Boglehead/Vanguard way to retire.

I just can't seem to get over the fees when it comes to these sorts of funds.

standard % fee

then if they outperform the market they get a bonus % fee

if they underperform the market you don't get any sort of discount/rebate etc

bit of a rort if you ask me. particularly given that all the evidence shows that in the long term, very very very few managed funds out perform the index (when taking fees into account).

Why not just dollar cost average into Berkshire Hathaway B Class shares? They essentially have a managed fund which contains a bunch of very high quality businesses. Given that Montgomery basically goes about his investing based on Graham/Buffett principles, it makes sense to go straight to the source without having to pay a premium for the "managed" aspect of it.

 

iShares have released new Core International ETFs (hedged and unhedged). Broader than Vanguards as includes Small Caps. Their fees on their Core range are very low.

I haven't looked into these in detail but check out following for ideas:

iShares Core MSCI World All Cap ETF | IWLD

Build Your Core | BlackRock AU

https://www.blackrock.com/au/indivi...del-portfolios-for-professional-investors.pdf

PS: Personally I'm not a Boglehead style investor but a good fit for some. However beware of becoming a single strategy diehard! As I say, keep an open mind, steal ideas and perhaps blend strategies. First thought Core and Satellite!

 

Oh wow looks like Vanguards got some competition (finally). Hopefully itll drive fees down further!

 

OK ladies....I am thinking of doing this with one of my Super Funds (Australian Super via the Direct Option)...have a 188k to spend.

Here is what I planning to allocate it;;

1. Vanguard Australian Shares High Yield ETF (VHY) - 50k
2. Beta Shares Top 20 Equities Yield Maximiser (YMAX) - 50k
3. Betashares Divident Harvester - 50k
4. SPDR S&P Global Dividends (WDIC) - 38k

Any thoughts on this portfolio allocation. As you can see I am focused on the dividends....

 

Hi Sash,

What is the yield and franking credits on each? What has been the dividend growth over last 10-15 years pa. How does that compare with market index in general?

Best to find these things out before investing. Just like you do your due diligence on property before purchase it is wise to do the same in shares as well.

Cheers,
Oracle.

 

And what are the strategies of each of these etfs and strengths / weaknesses thereof. Not for you to answer, just understand. They aren't vanilla cap weighted products.

 

Just ask yourself the question,who opens a tattoo parlor in kings cross ,if you don't want risk..
That's a interesting line-up,but what is the back-up strategy,sometimes one can do a lot better in just a simple comsec-netbank account diversified into short term trades..imho..

 

The more I read the more there appears to be to dislike about ETFs that chase divs.

Fees and turn over are higher.
Capital gains events are more regular.
There are other problems I am only vaguely aware of.

Seems Australian super has a bit more variety on offer than ING living super shares. From memory I can't buy some of those ETFs through ING super.

I've just moved to ING and will be using VAS and cheap LICs (mlt, bki, whf) for local and VGS and an LIC for international, deciding between mff, PMC and one other. Looking at 70/30 split Aussie to international.

 

Insulted at being called a lady so will only give brief reply.

VHY - Been discussed elsewhere (do a search). Like many smart beta ETFs there are issues such as churn and poor holdings at times eg BHP and RIO in an income focused portfolio. You want quality and reliable dividend payers not rubbish as a result of inflexible rules.

Options 2 & 3 - Beware the yield trap. High yield up front but relatively minimal growth in income over time.

WDIV - haven't looked into it much but like a lot if these high income, smart beta ETFs I expect there to be some downside.

I tend to prefer traditional cap weighted index ETFs. Yield might appear low up front but over the longer term it is highly probable it will give a higher total return than the high yield ETF options.

Admit I'm no ETF guru so others might wish to comment?

 

Thanks guys much appreciated...will do some more reading....

 

Silly Question: I know how to put money into a Vanguard fund, but how do you sell? I was on a comparison website which showed the LifeStrategy high growth fund and it said you can't sell via online or via their call centre.. so how the f do you get your money?

