartis 0.5 Switzerland

Source: IG, September 2018

Whilst there is a lot of diversification, the top 15 positions still account for almost 16% of the total invested and there are allocations to the best—known technology, oil and banking stocks. A £1000 investment would acquire circa £14 of exposure to Amazon, with the only commission paid being the very small bid—ask spread of the underlying ETF — not bad at all for a share that traded in the market for $1800, at the time of writing this.

You do take reasonable exposures to larger companies, but if you compare the riskiness of this to owning a single equity index, the benefits become clear. A diversified portfolio really does help to reduce the overall risk of any individual company getting into trouble.

Buyers of the FTSE 100 have 24.1% exposure to three companies: Shell (11.3%), HSBC (6.9%) and BP (5.9%), while within the aggressive portfolio there is just a 1.06% allocation to Shell. Similarly Apple is a 4.2% weight in the S&P 500, while in this portfolio it has a 1.7% allocation.

If you do want greater exposures to single stocks, you could use an IG Smart Portfolio as a sensible core portfolio while trading your best ideas on our low—cost share dealing platform.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.