ETF Portfolio Update: Just Buy The Haystack

Title: ETF Portfolio Update: Just Buy The Haystack Show: Compounding Quality (Substack, compoundingquality.net) Guest: Pieter Slegers (publication) — this issue written by TJ Terwilliger for Team Compounding Quality Date: 2026-03-29 URL: https://www.compoundingquality.net/p/etf-portfolio-update-just-buy-the Length: written post (paid) — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; page chrome (like/share counts, portfolio-access CTAs) removed. The IQLT holdings table, the two portfolio weight charts and the American transaction sheet are published as images and are transcribed below as [Table image — ...] blocks. Chart images (Charlie Bilello rolling returns, J.P. Morgan valuation and regional charts, iShares sector split) are not reproduced. =====

Passive investors don't look for the needle in the haystack, they just buy the entire haystack.

But which haystack should you buy?

Let's dive into our ETF Portfolio today.

Passive investing 101

Passive investors don't try to beat the market.

They are more than happy with matching the performance of the market.

To build wealth you don't have to beat the market, just follow these simple steps:

Spend less than you earn

Invest at least 10% of your income every single month

Everyone can do it.

You don't need to be interested in investing or spend a lot of time researching stocks.

"Paradoxically, when 'dumb' money acknowledges its limitations, and starts to invest periodically in an index fund, it ceases to be dumb." - Warren Buffett

Why Does Passive Investing Work?

Lower Costs: Passive funds are cheaper than active funds

Lower Stress: you can automate your investments and ignore the market

Market Growth: The stock market tends to go up in the long run

Another big reason passive investing works?

Diversification.

When you invest in an ETF, you own a small part of many companies.

This spreads out your risk.

If one company does poorly, it won't hurt you as much because you have a lot of other investments.

Diversification doesn't just mean owning a lot of different companies.

It means owning companies in different places.

Global Diversification

You can't predict where the next winner will come from.

Since the bottom of the Global Financial Crisis in March of 2009, US stocks have compounded at 15% per year.

They have outperformed almost every asset over this period.

Source: Charlie Bilello on X

It feels like US stocks will keep going up forever.

So why wouldn't you solely invest in US ETFs?

Because US stocks don't always outperform.

The chart below shows the rolling 5-year returns.

Blue areas show where the US outperformed

Red areas show where the rest of the world outperformed

Source: Charlie Bilello on X

The US outperformance can't go on forever.

If it did, US stocks would eventually make up 100% of the global stock market.

The chart below shows the market share of the following countries: The United States, Europe ex-UK, Emerging Markets, Japan.

You can see that US stocks already make up a lot of the global market cap.

Source: J.P. Morgan

In 2025, the S&P 500 had a total return of 18.1%, which is amazing!

But it's lower than a lot of other markets.

Here's the performance of different regions:

US stocks (purple): 18.1%

Emerging Markets (pink): 25.9%

Asian Stocks (green): 32.7%

European Stocks (orange): 36.4%

Source: Fiscal.ai

The US market is also quite expensive at this point in time.

Source: J.P. Morgan

Buying the S&P 500 at the current valuation levels will probably yield lower returns.

Source: J.P. Morgan

But how do you diversify outside the United States? How do you play this idea?

Let's find out together.

ETF of the Month (Spotlight): iShares MSCI Intl Quality Factor ETF (IQLT)

Key Information

Name: iShares MSCI Intl Quality Factor ETF

Ticker: IQLT

ISIN: US46434G1004

Total Expense Ratio: 0.30%

Physical/Synthetic ETF: Physical

This ETF is only available for investors in North America.

However, non-American investors can look at the iShares Edge MSCI Europe Quality Factor UCITS ETF (IEQU). It's got a slightly lower expense ratio (0.25%) and the top holdings are nearly identical to IQLT.

What?

IQLT invests in international developed large- and mid-capitalization stocks exhibiting relatively higher quality characteristics as identified through:

Return on Equity (ROE)

Earnings variability

Debt-to-equity (D/E)

Why?

Companies with a high ROE, stable earnings, and good balance sheets tend to outperform.

Source: iShares

Sector Split

Here's the breakdown of the sectors the ETF invests in. [image]

Source: iShares

Top Holdings

Here are the top 10 holdings of IQLT:

ETF Portfolio Update: March 2026

Our ETF Portfolio is a great mix of ETFs that should be able to outperform in the long term.

We use multiple factors that tend to do well:

Quality: Only invest in companies that have already won

Size: The smaller the better

Multifactor: Quality, size, value & momentum

Emerging Markets: Small exposure to Emerging Markets

Let's now dive into the ETF Portfolio itself.

Please note there's a portfolio for Americans. And another one for non-Americans.

Why?

If you live in the US, you can't buy non-US ETFs.

And if you live outside the US, you can't buy US ETFs.

American ETF Portfolio

The American ETF Portfolio is invested in these ETFs:

[Table image — American ETF Portfolio, weight per ETF. Vanguard Small-Cap ETF 22.7% WisdomTree Emerging Markets Multifactor Fund 19.2% Invesco S&P 500 Equal Weight ETF 18.4% VanEck Morningstar Wide Moat ETF 12.5% Invesco S&P MidCap Quality ETF 11.3% Tema Durable Quality ETF 10.5% iShares MSCI USA Min Vol Factor ETF 5.3%]

The performance looks as follows:

[Table image — Performance per position, American ETF Portfolio (approximate, read from the bar chart). Vanguard Small-Cap ETF ~ +44% WisdomTree Emerging Markets Multifactor Fund ~ +22% VanEck Morningstar Wide Moat ETF ~ +19% Invesco S&P 500 Equal Weight ETF ~ +16% Invesco S&P MidCap Quality ETF ~ +8% iShares MSCI USA Min Vol Factor ETF ~ +1% Tema Durable Quality ETF ~ 0%]