 

Here is the link to the withdrawal form:
Vanguard Australia - How to transact

then click on : withdrawal form.

https://static.vgcontent.info/crp/intl/auw/docs/forms/Retail_Withdraw.pdf?20160610|191100

 

Australia is a very small percentage of the global market. Is your asset allocation based on franking or something else? That is, you are choosing 70% when a perfectly diversified portfolio would have <3%. Go global and future proof your portfolio

Im only asking because I am in a similar position wrt ING but had planned to go for the opposite allocation using vts, veu, vgs and ishares s&p500 etf.

Not advice.

 

I really dislike that line that Global ETF and Fund managers trot out....the line about "2-3% of world markets". People pick that up (as intended) that's somehow prescriptive as to how one should invest. The key reasons I overweight Australia ( 65/35 currently personally).

- A Capital market that works. Have posted indirectly about developing world markets previously Australian market 115 years ;



- Dividend Imputation. So important. (majority of TSR comes from Divs...and foreign instos derive no benefit from it)
- Currency risk
- Belief that Australia will remain an attractive place to be and be comparatively (!) well governed.

Now, underpinning all of this is the knowledge of the mobility of capital across global markets and efficient market hypothesis (EMH). While I don't subscribe to EMH totally, it is quite right in the short-mid term.

If the issue is one of portfolio diversification, then there are means of getting that easily on the ASX. (VAS+QVE springs to mind!). If you want specific exposure (Tech, consumer staples etc) then sure look offshore, I do the same. Just wanted to add to this discussion as the "2% of world markets" thing is a bit of a peeve of mine!

 

Anne gave some good links.

Instead of the managed funds you could just use the ETFs and trade through your broker. The ETFs have lower MERs as well compared to the retail products.

 

Thanks @The Falcon - Always explains things far better than I could and with more detail. Certainly the main points all covered

I would also rather be in a stable established market especially when indexing.

Brazil, India, Russia and Mexico are about 10% of the world markets.I know very little about their markets and I am sure there are fantastic opportunities there, but I wouldn't feel comfortable buying an index in these countries with all the rubbish that comes with them and the added risks. Knowing nothing of these markets I would rather just stay away, invest in what you know and understand. OK technically I don't understand what I invest in now but I'm trying to be practical to the extent I can.

On this the Industrial Index (basically everything minus miners) has outperformed the broader index in Australia (possibly elsewhere). The LICs I plan to buy are more industrial focused and hold a broad enough exposure to reduce any risk in a specific company to a similar extent of ETFs like VAS along with that they can be picked up below NTA from time to time - which is why I focus on a few so I can get the one at the biggest discount. Not an entirely Boglehead way to think, as I am trying to pick the best performing index I can to some extent.

If I was clever, well educated and had the right mindset I would possibly try to pick a range of stocks and beat the market myself. Unfortunately I am not so I act in a way that the EMH is real and alive which is sensible for most people IMO.

Why would you want VTS, VEU, VGS and the iShares S&P500?
I understand some people go VTS + VEU to have the ability to balance the split and have broader exposure than VGS - which I just think is simpler so it suits me. Then you are looking at an S&P500 which is narrower than even VGS.

 

@Hodor . No argument from me. I'd rather pick up my developing market exposure from Nestle, Unilever, Johnsons and the like than the stuff listed in those markets.

 

Have you ever had a look at iShares IXI? From my brief look it holds the type of companies the likes of Markel/Birkshire favour. I would be interested in anything general thoughts you (or anyone else) has.

Top 10 Holdings

NESTLE SA 6.91
PROCTER & GAMBLE 6.17
COCA-COLA 5.07
PHILIP MORRIS INTERNATIONAL INC 4.42
PEPSICO INC 4.32
ALTRIA GROUP INC 3.58
BRITISH AMERICAN TOBACCO PLC 3.31
CVS HEALTH CORP 3.18
WALMART STORES INC 3.04
ANHEUSER BUSCH INBEV SA 2.94

TOTAL 42.94

 

Awesome thanks. I tried googling it but it said the site was down for maintenance.. I had assumed it was some sort of strategic plot to never let you withdraw

 

I am rolling over into ING which puts a constraint of 20% into any one particular share. Thus I can only put 20% into VGS and to get up to 60% global exposure on low cost cap weighted index ETFs using VTS and VEU.