Part 6 - Complete portfolio

The full monty

This post is part of an 8-post series on the construction of my portfolio.

In the previous posts of this series, I set a strategic asset allocation designed to deliver a 6% nominal return during the first 10 years of my retirement. Following that, I selected individual equity, bond, and cash building blocks. Let’s now look at how the entire portfolio stands when fully constructed. This compiles the choices described in the last three posts.

As mentioned before, I limit myself to 10 products. Enough to steer the regional and currency allocation, few enough to keep it manageable.

Portfolio blueprint

The table below outlines the selected products and absolute weights in my retirement portfolio.

Table: Final portfolio allocation (yields: trailing 12 months, justETF, October 2026)

What does it cost?

When relying on a steady 4% withdrawal rate while trying to shield capital from inflation, fees eat directly into retirement income. Every basis point saved stays in the pot. I calculated the weighted average TER (Total Expense Ratio) in a spreadsheet: 0.195% per year. Just under 0.20%.

For a diversified portfolio with specialised assets like physical gold, emerging market debt and some hedging, 20bps is fine.

The costs comes down to balancing two things:

• Cheap core index blocks pull the average down. The SPDR S&P 500 ETF costs just 0.03%, and my broad European exposure via Xtrackers Stoxx Europe 600 is 0.07%.
• Active and targeted dividend strategies cost more. My dividend bucket sits at a blended 0.31%, and the EUR-hedged EM sovereign bond allocation runs 0.50%.

Keeping costs down to that 0.20% baseline matters over a 20-year retirement. BTW, on a €500 000 portfolio, the gap between 0.20% and the 1% a bank might charge is €4 000 a year. Money that stays invested instead of leaving the pot.

Enough income?

In part 1 I set a floor of 2% distributions. The weighted trailing yield of the portfolio is 2.38%. Most of it comes from the dividend funds (~2.9% on average), the bonds and the cash fund. The S&P 500 adds little at 0.85%. If the ECB cuts rates and my cash fund yields 2% instead of 2.94%, the total drops to about 2.29%. Still above the floor.

My real Euro exposure

In part 1, I set a target: 40% EUR or EUR-hedged. Here’s my portfolio for EUR:

• Xtrackers Stoxx Europe 600 (5%) - about half in euros; the rest is mainly UK, Switzerland and the Nordics.
• Fixed income & cash (20%) - EUR corporate credit (5%), EUR-hedged EM bonds (5%), short-term Euro cash (10%).
• Xtrackers Euro Stoxx Quality Dividend UCITS (5%) - all Euro exposure.

Direct EUR exposure comes to about 27.5%. Counting the euro companies inside my global dividend funds, it’s roughly 34%. Not the 40% I wanted, but I will have to live with it for now.

The only way to get more EUR at this stage is hedging, and that’s simply too costly.

Does it tick the boxes?

Does this setup satisfy my retirement rules? Let’s check:

• Return potential: 75% of the portfolio sits in dividend payers and core market trackers. With the return estimates from part 1, that’s 6.33% before costs, 6.13% after.
• The remaining 25% - corporate credit (5%), EM sovereign bonds (5%), gold (5%), ultra-short cash (10%) - is there to help if stocks don’t deliver and times are tough.
• Underweight US: my stocks are US 44%, Europe 30%, Other 26%, against a 45/30/25 target. Well below the ~71% US in MSCI World.
• Distributions: 2.38%, above my 2% floor.
• Products: 10. Exactly at the limit.
• Volatility: checked in part 7.
• As mentioned, EUR coverage is still a weak point. I might revisit this.

An important note. The 25% invested in other asset classes than stocks should not be seen as a true defensive bucket. The 10% sitting in corporate credit and EM sovereign debt is positively correlated with the stock market. In a real sell-off, credit spreads widen, and EM debt tends to drop right along with equities. Over the long run these assets are more stable than stocks, but they are still risky assets, not a safe harbour.

Trade-offs

• Vanguard High Dividend Yield at 25% is my largest position and my biggest source of income.
• Japan, Canada and Australia are small; “Other” is mainly China, India, Taiwan and South Korea via EM IMI.
• No dedicated value fund; I rely on the value tilt of dividend stocks.

What is next?

Putting my portfolio together on paper is a good step, but keeping the machine running smoothly through all sorts of different market circumstances is where the real work begins.

But first I need to take a closer look at the predicted performance of my portfolio in part 7. Am I getting my 6% return with a reasonable risk?