Cash Club: Portfolio housekeeping

Earlier this year we did a Wild and Tax-Free podcast with Kristia, Simon, Stealthy Wealth, Patrick McKay and Carly Barnes, where we discussed our tax-free portfolio strategies.

Stealthy mentioned that he takes his RA portfolio into account when making decisions on what to buy for him and his family. This led me to think hard about my portfolio since I am more knowledgeable now than I was about three years ago.

My tax-free investment journey started with ETFSA with the following products:

Coreshares S&P 500
CoreShares S&P Global Property
Satrix 40
Satrix Property

As time went on and I learned more, I realised that two property ETFs is somewhat a duplication, and that Coreshares S&P 500 only gave me exposure to US stocks – and I wanted to own the world for geographical diversification purposes.

I chose to replace Coreshares S&P 500 with Sygnia Itrix MSCI World. I didn’t sell the Coreshares S&P 500 and Satrix Property ETF units, I just stopped contributing to it. I also added Satrix MSCI Emerging Markets and Ashburton Midcap ETF because I wanted exposure to the rising stars as they rise, and the Absa TRACi ETF because I wanted to have something close to cash for protection.

I then moved to Easy Equities but kept my etfSA.co.za account. I moved because it’s cheaper and I liked the idea of being able to buy fractions of assets, which was not the case with etfSA.co.za.

After the podcast, I wanted to clean my portfolio because I felt eight ETFs are too many, especially at a time when we were talking about one ETF to rule them all.

So I did the following: I first checked what was in my provident fund, since I don’t have an RA as yet. I also investigated the RA funds that I would invest in once I have the funds.

My friend Lesegisha pointed out that most RAs would be heavily exposed to JSE stocks – especially top 40 stocks, because of reg 28 compliance, which is the case with my provident fund. That’s why I will be dropping my Satrix 40 ETF from my TFSA portfolio.

I’m going to keep the following until retirement:

Satrix Property 20%
Satrix World 50%
Satrix Emerging Markets 30%

I’m selling everything and buying those three, and I’ll let my provident fund and RA handle my South African exposure.

However, I’m keeping S&P 500 and the Top 40 ETFs for my son, because he doesn’t have that Top 40 exposure. I’m also looking to include a property ETF in his portfolio as well.

I didn’t take into account my investment club portfolio because it won’t exist in its current format for long enough, as it will change in 10 years or so.

Njabulo Nsibande is a Just One Lap user-turned-contributor and a founding member of an investment club. His “Cash Club” blog details his experiences balancing the financial obligations of a young parent with his investment aspirations.

Follow Njabulo’s journey here every month. You can also follow his trading journey by listening to his Village Trader podcast.

Find him on Twitter: @njabulo_goje.