Download Subtitles for 'After Years of Investing' Video 2026

In my previous video, I went through my investing plan for 2026 and showed where all my portfolios currently stand. However, this video is a deeper dive into something more specific, what I'll actually be investing into and how I arrived at those decisions. This isn't investment advice, and I'm not claiming that I found the perfect portfolio. I'm just sharing how I think about investing, what's important to me, and how I've arrived at my decisions. Over the last year, my approach to investing has changed a fair bit. I've gone from quite a complicated strategy to something a bit more simple, but also very intentional. So, in this video, I'll explain what my strategy actually is, what I look for when choosing between ETFs, and why I think this current setup is what I'll be able to stick to over the long term. Just a bit of context before we jump in. The reason why I'm making this video is because I personally find it super interesting to see how others invest. Not because I want to blindly copy them, but just because seeing how others invest, their process [music] allows me to reflect on my own process and my own decisions. That's the mindset I really want everyone to watch this video with. What's suitable for me may not be suitable for you. That's really important. And more importantly, I might not even have the most optimal portfolio for myself, never mind for anyone else. We all have different risk tolerances, different time horizons, different preferences, and there's never any guarantees of investing. So, it's always important to do our own research and pick a portfolio that suits us. And before we jump into what I'll be investing into, it's important to quickly establish how my investment portfolio changed over 2025. So, at the start of 2025, the bulk of my ISO was split across five different factor ETFs. And what I discovered over the course of that year that it just was a bit too complicated for me as behaviorally challenging. I was secondguessing myself. I was doubting myself. I was wondering about what ETF to add to, what to sell, and I just decided that this sort of approach to fact investing, building an ETF portfolio was no longer suitable for me. And looking at my portfolio now, as you can see, the portfolio balance is currently £53,000. [music] And how I structure it is a lot more intentional. I split my portfolio across a core fund, satellite funds, and then a very small amount to individual stocks. As you can see in the asset allocation here, the core fund makes up about 60% of the portfolio, and then about 30 to 35% into satellite funds, and then a very small amount to individual stocks. And whilst I'm definitely not claiming this is perfect and there's more work to do, thinking about my portfolio like this has really helped me personally. And I'd also like to quickly thank Trading 212 for sponsoring today's video. I've been using Trading 212 for a number of years now, and I will be continuing to use them for my stocks and shares in 2026. As a viewer of my channel, they're kindly offering you free fractional shares worth up to £100 [music] when you sign up via the link in the description, or alternatively, you can scan the QR code on screen. If you've signed up and not received your fractional shares within 10 days of opening your account, you can go to the menu page, use promo code section, type in Tom, and that will allow you to claim your fractional shares. Thanks again to Trading 212 for sponsoring today's video. Okay, so the most important thing about how I decided what to invest into are the three principles that drive my decisions. And these three principles are one, diversification. I value the benefits of diversification in a portfolio based on my risk tolerance. I don't want a concentrated portfolio. The second thing is I want my portfolio to be evidence-based. I want my strategy to be backed by research, by evidence. And whilst that's never any guarantee of success, I do enjoy evidence-based strategies. And it does make me feel more confident with my portfolio than it is based on some academic evidence-based backing. And that leads us on to the third principle, and that is it has to be easy to stick with. It doesn't matter how optimized or how sophisticated a portfolio is. If you can't stick to it, then it's no good. And that's what I found out over time with my previous strategy. I just wasn't able to stick with something like that. What I've really come to learn is that behavior matters just as much as the theory. Okay, now on to what I actually investing into. The biggest part of my investing strategy for 2026 is a global fund. And to explain quickly why I want to have a global fund, we need to understand what a global fund is. So a global fund, when I say a global fund, I mean a fund that contains stocks from all over the world, developed and emerging markets. And these funds are usually market cap weighted. Market cap weighted meaning the greater the market value of a company the greater the waiting it has in the fund. So at the moment at the time of recording the biggest companies in there will be the likes of Nvidia, Microsoft and Apple. But global funds rebalance accordingly. And this is a really important part. As things change over time, so does a global fund and its allocations. And things do change over time. As you can see on this chart here, back in the 1980s, Japan had the greatest waiting in a developed market index. But that quickly changed and the US went on to dominate. And it may be easy to look at the world now and think that the US stock market of course will continue to dominate. And it may well do. I have no way of knowing. But because I have no way of knowing, I like the global fund and the