Boglehead/Vanguard way to retire.

Good for you austing! I've recently taken up Mountain biking and Kayaking. Best $1500 I've ever spent having a blast and getting in shape too! Kayaking on my local lake as the sun comes up, on a weekday, while everyone rushes to work.......priceless!!

 

Triathlon.

 

LMGTFY

 

Not sure why they haven't, I have all my ETFs with Betashares. The fact that they are domiciled in Australia was a major factor in my choice.

 

@ollidrac nosaj

Is that the BetaShares S&P 500 Yield Maximiser Fund, ASX Code “UMAX”?

 

No my international exposure consists of FOOD and HEUR, both locally domiciled. (EX20 for my AU exposure) Not sure as I haven't checked but I believe most of the Betashares funds if not all are domiciled here.

 

FOOD looks interesting

HEUR (WisdomTree Europe ETF - Currency Hedged) not so much with the hedging

 

Yeah I really like the product. The way the index is structured it has a broad exposure across the entire food industry. (fertilisers, farm machinery,distributers and packaging, plantations etc). I don't expect it to shoot the lights out, but think it will deliver stable long term growth. With the expected population and middle class growth I expect demand will only grow, especially meat consumption.

 

Checked it out and all Betashares funds are domiciled in AU.

those looking for US exposure and want to avoid US tax implications might want to check out Betashares QUS or UMAX.

For broad based global exposure WRLD or ETHI.

 

Betashare products generally appear expensive and aren't what a Boglehead typically looks for IMO.

QUS and QOZ are two of the cheaper options ~0.40% MER, RAFI when back tested outperformed the cap weighted indexes from what I have read. Backtesting doesn't always translate to the real world, maybe worth a look.

WRLD is similar to VGS in terms of holdings (both AUS domiciled) however it has a higher MER and writes futures in times of higher volatility. The futures writing strategy claims to help lower WRLD's volatility and it should therefore fair better in a falling/flat market. As we know, markets tend to rise (WRLD claims it will under perform at these times) and the fees are a hurdle, over a complete market cycle it will be interesting to compare the two.

NDQ (NASDAQ 100) is a simple index tracker with a 0.48% MER, too expensive (might improve with increased FUM?).
UMAX with a MER of 0.79% has under performed the s&p500. In my mind options writing strategies sound good, in practice I am yet to be convinced.

Do you hold anything that includes the top20? I understand wanting to try and balance out some of the weighting issues. Completely avoiding the 20 biggest companies with some of the strongest competitive advantages seems a step too far.

Your international exposure heavily weights Europe and under weights US. Do you have other exposures?

I am genuinely interested in your strategy as it appears you are avoiding or minimising exposure many of the biggest and most successful companies in AUS and the biggest market (US) and backing the established markets in Europe. I can understand a weighting towards FOOD (though I haven't really done much reading there).

 

I have no exposure to Top 20, my holdings are HEUR, EX20, FOOD in equal weight. Yes the companies listed top 20 have enjoyed huge competitive advantage but not sure if this will continue going forward. Eg. WES/WOW now being squeezed by Entry of Euro/US competition. How much more can these companies grow in such a limited market? Without big population growth or targeting growth outside Aus. I do like the banks but not in the bloated weight they hold in the asx. Also I don't see the point of investing in something which is highly correlated to the property market that I am already exposed.

For my international exposure HEUR, I found the European market/economy best suited my needs for sector allocation. There is also a high sector diversification between the Euro/Aus markets. Also with EX20 having a high materials weight and Europe being a net importer of materials this will also somewhat help smooth out volatility between the two funds to some extent. I also like the hard to replicate branding power of some of the euro companies, eg BMW, Daimler, LVMH, kering, etc.


As for US exposure I was not as keen with its heavy finance exposure, also not a huge fan of the big tech companies. Also US markets appearing rather expensive, and Euro somewhat cheaper on the fundamentals. Having said that i don't have an opinion of either market performing better than the other moving forward.

 

Playing Devil’s Advocate on Index Funds

 

I liked this one also..

Index Funds Are Nothing Special

 

Interesting articles, the "playing devils advocate" article touches on the effects of a high concentration of capital flowing into the index funds. I was recently listening to a podcast where they also mentioned that. they were of the view that growth in cap weight indexing was tilting the market to more favourable conditions that suited "value investing". In theory if the trend continues this would also benefit some smart beta value funds, RAFI etc

 

This online portfolio backtesting tool allows you to construct a portfolio based on the selected asset class allocation to analyze and backtest portfolio returns, risk characteristics (Sharpe ratio, Sortino ratio), standard deviation, annual returns and rolling returns. The results include a visualization of the portfolio growth chart and rolling returns, CAGR, standard deviation, annual returns and inflation adjusted returns. A periodic contribution or withdrawal can be specified together with the preferred portfolio rebalancing strategy and you can compare the given portfolio allocation against multiple lazy portfolios. You can also use the portfolio backtesting tool to build a portfolio based on specific mutual funds, ETFs and stocks.

Here's an example of a 100% Stock Market allocation versus a 60%/40% split to see how diversification assisted volatility. Pity its US only

Example

 

Thanks for this tip @ollidrac nosaj - that's exactly what I've been looking for

 

This has been eating away at me for a while - how much of a PITA are overseas domiciled ETFs? So far, I have avoided them, but maybe I am just spiting myself. For sure, if there is comparable offering that is Aus domiciled I will take that every time, but the US domiciled IAA and IOO look interesting and if I invest a sizeable amount that might make the extra paperwork worthwhile.

Is it just having to fill in a W8BEN every 4 years and filling in foreign income on my tax return (same as I do for RMD) or is it more complicated that that? Anything else to be aware of with respect to US IRS etc?

 

Which ETFs are cross-listed and what does it mean?

 

Thanks so much @Redwing - I wish I knew about this a few months ago.

I'm seriously looking at getting rid of my internationally domiciled ETF holdings based on this. I got a real shock some time ago when I got a W8-BEN in the post, when I'd specifically picked an ETF that had 'ex US' in it's title - I thought that meant that there would be no links to the US. Turns out, I'm not so smart

Now I've read this article, I know so much more about how to check for the country the ETF is based in, and the possible long-term ramifications. I've got two of the funds listed in my portfolio, and they are my best performers, but I think I now I have a good (justified) reason to cut them loose and look for other options that won't provide the potential hassle of a foreign base.

 

I've had VTS & VEU for a while now but have moved to VGS with new purchases.

I'll still hold VEU & VTS though so no selling

Securities covered by VEU & VTS:
6,284

Securities covered by VGS:
1,575

Management fees for VEU & VTS:
0.095%

Management fees for VGS:
0.18%

VEU & VTS gives more securities, diversification, access to US small caps, and emerging markets.

From a Whirlpool post​