Boglehead/Vanguard way to retire.

Discussion in 'Share Investing Strategies, Theories & Education' started by 2935, 7th Sep, 2015.

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  1. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Thanks for your input IL Falco, much appreciated.

    I hope both stay listed for the long haul as this is my investment horizon, if think HEUR will be, but do realise the ultra niche nature of FOOD. Interesting you mentioned global consumer staples i have owned the ishares product in the past but have sold my holding in favor of FOOD. I also took in to consideration that HEUR has a large exposure to the consumer staple sector. If Food were to be pulled i would consider a return to IXI.

    I considered an all world exposure through Vanguard but was not keen on the large US or especially the Finance sector weighting of the product. One of the core ideas of the portfolio allocation was to access sectors not available or under represented on the asx and have minimal correlation to our domestic economy/market.
     
  2. Nodrog

    Nodrog Well-Known Member

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    WAM can be over 4% with performance fees at times.
     
  3. Redwing

    Redwing Well-Known Member

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    What are physical and synthetic ETFs?

    The chief risk of synthetic ETFs is counterparty risk. Essentially, synthetic ETF investors trust that the total-return swap provider will carry through on its obligation..

    [​IMG]
     
  4. Redwing

    Redwing Well-Known Member

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  5. The Falcon

    The Falcon Well-Known Member

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    Sounds like you are managing for volatility. With a long horizon I'd be looking for a broader exposure to avoid leaving money on the table. I couldn't countenance leaving US broad market out of any long term etf based portfolio (particularly giving France a greater weight) Asset allocation isn't really my thing though, I reckon you'd get some good feedback on bogleheads.
     
  6. The Falcon

    The Falcon Well-Known Member

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    Yes I think QVE at 0.9% is fair value for small-mid active management.

    Re running a 170 stock portfolio as proposed, the ongoing portfolio admin will do your head in. Buy WHF if you want that type of exposure, or run a smaller 30-40 position portfolio which will be more manageable, but still a bit of work. The opportunities are more interesting with direct stocks in a market crash, as often LICs will trade above NTA particularly in fast moving corrections, you just need to make sure you have the fundamentals right...most importantly it's debt that will kill a biz when there is no liquidity and they can't refinance.....so you only want stuff with solid balance sheet. Often the baby gets thrown out with the bath water and that's what you are looking for.
     
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  7. Nodrog

    Nodrog Well-Known Member

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    I'm not @Il Falco, but I think it's worth emphasising that WHF has historically traded at a 8 - 9% discount. And unlike the popular large LICs it's more likely to trade at a discount during market upheavals. For instance during the depths of the GFC it's discount was around 20% when the major LICs were at a premium! I remember loading up on WHF for an average price of around $2.40. So in effect I was getting the likes of CBA and WES indirectly at a heck of a discount. But being greedy I bought them directly as well.

    Ok there's a smallish fee of 0.35% for WHF. But at an ongoing discount as explained above this way more than compensates for the fee and Areit holdings still leaving a discount. So think how much difference this discount will make if you buy year after year, decade after decade. Outperformance of the Industrials Index is a high probability.

    A 40 - 50 stock portfolio like Thornhills will entail work and a lot of transaction costs. Nothing comes free. By the time you've setup your direct share portfolio and try to maintain it you will probably look back and think 0.35% fee for WHF is a bargain in comparison.

    As for finding ALL LICs being expensive I saw the Indicative NTA of WHF at a 9.3% discount on 1 Feb.

    In fact I often think I should keep quiet about WHF because if it becomes more popular that discount might narrow thereby depriving me the opportunity of getting this great LIC cheap:(. So please take my advice, DON'T BUY WHF:p. I'm keeping quiet about it from now on.

    Anyhow this is taking the thread off topic.

    NOT ADVICE or in the case of WHF NOT NOT ADVICE. Or should it be NOT NOT NOT ADVICE. Bugger now I'm confused. @ErYan it's all your fault:).
     
    Last edited: 8th Feb, 2017
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  8. Perthguy

    Perthguy Well-Known Member

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    I am new to all of this so excuse me if this question has been asked before but... the three-fund portfolio using Vanguard are:-
    - Vanguard Total Stock Market Index Fund (VTSMX)
    - Vanguard Total International Stock Index Fund (VGTSX)
    - Vanguard Total Bond Market Fund (VBMFX)

    Is there an Australian equivalent to this using Vanguard?

