Is it possible to invest in only one ETF?

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Here are 3 potential ETFs that can assist you in making this decision

Is it possible to invest in only one ETF?
  • Level: For beginners
  • Reading time: 5 minutes
What to ecpect in this article
Many investors, when entering this world, are haunted by the question: How many ETFs should I have in my portfolio? One for the US, one for emerging markets — and should I include Europe as well? However, relying solely on equities is too risky; therefore, incorporating bonds and other assets is prudent.
Have you found yourself in this situation before?
Obviously, there is no one-size-fits-all solution. Each case must be assessed on its own merits. However, the answer to all these doubts may be simpler than you think.
Let's now examine some indices and, consequently, ETFs that might be more than enough to get you started in this manner. These are not financial tips but merely examples. Each person must then evaluate their situation and implement the strategy that best suits them.
Let's start with a classic: World ETFs. Instead of buying individual ETFs for the US, Europe, China, and emerging markets, you can simplify by purchasing one ETF that covers all these countries. This results in:
  • Reduced transaction costs with your broker
  • Less effort: You will spend less time buying, monitoring, and selling your ETFs.
  • Less rebalancing: The ETF automatically rebalances the share of each stock according to their capitalization.

1. ETFs on MSCI World

The MSCI World index is a global equity index that represents large and medium-sized companies in 23 developed countries. Widely used as a benchmark by investment funds and portfolio managers, this index comprises over 1,500 stocks and is weighted by market capitalization. This means that companies with a larger market capitalization exert a greater influence on the index. The MSCI World Index's objective is to provide broad exposure to global equity markets and reflect market conditions worldwide.
Within the index, U.S. equities hold the largest weighting, accounting for over 70.0%, followed by Japan (6.10%) and the UK (3.99%). The dominant sectors in the MSCI World index include the IT sector (23.12%), the financial sector (15.08%), and the healthcare sector (12.20%).
If you're also interested in emerging markets, consider the following …

2. ETFs on MSCI All Country World (ACWI)

The MSCI All Country World Index (ACWI) is a comprehensive global equity index that represents both developed and emerging markets. Encompassing over 3,000 equities from 49 countries, it covers approximately 85% of the potential global market capitalization.
U.S. equities maintain the largest weighting within the index at 62.72%, followed by Japan (5.46%) and the UK (3.57%). The primary sectors in the MSCI ACWI index are the IT sector (22.95%), the financial sector (15.82%), and the healthcare sector (11.33%). Notably, emerging market equities account for 10.50%, while developed market equities hold 89.50%.
Compared to the MSCI World, the MSCI ACWI includes emerging countries, and the U.S. weighting is slightly lower.
Now, let's delve into something different – Factor ETFs.

3. Multi-Factor ETFs

Multi-Factor ETFs amalgamate various investment styles into a single product. The underlying theory is that different investment factors exhibit distinct return cycles. By combining these factors, an attempt is made to capture the benefits of each during different phases of the market cycle.

Examples of Factors:

  • Value: Selection of stocks that seem undervalued relative to their intrinsic value.
  • Quality: Focus on companies with robust fundamentals, such as stable profits and low debt.
  • Size: Investment in companies of varying sizes, from large-cap to small-cap.
  • Volatility: Preference for stocks with smaller price fluctuations for greater stability
  • Momentum: Focus on stocks displaying an upward trend in price.
This approach automates stock selection, enhancing efficiency and reducing susceptibility to human bias.

ETF Comparison

In terms of fund size, Multifactor ETFs generally have smaller sizes. The Total Expense Ratio (TER), representing costs, falls within the range of 0.2% to 0.3% in all cases.
Let us now look at returs and risks
MSCI World MSCI ACWI Multi-Factor
Yield 1 year 18,77% 16,78% 9,40%
Yield 3 years 37,25% 31,25% 39,03%
Volatility one year 11,93% 11,22% 10,96%
Volatility 3 years 15,29% 14,33% 13,10%
Yield/risk one year 1,57 1,5 0,86
Yield/risk 3 years 0,73 0,66 0,89
Source: justETF Research, 17.01.2024
The MSCI World is showing green a lot. It has reported the highest returns over the past year, while the Multi Factor ETF has outperformed over the last 3 years.
When assessing Yield/Risk, a metric that monitors the return achieved for each unit of risk taken in a year, over 3 years, the Multi Factor ETF shines as well.


Your choice among these ETFs should align with your risk appetite, investment characteristics, and the analysis you've conducted. These ETFs offer a straightforward means to invest, whether through a Cost Averaging approach or a lump-sum investment, avoiding the complexity of managing numerous overlapping ETFs. Moreover, they can potentially yield returns comparable to or even surpassing those achieved with a diverse portfolio.
However, individuals opting for a single equity ETF must be cognizant of the inherent risks and volatility within the equity market. Always consider your risk tolerance and investment goals before making a decision.
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