Why Simpler Portfolios Can Create Bigger Problems for Expats
- Thomas Sleep
- Aug 26, 2025
- 7 min read
Over the last decade, many expats have made a deliberate effort to create simpler expat investment portfolios.
They have reduced their holdings, consolidated accounts, and shifted toward a small collection of low-cost ETFs that are easy to understand, monitor, and justify. On the surface, that shift feels sensible. Lower fees, fewer moving parts, clearer oversight, and less time spent worrying about what is happening behind the scenes.
For financially capable, self-directed expats, simplicity often feels like maturity.
The problem is that for expats, portfolios do not exist in isolation. They sit inside a much broader system of residency changes, tax exposure, future income needs, repatriation planning, and evolving life decisions. When those factors are ignored, a simpler portfolio can quietly increase risk rather than reduce it, not because the investments are wrong, but because the structure around them is no longer doing enough work.
Why Simplicity Feels Safer Than It Really Is
Simplicity creates a powerful sense of control.
When a portfolio is easy to explain and easy to track, it reinforces the belief that risk is being managed effectively. Many expats have seen overly complex portfolios in the past, full of unnecessary products and opaque charges, and have reacted by moving decisively in the opposite direction. In that context, simplicity feels like discipline rather than compromise.
That instinct is understandable.
What is often overlooked is that simplicity at the portfolio level does not automatically translate into simplicity at the planning level. In fact, the simpler the portfolio, the more exposed it is to a narrow set of assumptions about markets, returns, timing, and future behaviour. Those assumptions may hold for a period of time, particularly when markets are supportive, but they are rarely properly stress-tested while conditions remain comfortable.
When we are comfortable, we fall asleep. We don't analyse or critique.
How ETF Concentration Creeps In Without Being Noticed
Most simplified portfolios are market-weighted by default.
Global equity ETFs, US-centric indices, and broad bond funds dominate allocations because they are liquid, familiar, and easy to defend. On paper, these portfolios appear diversified across regions and sectors. In practice, they often become highly dependent on a small number of drivers, particularly US equities, large-cap growth stocks, and a narrow group of dominant companies.
Currently, the S&P 500's top 10 companies by market capitalisation account for 41.6% of the index. (Data updated October 2025)
During periods of strong performance, this concentration rarely feels uncomfortable. Returns reinforce confidence, volatility remains contained, and the absence of obvious stress creates the impression that risk has been reduced rather than reshaped.
The issue is not that these instruments are flawed. The issue is that many expats underestimate how much their future outcomes are now tied to a single market regime that continues to behave broadly as it has in recent years. When that assumption stops holding, simplicity does not bend gracefully. It tends to become brittle.
Why Behaviour Matters More Than Asset Labels
One of the biggest blind spots in simplified portfolios is behaviour.
Passive, market-weighted strategies do precisely what they are designed to do, which is reflect market movements without judgment. What they do not do is adapt to changes in an investor’s personal circumstances. For expats, those circumstances often shift in ways that materially affect risk tolerance long before it shows up in portfolio returns.
Career visibility can be reduced. Residency plans can firm up. The timeline for accessing capital can shorten far faster than expected. What once felt like a long-term growth portfolio quietly becomes a pre-retirement or pre-repatriation portfolio without ever being redesigned as such.
This is where many DIY reviews fall short. They assess risk in static terms, based on allocation percentages and recent performance, rather than recognising that risk capacity tends to shrink as optionality narrows. The portfolio remains unchanged as the investor’s life progresses.
This is one of the reasons expat decisions are increasingly judged in hindsight rather than intention, as explored in Expat Financial Decisions Are Increasingly Being Judged in Hindsight.
Why “Simpler” Expat Portfolios Often Hide More Risk Than They Remove
Simplicity in investing is usually sold as a virtue. Fewer funds, fewer decisions, fewer moving parts. For many expats, particularly those who are financially literate and self-directed, this appears to be a sensible response to unnecessary complexity.
The problem is that simplification at the portfolio level often creates concentration at the outcome level.
What looks clean on a dashboard can become fragile once you look beneath the surface, especially when markets, tax rules, and personal timelines stop cooperating.
What Most DIY ETF Portfolios Are Really Exposed To
Many portfolios that describe themselves as globally diversified are, in reality, heavily reliant on the same underlying forces.
