Asset Allocation

Hey @dunno what criteria are you using to define VAP being cheap? Just curious

Below are the fund characteristics



Another curiosity have you ever considered adding Berkshire to the portfolio mix? If you don't mind yours thoughts on the pros/cons compared to some other funds you have been looking at.

Cheers,
Oracle.

 

Sorry, only meant cheap in the sense of MER/operating costs/spread compared to global Property or infrastructure.


Re Berkshire.

My portfolio mix target is quarter each:

Australian direct shares
Passive Australian Cap Index
Passive Developed Global Cap Index.
Passive global diversifying ETF’s

I do contemplated replacing that diversified global quarter allocation with Berkshire. Its a bit like I consider replacing the Aus Directs quarter with a couple of LIC's or Sol etc.

Pro’s are its simple, the track record, the leadership. Con’s less transparency, It’s size now, culture could change post Buffett/Munger. I’m probably too much of a fan boy to evaluate the holding impartially if I was on board.

One day maybe but not today.

 

Cheers for this mate.
On EM I think you are spot on that if you won’t rebalance don’t hold. Hard to argue on valuation grounds, but there is so much wrapped up in that. Market is reasonably efficient, but there are some left tail risks that I personally think are more likely than most assume. Like the assumptions made for decades that PRC would not be a malign actor as it became wealthy, I question whether geopolitical risk is really properly priced for a little AU investor sitting in Oz in an Oz domiciled fund.

Between that and “the feels” I’ll be happier be wrong via omission than commission (the “I f&r:-*# knew it !!!! “) regret would be too much to bear

Agree at 4% VAP concentration not an issue..and GMG is a hell of a biz!

 

Wallowed in that one more than a few times in the past and undoubtedly will again. Its a great way to think about being wrong.

My portfolio (ex direct Aus) currently results in China 2.09%, Hong Kong .75% and Taiwan 1.09%. Won't be the biggest (the “I f&r:-*# knew it !!!! “) I've eaten by a long shot and don't have your level of insight on the matter so pretty resolved to wearing the risk.

Hmmm wonder which is worse? (the “I f&r:-*# knew it !!!! “) or (the “I f&r:-*# didn't listen!!!! “)

 

The 10% cash allocation (HIAs & Term Deposits) is kept roughly in balance across the overall portfolio BUT is never allowed to fall below a set "floor" of x years living expenses.

 

I use a cash level in the SMSF for my comfort money as well as the funds outside of it. No TD's though but that's just me.

 

Just had a quick look at VAS-VTS-VEU last 6 months

 

@Redwing how are the bond funds doing?

Cheers,
Oracle.

 

I have also axed EM and just have three simple ETFs:

VAS 40%
VGS 50%
VDHG 10%

I contribute any leftover money to the ETF under allocation every month and hope for the best

Really good to see the smart folks discussing their thoughts! Helped me immensely over the years.

 

Oops, I should add it's VGAD and NOT VDHG.

 

Stocks = Down
Bonds = Down
Crypto = Down
Blood Alcohol Level = Up



When there are times like this always remember Chapter 1 verse 9 of the good book of @SatayKing you are getting more units when purchasing now

• Build a diversified portfolio of ETFs
• Add money when you have it
• Don't chase recent winners
• Celebrate when the overall market drops
• Remember, you are getting a discount
• The overall market always recovers

 

Post from Bogleheads on Bonds as rates rise

 

A slight amendment to allow for my bias (because I can) but suggest you also add:

When CG disappears, focus on income and expenses.
If something goes from $100 to $70, you still got $70 so what's your problem.
There are worse things which can happen to you.

 

@Redwing I just posted this elsewhere to deal with the bond fund / etf vs individual bond issue. The common misconception that bond etfs lose money whereas individual bonds don’t. Basically with a bond fund / etf you have a rolling bond ladder that just rolls on in perpetuity.

“Bond ETF marked to market price reflects current value of all maturities, example say it’s holding bonds with 1.5% coupon and 5 years maturity. What is the market value of that bond now if face value is $100? It’s clearly less than $100 as we can now buy new issues at much higher coupon with same maturity, so market value of the bond will fall to reflect this, so that its running yield meets the market. The bond fund is not “losing money” as barring default it will recover face value of the bond plus coupon payments at maturity.

So selling a bond fund when it’s “down” is a sure fire way to lock in losses as you have taken the price haircut but not received the future coupon payments that the haircut has paid for”

 

How about property? I can’t see any allocations in the past or future. Surely they would have crossed your mind in the last decade or two.no? I am just trying to understand how investors would opt for stock market instead considering massive gains in Aussie property over the last couple of decades.

 

Had a similar conversation with a friend yesterday around this. I pointed out that likely the dividend will remain the same & also if one intended to invest $x amount in same stock you will now get more & if dividend is the same then he will get a higher % return on his current purchase. A lightbulb moment for him.

 

The value of property

A roof to keep the rain off my bed.
Four walls to stop the wind from whistling through.

To me, apart from those, zip.

 

Depends. ETFs have to empty the bank account. Others, such as LICs, may be able to dip into reserves to either maintain the dividend or support a reduced one. Example was ARG which stated it's dividend income dropped by over 12% yet it's dividend payment did not drop by that amount. For how long that can be done is another issue.

 

Property: always considered never stacked up as in investment for me. However we do own our personal use property, but I don't consider it an investment.

For full disclosure, I'm a director and still shareholder of our family company established for generational transfer of wealth and it has a large holding in farm land and associated rural business to efficiently use the civil and farming specific machinery we own to operate and improve the land. I don't see this land ownership as the greatest generator of wealth but I do see it as the best multi generational keeper of wealth.

The asset allocations I discuss on this forum relate to our SMSF which is how we intend to fund our post 60 years which is another 8.5 years away. At that point it will become our sole source of income.