LIC Performance Comparison ARG v AFI

Frank,i will give you one thing you have a way of effectively navigating difficult conversations ,particularly when the only likely outcome appears to be one in which everyone loses..

At least you are going to see and learn over the next few months how a bear market works so be very care=full
one week it goes up the next it's will go lower then the previous high,and Frank you may be playing us all and be smarter then you think..

 

Even better.

Your aussie shares are your currency hedge.

There is so much wrong with this sentence....

So you are doing an all australian large cap portfolio with a tiny bit of international and miniscule bonds/fixed income/cash? Why not just buy VAS and have the same outcome for much less expense?

Yep - world's best troll. Either that or the type of injured fish the financial planning sharks make their money off.... I wish I could charge him 1.5% + performance fee to invest him in a closet index fund!

 

This thread, as well as the other started by the OP which ran to over 30 pages, reminds me of the tune by the Nitty, Gritty Dirt Band.

Will this thread ever be unbroken? And like a vynal record goes round and round and...........

 

Which makes me think if it’s not a troll thread then maybe the OP is not suited to share investing.

 

And whatever the situation I always know if the outcome, either good or bad, for the person then:



Not my job.

 

+1. If you still don't get it after 2+ years, then I don't think equities are for Frank.

 

Yes very long saga.
I think what Frank Manno is trying to do is keep it simple which he has started to do by investing in VDHG, so well done.
As most would know that should be all that Frank would have to do.
How ever from this thread and the other 30 page thread on Frank, he is after a passive income stream of some +$80k a year which VDHG from Frank's calculation won't achieve. Although he should take into account Total Return. But this is where it gets complicated as Frank I presume doesn't want to sell shares to create the dividend shortfall.
Therefore Frank is trying to invest in more Aussie being VAS and or AFI/ARG to boost his income via dividends.
So to solve his problem he should just invest additional funds into VAS and if he wants a bit of active management and dividend smoothing invest in AFI or ARG.
Hope this helps.

 

Possibly longer as one poster pointed out the OP is a member of another forum and apparently joined that one a few years before becoming a member on this forum.

 

Please correct my assumptions between VGS vs VDHG

VGS - International exposure which isn't good now because AUD is weak.

VDHG - Same underlying assets as VGS but currency is "hedged" to offset fluctuations between AUDUSD.

Why does it matter if one is hedged or not?
Let's assume our current weak AUD becomes stronger in a decade, how would that impact performance for the 2 funds?
What scenarios do you need to consider to maximize performance between the two in the long run?

 

VDHG has
VGS 26.5% (Unhedged) and a further 15.7% (Hedged) totalling 42.2% of VGS

Plus

VAS 35.6%

And some small companies, some bonds, some fixed interest.

Try to buy anything US that is not hedged when the Aussie dollar is higher and sell when the aussie dollar is lower. This will allow you to not only make a profit on your shares but also a profit on the currency exchange..

-Frank

 

AFI and BKIs greater exposure to mining and resources generally might lead to some out performance compared to financial heavy LICs such as WHF?

 

VDHG is 53.7% International so if VDHG is 50% of my portfolio then it not only a tiny bit of international, there is a decent amount of exposure there, no?

-Frank

 

Yep you nailed it where you said 'this is where it gets complicated'

I just want to make sure I understand your post correctly..?

Did you mean, invest in *VDHG* and additional funds into VAS and if I wanted a bit of active management invest in AFI or ARG?

Or did you mean just VAS, AFI/ARG without VDHG?

I know this is not advice..


-Frank

 

@Frank Manno

"The perfect is the enemy of the good"

You can slice and dice and try to create the optimal portfolio, however it's an elusive and ever changing beastie, you'll do your head in trying to find a 'perfect' for every weather, heads you win, tails I lose portfolio

The Optimal Portfolio

Interesting read and graphics from A wealth of Commonsense

The problem when searching for the “optimal” portfolio is that it’s always changing. The optimal portfolio today is unlikely to be the optimal portfolio of the future. The only true optimal portfolio is only known with the benefit of hindsight.

Successful investors know there’s no such thing as a perfect portfolio. So you must understand and be willing to live with whatever drawbacks exist within the portfolio of your choosing.

And then, come hell or high water, you must be willing to stick with that portfolio. The strategy you either can’t or won’t stick with is indistinguishable from a failed investment plan.

This year has been kind to stock and bond markets around the globe:



From Of Dollars and Data

My personal investment philosophy is: To continually buy a globally-diversified set of income-producing assets through passive investment vehicles while paying low fees.

My current allocation is:

• 40% U.S. Large Cap Equities (S&P 500)
• 30% World Equities (non-U.S.)
  • 15% Emerging Markets
  • 15% Developed Markets
• 10% U.S. Real Estate Investment Trusts (REITs)
• 20% U.S. Intermediate Bonds (duration ~5 years)

All of these are ETFs, but mutual funds could provide similar results.

Is this allocation optimal? No, and it never will be unless I get lucky. My portfolio has already underpeformed the S&P 500 since I started investing in 2012, but that’s fine with me. As I have written before, even in an optimal portfolio some of your assets will lose money/underperform in almost every year.

 

Any share can beat any other share. Will a share beat another share, there is no way of knowing until after the fact.

However, statistically, as the time scale approaches infinity, there is a strong argument that nothing can beat the index.

 

Thats pretty close to a US equivalent halfway between VDHG and VDGR. Looks good

 

@Frank Manno, this combination should cover your requirements, my allocations are included for reference:

1. VAS - 35% - increase this if you want to overweight ASX200
2. VSO - 5% - increase this if you want to overweight ASX small caps
3. VGS - 25% - increase this if you want to overweight International
4. VGAD - 15% - increase this if you want to overweight International with hedging
5. VISM - 0% - increase this if you want to overweight International small-caps
6. VGE - 10% - increase this if you want to overweight emerging markets
7. VAE - 0% - increase this if you want to overweight Asian emerging markets
8. DJRE - 10% - increase this if you want to overweight property
9. VGF - 0% - increase this if you want to reduce risk (beta)

Holding in AUD are 1, 2 and 4, ie 100 minus the sum of these is your exposure to currency fluctuations.

NB:
I have LICs such as MLT and ARG that I consider in the same bucket as VAS
I have LICs such as MFF and PMC that I consider in the same bucket as VGS
I have LICs such as QVE that I consider in the same bucket as VSO

VDHG is probably the easiest and safest bet, but you are delegating control to Vanguard. The other option is using VDHG as your primary holding and then buy 1-9 above as satellites to overweight.

 

Thanks for sharing..

To increase the weighting would I use the number of shares purchased or the stock price?

Just a fictitious example..

Lets say I have $10000 and want a 70% to 30% split across 2 stocks. Is it a case of buying for example 70 shares of one stock and 30 shares of the other?

or

Buy $7000 of one stock and $3000 of the other regardless of how many shares I end up with?


-Frank

 

The 2nd scenario. It’s the value of each asset class not the number of units because each share has different unit price.

If your question is genuine and I think it is then perhaps you are not yet ready to invest in shares

 

If you have engaged an adviser and are still with them you pay for a service. If so then this:

If not or you and your adviser have parted ways, engaging another to be your tutor could be a worthwhile for you.

SK exits thread stage left.