22M - ETFs Vs Individual stocks in a Stocks ISA. Diversify or Concentrate?
I'm currently investing in a Trading 212 Stocks ISA and likely to be able to max out for the next 6 years (£16k/year in Stocks ISA and £4k/year in Lifetime ISA).
My current portfolio is at £34k:
66.9% VUAG at £22.8k
30.3% VWRP at £10.3k
2.7% Nvidia at £944 (not adding more)
Going forward, I plan on just investing in VWRP.
However, I keep seeing the argument from some finance creators (e.g. The FBA Investor) that "ETFs won't make you rich" and that with enough due diligence you can get higher long-term returns by concentrating into a smaller basket of individual stocks (holding for at least 5+ years). The criticism is that broad ETFs dilute exposure to the biggest winners and include many average companies which average to smaller returns.
I understand the upside, but my concern is the probability of actually outperforming a simple global index over 10-30 years (and the risk of underperforming for long periods).
1. Is concentration in individual stocks a sensible way to optimise long-term returns?
2. Is my VUAG & VWRP split redundant - is it best to simplify to only VWRP?
3. Is a satellite approach reasonable and what percentage cap would you suggest for individual stocks (i.e. 10%)?
I still plan to invest long-term by holding for at least 5 years.