ASX Shares If you were only allowed to choose 4 ASX holdings - what would you choose, and why?

I considered including A2M. Its like choosing which children to abandon. I don't think and don't hope A2M will start paying dividends soon. It is better if it keeps reinvesting in growing market size, It is killing it in China with 100% growth, ANZ 50%, USA still a lot of pushing needed. I hope it uses its strong balance sheet to keep reinvesting to double revenue every 2 years, and purchase a canning factory.

 

I wouldn't invest in VAS it holds about 270 companies I wouldn't invest in and some I bailed out off with the price spike when they entered the top 300. I wouldn't invest in the 300th or even the 30th best company. If I have 4 companies to invest in I want the 4 I consider the best and have highest conviction in. Wouldn't use bonds, I use positive cash flow property as security to purchase shares, if the shares go South I still have the property that growing at up to 15% ( doubled in the last 5 years) which will more than offset a complete wipe out of shares. For a long term property REIT I am invested in RFF. If I was less risk tolerant I would include that in the 4. though I have similiar direct exposure. I also have CGC which is in a way similar. Attack is the best form of defence. One company making 1000%, will make 3 companies of equal weighting loosing 100% unimportant, but the chances of more than one going under are very low.

 

I'm actually with geoffw on this one. There's no right or wrong here as it all depends on individual circumstances and risk tolerance. However statistically, 98%+ of the time, low cost passive index funds outperform individual stock selection over the long term. I'm interested in maximising risk adjusted returns, and low cost diversified ETF's are the king of this (see: Buffet, Malkiel, Bogle et al). It's boring, but it works.

This is why my four looks roughly as follows:

• ASX:VGS - 49%
• ASX:VAS - 49%
• Speculation stocks - 2%

 

Anybody load ad up on FMG lately?

Forget picking 4, just 1 would do. (not advice, no siree, just a thought).

 

I would choose this also.
Great diversification and growing dividend stream at the same time.

 

VHY, WPL, BHP, NAB

For size, stability, slow growth, dividends and the occasional covered call.
I´m past the speculative stage.

 

Holding VAS, AFI, MLT would cause some overlap & loss in diversification by the total underlying companies point of view, but the diversification from my perspective is the structure of the three holdings itself (ETF/LIC/LIC).

As a dividend investor, I wouldn't mind a bit of both worlds, ETFs & LICs.

ETFs as a trust structure must pay all cash received by the underlying companies to shareholders. (aka no people management)

LICs have people managing it, so this means LICs can retain some cash to smooth the dividend payouts on a rainy day/buy some companies during a dip. Having said this, fund managers can also cause bad decision making etc, the reason why I would choose 2 LICs instead of 1.

 

Yeah AudGrowsOnTrees explained my thoughts well.

I like diversifying asset classes, primarily property and shares. Then within my shares I like diversifying between domestic and overseas, and between fund structures (both positives and negatives to each ETFs and LICs) with minimal fees. And ideally diversifying by time of purchasing these assets, and in an automated way to minimize by own biases'.

Most definitely a fair amount of overlap between what makes up the domestic ETFs and LIC's, but I like the different reasoning for their respective portfolio concentrations, and I like the idea of having a bit of each rather than relying on one concentration to perform better than another. I like Australian shares with their typically higher yields, and also respect the growth potential of international equities.

Whilst I do hold some individual shares, I feel my concentration here is more for keeping it interesting and having a go at outperforming the market. For the purpose of this exercise in thinking which of my 4 most important parts of the share portfolio, I like the ETF/LIC option for the sleep at night factor too

 

Interesting choice, but that's 5

VGS, VAS, DJRE, VVLU @ 55, 25, 10, 10

After reconsidering, I believe there is a higher risk exposure for Aussies allocating too much ASX in their equities allocation, which includes factors such as: we are already strongly correlated by owning property here, having our jobs/companies here, and living here, Australia is only one country of many, our market is ~ 2% of the world, and China's increasing control.

A higher allocation to global (E.g VGS) mitigates this risk to some degree.

PS, I still own a lot of LICs that I won't sell, and I will purchase more in future, just less than my original plans.

 

My inclination is the same. Hold the LIC's I have, add if there is some form of action (SPP, etc) and look more to global. The income LICs spin off is pretty darn good in comparison with other regions which is why the Oz market is attractive at one level.

My problem - and it's only an attitude problem for me which I have created - is I don't want to add additional holdings after going through the effort of culling the herd. I'm finding the mental block I have established is difficult to overcome.

 

No love for EM?

 

I have EM (emerging markets) in super and no VVLU (unavailable in Sunsuper). However I was asked for only 4 and I feel that value adds performance over EM in this combination.

If I was going to start adding satellites they would be emerging / small / mids such as VGE, IJR, QVE. I'd be very interested in how much more risk reward could be achieved by adding any more than the Aussie sloth portfolio of VGS.