The return per transaction looks as follows:

[Table image — American ETF Portfolio, return per transaction. Columns: Date | ETF | Q | Price | Value | Cash | Current stock price | Current Value | Profit/Loss | Profit/Loss (%). 10/13/2023 | Invesco S&P 500 Equal Weight ETF | 3.56 | $140.3 | $499.47 | -$499.47 | $188.65 | $671.59 | $172.13 | 34.46% 11/10/2023 | VanEck Morningstar Wide Moat ETF | 6.80 | $73.5 | $499.80 | -$499.80 | $94.63 | $643.48 | $143.68 | 28.75% 12/15/2023 | Vanguard Small-Cap ETF | 2.35 | $212.8 | $500.01 | -$500.01 | $256.25 | $602.19 | $102.18 | 20.44% 1/19/2024 | Invesco S&P MidCap Quality ETF | 5.59 | $89.4 | $499.75 | -$499.75 | $100.66 | $562.69 | $62.94 | 12.60% 2/9/2024 | WisdomTree Emerging Markets Multifactor Fund| 19.72 | $25.4 | $500.89 | -$500.89 | $32.34 | $637.74 | $136.86 | 27.32% 3/25/2024 | Vanguard Small-Cap ETF | 2.23 | $224.6 | $500.77 | -$500.77 | $256.25 | $571.44 | $70.67 | 14.11% 4/26/2024 | VanEck Morningstar Wide Moat ETF | 5.83 | $85.8 | $500.10 | -$500.10 | $94.63 | $551.69 | $51.60 | 10.32% 5/31/2024 | Invesco S&P 500 Equal Weight ETF | 3.05 | $164.0 | $500.08 | -$500.08 | $188.65 | $575.38 | $75.30 | 15.06% 6/21/2024 | WisdomTree Emerging Markets Multifactor Fund| 18.07 | $27.7 | $500.00 | -$500.00 | $32.34 | $584.38 | $84.39 | 16.88% 7/26/2024 | Invesco S&P MidCap Quality ETF | 5.16 | $96.9 | $499.80 | -$499.80 | $100.66 | $519.41 | $19.61 | 3.92% 10/18/2024 | Vanguard Small-Cap ETF | 2.06 | $242.7 | $500.00 | -$500.00 | $256.25 | $527.88 | $27.87 | 5.57% 11/15/2024 | WisdomTree Emerging Markets Multifactor Fund| 18.62 | $26.9 | $500.13 | -$500.13 | $32.34 | $602.17 | $102.04 | 20.40% 3/7/2025 | Tema Durable Quality ETF | 15.41 | $32.45 | $500.05 | -$500.05 | $33.22 | $511.92 | $11.87 | 2.37% 4/25/2025 | iShares MSCI USA Min Vol Factor ETF | 5.51 | $90.70 | $499.76 | -$499.76 | $91.61 | $504.77 | $5.01 | 1.00% 7/7/2025 | Invesco S&P 500 Equal Weight ETF | 2.71 | $184.75 | $500.00 | -$500.00 | $188.65 | $510.55 | $10.55 | 2.11% 8/8/2025 | Tema Durable Quality ETF | 14.74 | $33.92 | $500.00 | -$500.00 | $33.22 | $489.68 | -$10.32 | -2.06% 2/20/2026 | Vanguard Small-Cap ETF | 1.80 | $277.32 | $500.00 | -$500.00 | $256.25 | $462.01 | -$37.99 | -7.60% As at 3/27/2026 — Final value $9,528.99. CAGR 7.4%.]

Non-American ETF Portfolio

The Non-American ETF Portfolio is currently invested in these ETFs:

[Table image — Non-American ETF Portfolio, weight per ETF (labels truncated in the published chart). (largest position, label not shown) 21.8% iShares MSCI World Small Cap UCITS ETF 18.2% iShares Edge MSCI World Multifactor UCITS ETF 16.8% iShares S&P 500 Equal Weight UCITS ETF 16.7% iShares Core MSCI Emerging Markets 15.7% VanEck Morningstar Global Wide Moat UCITS ETF 10.8%]

The performance looks like this, and the return per transaction looks as follows. [images]

Overall, our Non-American ETF Portfolio is currently slightly outperforming the American one.

[Chart image — paired performance, American versus non-American, position by position. Invesco S&P 500 Equal Weight / iShares S&P 500 Equal Weight: ~+16% / ~+19% VanEck Morningstar Wide Moat ETF / VanEck Morningstar Global Wide Moat: ~+19% / ~+11% Vanguard Small-Cap ETF / iShares MSCI World Small Cap: ~+44% / ~+15% Invesco S&P MidCap Quality / iShares Edge MSCI World Multifactor: ~+8% / ~+29% WisdomTree EM Multifactor / iShares Core MSCI EM: ~+22% / ~+18% Tema Monopolies and Oligopolies ETF (no Non-American comparison): ~0% / — iShares MSCI USA Min Vol Factor ETF / iShares Edge MSCI World Minimum Volatility UCITS ETF: ~+1% / ~+16%]

Over time, I expect both portfolios to generate similar returns.

New transaction

On Monday, at the opening, we will add to our ETF Portfolio.

We'll create some to our minimum volatility stocks.

For Americans:

Buy iShares MSCI USA Min Vol Factor ETF ($USMV) for $500

Current stock price: $91.12

For Non-Americans:

Buy iShares Edge MSCI World Minimum Volatility UCITS ETF ($MVOL) for €500

Current stock price: €72.57

Everything In Life Compounds Team Compounding Quality

Used sources

Interactive Brokers: Portfolio data and executing all transactions

Fiscal.ai: Financial data