They depend on continued US equity leadership, sustained earnings growth from a narrow group of large companies, and valuation levels that remain supportive of future returns. This approach worked exceptionally well in an environment shaped by quantitative easing, falling interest rates, and expanding multiples.
The risk is not that these assets suddenly collapse. The risk is that future returns become flatter, more uneven, and less forgiving of poor timing. When valuations start high, outcomes over the following decade are often driven less by growth and more by how well risk is managed.
How Are Model Portfolios Built Differently?
When experienced professionals construct portfolios, the starting point is rarely cost or index tracking alone.
The focus shifts to how assets behave across different environments, how returns are generated rather than assumed, and how risk is distributed rather than labelled. This is where portfolios begin to combine multiple sources of return, blend growth with genuinely diversifying assets, and introduce holdings whose purpose is not to maximise upside, but to preserve flexibility when conditions change.
Importantly, this is done independently. Professional advisers do not own the underlying investments within these portfolios. Their role is not to manufacture products but to objectively select, combine, and adjust exposures, without being tied to any single provider or outcome.
The aim is not complexity for its own sake. It is resilience.
The Difference Isn’t Just Growth, It’s How That Growth Is Achieved
Many DIY investors assume that professional oversight is primarily about chasing higher returns.
In reality, the most meaningful differences often appear elsewhere. Well-constructed portfolios tend to deliver better risk-adjusted outcomes, in which investors are compensated more efficiently for the risk they assume. Volatility is managed intentionally rather than tolerated accidentally. Drawdowns are considered in advance, not rationalised after the fact.
Over time, this appears as improved Sharpe ratios, more controlled beta exposure, and portfolios that behave more predictably when markets are less favourable. These characteristics rarely feel exciting in rising markets, which is precisely why they are often undervalued until conditions change.
Why DIY Reviews Rarely Catch This
Most self-directed reviews focus on performance and allocation.
They ask whether the portfolio remains on track, whether the fund mix appears reasonable, and whether costs remain low. What they rarely do is challenge the assumptions that underpin the portfolio’s construction. Questions about how the portfolio might behave if valuations compress, how returns interact with future tax timing, or how different assets respond under stress often go unasked.
Not because the investor lacks intelligence, but because these questions lie beyond the tools available at the consumer level.
What Changes When the Right People Are Involved
When experienced professionals sit around a portfolio, the conversation changes.
It moves away from the hope that recent winners will continue to dominate and towards deliberately positioning for a range of future outcomes. Decisions are informed by forward-looking risk rather than backwards-looking comfort. Diversification becomes intentional rather than cosmetic.
This is not about abandoning simplicity. It is about recognising that markets evolve, regimes change, and portfolios need to adapt rather than remain frozen in time.
Why This Matters More for Expats Than Most
For expats, portfolio behaviour does not exist in isolation.
Investment outcomes interact with tax timing, residency changes, repatriation plans, and income needs in ways that magnify the consequences of misjudged risk. A portfolio that is broadly fine for a domestic investor can create unnecessary pressure for someone whose future location and tax exposure are less predictable.
This is why professional portfolio construction is not about outperforming an index. It is about reducing the chance that investment behaviour becomes the weak link in an otherwise sensible financial plan.
Where This Leads Next
Simplification is rarely the mistake. Failing to revisit what that simplicity implies as circumstances change is.
In the next article, Why Market Calm Can Be the Most Dangerous Phase for Expat Portfolios, we’ll explore why late-cycle environments often create false confidence, how expectations quietly drift away from reality, and why many expats only recognise the problem once optionality has already narrowed.
A Final Thought
Simpler portfolios often feel safer because they are easier to live with day to day. For expats, that comfort can be deceptive.
If your investment strategy has become progressively simpler while your life and future plans have become more complex, it may be worth questioning whether the balance has quietly shifted against you. That is not a question best answered by performance charts or online tools. It is usually answered by stepping back and stress-testing assumptions with someone who has seen how these situations unfold over time.
If you want to explore whether your portfolio simplicity is still serving you, or whether it is beginning to limit your options, that conversation is far easier to have before circumstances force it.
Start with a conversation. Book a discovery call with My Intelligent Investor and get clear on where you stand, what’s changing, and what you can do about it. Let’s build a strategy that turns market complexity into opportunity.
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