Should You Use Trading 212’s Ready-Made Pies or Build Your Own?

Trading 212’s “Pie” feature allows investors to easily build their own portfolio of stocks, funds, bonds and commodities.

But it gives users a dilemma: should you build your own pie, or do you want one we made earlier?

If you’re new to investing, the ready-made pie might seem appealing — you can simply copy a portfolio from someone else. But is that really a good idea? Are these ready-made pies really suitable for all investors?

Let’s dive in and see how your options compare, and which pie you might favour depending on your investment goals.

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We are not financial advisers. This is not financial advice. This article contains opinions from long-term retail investors, not investment professionals. All investments have risk and can decrease in value.

Model pies

The first option we’re going to look at is Trading 212’s ‘Model pies’. These are pre-built pies created by fund providers with trillions in assets under management between them.

If you select “Choose a ready-made pie”, you’ll be presented with a small selection of model pies — at the time of writing, there are five different options to choose from.

The first two we’ll look at are BlackRock Core and WisdomTree Core — the two most prominently featured portfolios in this section.

Diversified asset model pies

BlackRock Core is made up of 49% equities (that’s stocks and shares), 48% government bonds, and 3% commodities — which includes things like physical gold.

Similarly, WisdomTree Core invests in 48% equities, but this time the remaining split is 32% bonds, 20% commodities.

Both of these pies aim to be diverse and somewhat low risk.

They aim for diversification by spreading money across different asset classes, industries, and regions.

At Financial Interest, we typically focus on slightly higher risk, very long-term investing strategies — 20 years or more — because we’re a long way away from retirement age.

We generally prefer to have investments as close to 100% in equities, or stocks and shares, as possible. This is because they have the potential to yield higher returns, albeit with greater levels of risk and volatility.

Bonds and commodities offer greater levels of security because they are less likely to experience extreme volatility in price movements, but this may not be as appealing for investors in the earlier stages of a long-term investment journey.

These asset classes are generally considered more suitable for those nearing retirement age, or those attempting to generate a safer return — away from the huge price volatility that the stock market can sometimes offer.

All investments have risk.

As a popular example of this, Vanguard’s “Target Retirement” funds contain large weightings of bonds — usually starting around the 20% mark, and this allocation increases as high as 70% as you reach your target retirement year.

It includes bonds from the start because it wants the best possible chance of allowing you to retire — less chance of a total disaster — but the weighting is much higher towards equities in the beginning. It still has a 71% equity holding when 15+ years away from retirement.

If you’re in the situation where you’d prefer your investments to have less risk at the downside of potentially lower returns — though returns could still be larger in theory — then these first two model pies could be good options for you.

BlackRock’s offering comes with a 0.17% Total Expense Ratio (TER), also known as the ‘Ongoing Charge’ which is taken annually by the fund. WisdomTree Core has a 0.28% TER, which is higher because of the larger weighting towards commodities — bonds are typically the cheapest option in a portfolio.

Both of these TERs are fairly reasonable — not dirt cheap, but not stomach churningly expensive.

And if you click through to the pie, you can also adjust the investment style to be more aggressive and take on more risk, or even be more conservative if you wanted to.

This option is listed in Trading 212 as ‘Pie variant’, which will change the investment weights.

If you want the most conservative pie possible, you’ll be putting nearly 78% of your investment into bonds, and only 20% into equities, on BlackRock Core.

On the other hand, you can select ‘Aggressive’ and have a 92% equity split.

There’s flexibility for you to consider, but we won’t delve into every single pie option here — we’re focusing on the default options, which is the ‘Moderate’ pie variant in this case.

We know our investment strategy, and neither of these pies offer what we’re looking for. If they sound like exactly what you’re looking for though, that’s great!

We’ll move on.

To see more model pies, scroll down a bit and you’ll see three more options — and this time, they invest 100% in equities (again, that’s a fancy word for stocks and shares).