    Would VAS, VGS and VCF be a fairly close equivalent?
     
  9. Redwing

    Redwing Well-Known Member

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    The 3 Fund Portfolio (US)

    An earlier post from The Falcon below

     
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  10. Perthguy

    Perthguy Well-Known Member

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    Cheers @Redwing. I did actually read that post but it went right over my head at the time. I am finding all the info a bit overwhelming but slowly coming to grips with it all.
     
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  11. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yeah i certainly see your perspective but "spicing" things up was certainly not my intention with the portfolio, actually quite the opposite. I liked the simplicity of the Boglehead 3 etf approach and used this as a base, QOZ was an easy selection for my domestic allocation, but as fore mentioned for my international selection i just wasn't comfortable with the high finance sector correlation to the US market. Also not keen with the high allocation to the tech sector in the top ten (Apple,Microsoft, Alphabet,Facebook).

    For me HUER ticked all the boxes in regards to giving the portfolio sector/regional diversification and non correlation to our market/Economy. But what really tipped it for me was the weighting of companies with high revenue outside of Europe, thus somewhat limiting the regional specific risk.

    My Third selection i decided against a bond etf, but struggled with what to replace it with. Initially i considered DJRE and GLIN but both sectors were already well represented in QOZ. With my choice FOOD i agree there is a risk heavily weighting a specific sector, but i do consider the sector itself to be comparably low risk and does give the portfolio some missing weight to the US economy. (FOOD has a 45% allocation to the US). I also took into consideration the huge US government support this sector receives, and i expect this to continue if not strengthen under the current Trumponomy. The global population is currently projected to increase by 1.2 billion over the next 15 years, i am not sure if they will be googling Facebook on there I phones but sure as hell they will be eating. :D
     
  12. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yeah after 10 pages you come to realize the the complexity in the simplicity! :D
     
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  13. Nodrog

    Nodrog Well-Known Member

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  14. Heinz57

    Heinz57 Well-Known Member

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  15. MTR

    MTR Well-Known Member

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  16. Nodrog

    Nodrog Well-Known Member

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    @Redwing, no gloating please:
    IMG_0071.JPG

    Be Prepared for a Bear Market
    But more importantly:
    Despite the message about bonds by the well meaning American I will stick to dividends. Oops I forgot that the mention of dividend investing is banned on the Boglehead thread:eek:.
     
    Last edited: 12th Feb, 2017
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  17. Redwing

    Redwing Well-Known Member

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    Hi @seven

    There's also this from Somersoft

    Boglehead/Vanguard way to retire
     
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  18. 2935

    2935 Well-Known Member

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    Thanks Redwing

    I wonder what ever happened to China from that thread?
     
  19. Perthguy

    Perthguy Well-Known Member

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    Is there any rough guides as to how to allocate the 3 funds within a portfolio?
     
  20. Zenith Chaos

    Zenith Chaos Well-Known Member

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    Vaf allocation should be proportional to your age. As you get older the general advice is to become more defensive.

    Home country bias / preference for dividends / understanding of the risks of over exposure to Australia might make VAS anywhere from 20% (remember Australian market is less tgan 5% of the world market so an allocation based on cap weighting would mean VAS could be 5% which is too low) up to 70%.

    Remember also that the ASX is heavily weighted to the top 20 companies - banks / resources so buying a very large chunk of VAS means that you are heavily allocated into a few big companies. This is why people here espouse the virtues of LICs.

    For VAS / VGS / VAF / CASH

    Currently I would be around
    40 / 30 / 0 / 30
    Defensive portfolio
    30 / 30 / 30 / 10
    Longer term with dividend tilt
    50 / 30 / 10 / 10
    Market cap weighting
    20 / 70 / 5 / 5

    It is very much a personal decision. The younger you are the less VAF you require IMO as you need to get as much into the market to grow for you. The Australia vs rest of tge world allocation should become its own thread, but I chose fully franked dividends (aus) so that I will have an income stream at retirement. Investing overseas may grow more but the dividends will be generally lower and you will have to sell down to get your income stream thereby incurring capital gains tax.

    Read the Bogle forum and google 3 ETF portfolio. I will start an Australian vs international allocation thread.

    Not advice.
     
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