ETF Indices: Your Real Exposure To The US. Winton launches 2 Portable Alpha ETFs & Most Generous Pensions Worldwide.

One of the most common questions investors ask is: ‘How much equity risk should you take?’

Today, we present a powerful framework to help you determine the equity allocation for your portfolio.

Three Tests Are Needed In Order To Determine An Equity Allocation – an investor needs to understands her ability, willingness and need to take risk. The Ability To Take Risk – is determined by four factors including the investment horizon, the human capital, the need for liquidity and the presence of a Plan B. The Willingness To Take Risk – is determined by the ‘stomach acid’ test, including questions like: Will I be able to enjoy life and not lose sleep worrying about my portfolio when the going gets tough? The Need To Take Risk – is the rate of return required to achieve an investor’s financial objectives. Staying rich requires an entirely different approach from getting rich. When Conflicts Arise – choices may be more difficult. A suggestion may be to take the lowest equity allocation derived from the three tests. Otherwise, if the risks show up the plan will fail.

We see Lightyear as one of Europe's most promising investment platforms. The broker offers commission-free ETF investing (whilst fully commission-free in UK on personal accounts, fund manager fees apply), multi-currency accounts, portfolio transfers, recurring investing, and cash management through its Vaults product, which is a solid offering given it only launched in 2020. Unlike some competitors, Lightyear does not appear to be conflicted with internalised execution models or proprietary trading venues. Nor does it push CFDs or other speculative products that are a losing proposition for most investors. It has developed a strong reputation for platform usability. Customer support is top notch, which is rare for a neobroker.

Importantly in our assessment, we have also found management to be unusually transparent and responsive compared to competitors. Today, Lightyear operates as a neobroker rather than a full-service international brokerage. Investors cannot directly choose their execution venue yet and its ETF universe remains smaller than that of its direct competitors.

Company domicile tells only part of the story.

Many large companies are global businesses, making corporate domicile an incomplete measure of economic exposure.

Companies in the S&P 500 Index generate more than 40% of their revenues outside the US, giving US investors meaningful exposure to economic activity abroad. But that does not make US and international equity exposures interchangeable. US revenues account for only 19% of revenues in the MSCI EAFE Index and 22% in the MSCI Emerging Markets Index, compared with 58% for the S&P 500 Index. The remaining revenues are spread across a different mix of economies around the world.