diversification and the rebalancing that brings. If things change over time, the global fund will change accordingly. If things don't change and the US remains a greatest part of the global stock market, then that's fine by me because I will also benefit because it will stay the greatest part of the global fund. 2025 was one such example of where geographical diversification has been beneficial because for UK investors with the pound strengthening against the dollar, the US component of a global fund hasn't delivered that good of returns. But the other parts of a global fund, European stocks, emerging markets have done pretty well. And even the UK stock market did do pretty well in 2025. Again, one year doesn't mean much, but it's just an example of where geographical diversification can be beneficial. So, I've explained what a global fund is to me. It contains both developed and emerging markets and its market cap weighted. But also, there's a few other important things when it comes to picking a global fund. For me, I want it to trade in pounds. I want the fund to be listed in pounds. What that means is that when I come to buy it or sell it on my platform, I won't incur FX fees. If I hold pounds on my platform and buy the shares in pounds, there'll be no FX fees. And I don't want to have to incur those fees because in general, the lower the fees, the more my returns I'm going to get to keep. And then the other important thing with global funds for me is I want it to be accumulating because it's the core part of my portfolio, the largest part, and it's for the long term. I'm not bothered about receiving dividends and manually reinvesting them. I want an accumulating ETF that retains the dividends within the fund and automatically reinvest them. That's what works for me. But I can see the argument for both. Some people like distributing ETFs and manually receiving those dividends because it gives them a motivation boost. I really don't think there's a right answer here, but for me, I want an accumulating ETF for that hands-off approach. So, once I apply that criteria and use a website like just ETF to filter through ETFs, filter through global funds, there's actually only four to choose from. I have the Vanguard Footsie All World, the Invesco Footsie or World, the Eyesshares Msei All Country World Index ETF, and the Spider Msei All Country World Index ETF. And this is the result of narrowing it down based on that criteria I covered containing both developed and emerging market stocks accumulating dividends automatically reinvested and they have a listing in pounds, so I won't have to incur foreign exchange fees. How I go about picking from here is I think about a few things. Now, the most obvious difference is that they track different indexes. There's the Footsie All World and the Msei All Country World Index. But when it comes to my decision-m, I don't really think too much about this. MCI and Footsie Russell are both index providers and Footsie or World and MSEI or Country World. These are just their own takes on a global index that contain both developed and emerging markets. There may be very subtle differences between them including one country and the other one might not include that country or they may classify a country as developed whereas the other one classifies a country as emerging, but overall they are extremely similar. And when it comes to picking between them, this is something I don't personally consider. They all do the job of delivering me exposure to the global stock market. Another thing I look at is fund size. Fund size is important because the larger a fund is, the greater the liquidity and the bid offer spread, the difference between the buy and sell prices tend to be tighter for larger funds. And if a fund is very large, there's very little chance of the ETF provider deciding that that fund isn't worth their time and closing or merging of another fund. they're probably going to keep it open if it is a large fund. And this is another thing that doesn't really help me narrow down these options because they are all very large funds. The last thing I consider is the fee, the total expense ratio. And whilst lowest fee isn't a guarantee of best performance, in general, when I'm left with multiple options that are all very similar and there's not much between them, I tend to go for the one with the lowest fee. But again, it is no guarantees of best performance. It's just how I would narrow down from here. So based on all those things, in 2026, I'll personally be investing into the Spider, MSEI, or Country World Index Tracking ETF. But to be perfectly honest, I'll be happy with any of these global funds. They all meet my personal criteria. Now, you'll probably have gathered from the title of this video and how I phrase things in the introduction that I will be investing into more than one ETF. And one of my main reasons for doing this is that a global fund, the ones I've just looked at, only include large and midcap stocks. So for additional diversification, I also want a small cap ETF, an ETF that invests in small cap stocks. If I want my portfolio to truly cover all parts of the global stock market, then I do need to make one more decision. At a high level, there's two ways I can invest into small caps. I can go with a standard market cap weighted small cap ETF that just gives me exposure to small caps based on their relative market value. Or I can go for a small cap ETF with an additional filter. Maybe this is a certain style of small cap investing or in my case a factor-based ETF that applies factor-based [music] filters. Factor investing is all about tilting a portfolio towards certain characteristics that are backed by academic research. They're evidencebacked. So, as I mentioned