Equity-focused model pies

These equity-focused model pies are called WisdomTree Tech, WisdomTree Environmental, and WisdomTree Multi-thematic.

We assume BlackRock and WisdomTree pay to have their pies featured within Trading 212, but this hasn’t been verified.

These pies don’t offer the option to alter the investment style or risk level, so there’s just one variant of each portfolio to consider.

The “WisdomTree Tech” pie will invest your money into multiple ETFs, all in different parts of the tech industry. This includes artificial intelligence, blockchain, biotech and more — it’s basically a futuristic tech pie, the type you’d enjoy sinking your teeth into as the world burns around you.

There’s also the “WisdomTree Environmental” pie, which focuses on eco-friendly themes like renewable energy, recycling, and sustainable food.

Finally, there’s the “WisdomTree Multi-thematic” pie, which is mostly a blend of the other two pies that we just discussed.

These are all ‘thematic’ pies — they focus on investments with a certain theme — and we can summarise our thoughts on all three together.

These pies are more in line with our own investment style (yours may differ) because they focus 100% on stocks and shares, but they are not highly diversified.

While we’re comfortable taking on higher levels of risk due to our focus on long-term investing, we also seek diversification to reduce our risk as much as possible.

Overexposure to specific industries does not fall in line with the investment approach we take at Financial Interest.

Because we’re not financial analysts or professional investors, we don’t believe in ‘stock picking’.

Our logic is simple: If many highly-paid traders fail to beat the market when picking stocks, why would we believe we could do it as casual investors that are simply looking to put money away for our future.

Investing in specific industries, or betting on certain “themes”, is essentially stock picking.

We obviously recognise that AI and emerging technology will be more prevalent in the future, but does this mean the share price of companies in that sector will go up?

The fact that these industries are expected to grow in popularity and use cases — and everyone knows it — should already be factored into their current share prices.

That’s one of the reasons why a company like NVIDIA has a P/E ratio* of 63.8 at the time of writing, whereas a non-AI company, for example Visa, has a much lower P/E ratio of 30.4.

*P/E ratio, or price-to-earnings ratio, is the share price of a company divided by its earnings per share. The higher the P/E ratio, the less money the company makes relative to how expensive their share price is.

Future growth of an industry doesn’t necessarily mean share prices will go up — but it could… we would have no idea either way, which is why we don’t pick stocks.

And look: we’re not saying we wouldn’t invest in NVIDIA, or AI companies, or tech. In fact, we do invest in these companies. We just do it in a different way with much less exposure.

If you want to make a bigger bet on the tech or environmental industries, these pies might be suitable.

However, a final consideration is the yearly fees (TER) the funds in these pies take, which are quite high.

WisdomTree Environmental, for example, takes a 0.6% annual fund fee — plus they’ll take other small fees for covering things like their trading costs.

0.6% is a lot higher than many other funds on Trading 212, and the difference between a 0.6% annual fee and a 0.22% annual fee — from a fund we’ll look at shortly — can be significant when compounding fees eat into your balance over time.

But can you buy into similar funds to the ones we’re discussing at a much lower price? Probably not.

Smaller, more niche funds will often require higher management fees to justify operating them.

While the initial model pies we looked at were too diverse for our strategy in terms of asset classes, the thematic model pies are not diverse enough in terms of industry or regional coverage.

What you’re looking for might be totally different depending on your age, risk tolerance, and more.

Community pies

If the first pies were too cold, and the second pies were too hot, will the final ready-made pies be just right?

An interesting feature that Trading 212 offers is their community pies, which allows users to copy the investments of other real users — and publish their own for others to copy.

You can see how many real users are copying each pie, too.

Interestingly, the default filter shows ‘new’ pies — it doesn’t show off the most popular, it shows what’s rising in popularity. If you read this, Trading 212, I would probably change that.

This default setting means we’re faced with some interesting portfolios when we first click onto the ‘Community pies’ tab.

