The MoneyWeek ETF portfolio – July 2026 update
The MoneyWeek ETF portfolio saw its annual rebalancing at the beginning of April, as the Middle East crisis raged. We cut a bond position that was stale and superfluous, and held the cash to reinvest once the outlook was clearer. This week, I set out to write that promised update – only to see the conflict ramp up to its worst for at least a month.
Nonetheless, this is still a good time for a decision. The point of the ETF portfolio is certainly about sharing our top-down views on markets, but it is also about having a process for investing. Holding lots of cash for too long because of fears of what might happen is a good way to earn worse returns over the long term.
The most protective part of our portfolio lies in very short-dated government bonds (essentially a cash proxy with a near-4% low-risk yield) and short-dated inflation-linked bonds (we think there is a growing risk of inflation picking up on a one-year view). These invest in US bonds, but are hedged back to sterling. We would hold UK bonds instead for simplicity, but the equivalent ETFs don’t exist.
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Oil stocks have benefited us in this crisis and remain reasonably attractive, but we would consider trimming them if peace sets in.
Gold has not done as well lately as many investors expected and with hindsight we can be grateful that rebalancing in April automatically took some profits from a strong run-up. My view is that gold often doesn’t shine in the immediate phase of a crisis and the key factor is whether fears about inflation and the dollar’s role as global reserve currency continue to increase gold’s appeal over the longer term.
Balancing tech exposure in our ETF portfolio
Meanwhile, our equity positions viewed together mean we are far less concentrated in the US than the global index. Our decision to switch into the equal-weighted version of the S&P 500 last year – to reduce our concentration in the tech mega-caps – was early, but has not hurt us too much: the market has shown signs of rotating away from them lately. We have done well in Japan and in emerging markets. However, we need to be very aware of the extent to which non-US markets are geared to the AI trade.
I have discussed this several times with regard to emerging markets recently, and this leads us to an obvious decision. Last week (issue 1319), I suggested using the new WisdomTree True Emerging Markets (LSE: WEMP), which does not hold China, Korea and Taiwan, as a way to balance some of the tech and East Asia bias that is dominating the emerging-market index. Using some of the cash to add 5% in this should give us more diversification, although note that since this is not a well-established core index, it is a bit harder to be sure what performance we can expect in different scenarios. That leaves 5% still in excess cash, which I will look at next time in conjunction with the one position I have not yet discussed – real estate.
(Image credit: Future)
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