with the three principles that drive my decisions, if I am going to tilt the portfolio, I want there to be some evidence backing that. So, in my case, rather than going for a standard market cap weighted small cap ETF, I've gone for one that tilts towards small companies that are cheaper and profitable. also known as the value and profitability factors. I don't want to go too deep into the evidence backing my decision in this video because I have done separate videos on factor investing. But just as a very quick whistle stop tour, historically research has shown that small cap value stocks have outperformed the market. The key thing to make clear is that there's no guarantees going forward, but the evidence has shown that historically they have outperformed. It's not just about small cap value though, cheap stocks. [music] The research shows that a profitability filter is also important. The farmer and French five factor model, for example, includes size, value, and profitability as drivers of returns. We could say that a profitability filter is important because not all small, cheaper companies are cheap for a good reason. They may just be genuinely struggling businesses that are cheap and will remain cheap forever. These can often be referred to as junk stocks. [music] Research by Robert Novi Mark showed that profitable firms generate significantly higher returns than unprofitable firms, even though they often trade at higher valuation ratios. So it's not all about value. Profitability does matter is what Robert Novie Marx found. The most crucial part here is that when you control for profitability, the performance of value strategies improves dramatically. The core idea that I get from this research is simple. Small cap value strategies may be more effective when you avoid unprofitable junk companies. The final bit of research and paper I want to mention is the one with a funny name. Size matters if you control your junk. And what they found in this paper is that the size premium on its own isn't really noticeable. However, it does become noticeable when you control for profitability. So, another example of why profitability filter does matter and why for my small cap exposure, I've gone for an evidence-based strategy that has those value and profitability filters. Aside from this evidence, another reason why I like this strategy is that historically small cap value has performed very differently from large cap growth. [music] So in that sense it is also a potential diversifier rather than just a tilt. There's been periods where large cap growth has performed poorly but small cap values performed well and vice versa. However, I want to make very clear that small cap value investing is not a free lunch for a number of reasons. First of all, as I've mentioned that there's no guarantees going forward. We can look at all the research, all the evidence we want, but there's no way of knowing the future and this strategy may not perform well in the future. And also small cap value stocks are more volatile. There's also long periods where they have underperformed the market historically. So even if it does work over the very long term, I would have to stomach periods of underperformance. I have to know what I'm signing up for. This behavioral challenge is exactly why my previous portfolio didn't work. I was using factor ETFs for the majority of my portfolio and splitting across multiple ETFs. And the behavioral challenge is why I gave up on it. It's really important to know that when you explore factor investing, the behavioral challenges are very real. This time around with my factor investing strategy, I've focused on the factors that I believe have the strongest evidence base behind them and done it as a simpler part of the portfolio, not split across multiple ETFs, just multiple factor exposure in one ETF. This approach meets all my principles that I set for myself. There aren't that many global small cap ETFs on the market. But with all this in mind, the one I picked was the Advantis Global Small Cap Value. And I picked this one because it targets the size, value, and profitability factors that I talked about, but it's also relatively low cost, globally diversified, and trades in pounds. Again, please do remember this is not investment advice. I'm just simply sharing what I've decided to do with my own money. So, those are the two ETFs that I'll be investing into in 2026. And another important point to consider is portfolio waiting. How will my contributions be split between these two? And because small caps make up a much smaller part of the total investable universe, they will have a much lower weighting in my contributions. However, I do want a bit of a tilt towards those factors. With that in mind, I'm aiming for about 20 to 30% of my contributions to go to the small cap value ETF and then the vast majority to go into my large and midcap global fund. I'm comfortable with that level exposure and also I'm not strict on it. So, I understand that based on the performance of things, that will drift over time and I'll decide to rebalance if and when depending on how things go. So, that's what I'll be investing into for 2026. One global core ETF and then one small cap value ETF as a satellite position to tilt my portfolio in an evidencebacked way that I believe in. I've moved from quite a messy, overengineered portfolio that I really struggle to stick to to something that's a lot more intentional, simple, and hopefully something that I'll be able to stick to for a very long time. I still find factor investing super interesting, but I understand now that the behavior matters just as much as the theory. Let me know in the comments below your investing plans for 2026. And as always, thank you for watching.