The top result at the time of writing is currently a ‘GTA 6 Build-up’ pie, which contains companies that will be affected by the release of GTA 6. This includes Amazon, Sony, Take-Two Interactive, and other similar companies — it even includes the notorious GME to round off this meme-worthy portfolio.

While this is quite a fun and topical option, it certainly isn’t built with a long-term focus.

It may also be worth skipping past pies like “AI Growth” for reasons we’ve already discussed, and the “Donald Trump USA portfolio” — which includes “34 companies expected to do well if Donald Trump is elected”, as well as almost all other new community pies, if we’re being honest.

Maybe these pies sound interesting to you, but we’ll move on because they don’t align with the investing strategy we’re looking to use.

Unsurprisingly, if you switch to ‘Top’ community pies instead of ‘New’ — and you find portfolios that tens of thousands of people are copying rather than 65 people — things start to look a little more promising.

The top pie, for example, focuses on big brand names that pay regular dividends like Microsoft, Apple and Johnson & Johnson.

This is clearly popular — 110,000 people have copied this pie at the time of writing.

Sadly, again, it might not be a good fit for those seeking broader diversification like ourselves.

Focusing exclusively on companies that pay dividends means we’d miss out on all of the companies that choose to reinvest their profits instead — something that can also potentially help share prices, in theory.

The ‘(Almost) Daily Dividends’ pie only includes 50 different companies, so it’s not particularly diverse, and this is the maximum number of different ‘slices’ a pie can have on Trading 212.

A slice could be an ETF rather than a share in one company, but many of these top community pies focus on individual shares.

This pie also invests exactly 2% into every company — it doesn’t scale based on company size.

For long-term equity investors who are looking for diversification, a portfolio would likely include exposure to more than 50 companies.

The investments could also scale based on the size of the company — the bigger the company, the bigger the position. This is how large funds typically structure their portfolios, at least.

Another thing to consider is FX fees. When you’re based in the UK and buying shares priced in USD, you’re going to incur currency conversion costs.

These costs aren’t massive, but if you’re investing on a regular basis and you’re losing 0.15% in FX fees every time you do, this compounds to a large amount over time.

This doesn’t apply if you purchase ETFs priced in GBP, and taxes are different too, although shares don’t have an annual ongoing charge (TER) to deal with.

Overall, community pies don’t seem quite right for what we’re looking for.

Build your own

Based on everything above, we prefer using the ‘Create your own’ pie option instead.

And truth be told, the only reason we use a pie at all is because it allows us to set up regular, ongoing investments.

At this time, within our pie, we have just a single, solitary ETF.

Please note: this is not a recommendation. There are many similar funds, and thousands of other funds that allow you to invest in different things — from subtle differences to totally incomparable.

We invest into a globally-diverse fund — VWRP — that invests in 3,727 stocks as of the date of writing, and has an ongoing charge (TER) of 0.22%.

It invests into businesses of various sizes, spread out across the entire globe.

The majority of the portfolio’s exposure is in North America, with businesses in the S&P 500 getting a relatively large amount of exposure, but it’s still much more diverse than simply investing into an S&P 500 fund.

It ticks all of the boxes that we’re looking for: it’s 100% equity focused, but is extremely diverse in terms of industry, region and business size coverage.

Any dividends that are earned are automatically reinvested because this is an accumulation fund, though there is also a version of the fund that pays dividends directly to you (VWRL).

Our mindset is a very basic one, and is summed up by this quote (paraphrased) from Vanguard founder Jack Bogle: “why look for the needle when you can buy the whole haystack?“

Trading 212 has a variety of other popular funds and we’ve broken those down in our free cheat sheet.

What’s best for you?

From everything discussed here, we hope you can see how important it is to decide exactly what you want from your own investments rather than blindly copying what other people are doing. That includes copying our strategy — we are “other people”.

We are not financial advisers.

While we might not be fans of many ready-made pies on Trading 212, there might be one that looks perfect for you.

If you need any assistance or specific advice, seek help from a qualified financial adviser.

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