Lics and ETF

Discussion in 'Shares & Funds' started by Tobytom, 29th Dec, 2019.

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  1. Tobytom

    Tobytom Well-Known Member

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    Welcome any thoughts from the.community.The amount of Knowledge in here kills any investment newsletter especially from the likes of @Nodrog @SatayKing @dunno @The Falcon just to name a view

    Currently international diversification is through IVV, NDQ and MFF

    As MFF is on the Higher side Fee wise and IVV and NDQ gives plenty of exposure to US should I consider adding VAE to diversify more and cutting back on NDQ and MFF

    Any thoughts as part of my thought process would be appreciated

    Have cut back individual stocks on the US Market and moving towards ETF/Lics which is the plan moving forward
     
  2. pippen

    pippen Well-Known Member

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    I would suggest a good read on this forum (lics etf etc etc) the search function is your best friend! All info is in these threads you just need patience and a willingness to learn and spend time exploring all concepts FOR YOU and YOUR investment plan!

    All the best!
     
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  3. Tobytom

    Tobytom Well-Known Member

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    Good feedback, thanks @pippen
     
  4. TAJ

    TAJ Well-Known Member

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    Do yourself a real favour and read the "Other Asset Classes" thread on this site.
    There are numerous ways to get ahead without being bogged down in residential property investments.
    If you desire relatively passive income, then ETF's & LIC's are the way to go, unless you are able to secure Commercial real estate.

    Good Luck.
     
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  5. Nodrog

    Nodrog Well-Known Member

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    From an asset allocation / risk management perspective with global equities there’s developed and emerging / Asian markets. VGS and VGE / VAE pretty much cover it. Some will argue about small caps not being included but given the nature of cap weighted indexing it really isn’t much of an issue.

    Not sure about taking a sector bet on tech given the level of exposure already in the major indexes?

    You have US covered with IVV but no ex-US developed markets or emerging / Asian markets.

    MFF is a bet on active management if you think they can continue their outperformance? Heavily focused on US also from memory.

    I suppose I like the core satellite approach if intending to take “optional” sector / active bets etc. The core being developed and emerging / Asian global market index funds. With that in place then optional smaller allocations can include whatever one fancies but ideally something very different to the index rather than simply doubling up / overweighting etc.

    Investing is a never ending journey for some of us but overtime I’m finding simplicity is a wonderful thing.

    Not advice.
     
    Last edited: 29th Dec, 2019
  6. Fargo

    Fargo Well-Known Member

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    Depends what you want to diversify. VAE or ASIA will give you currency diversity. But the largest positions in VAE are also listed in the US and in US indexes. NDQ will give you much the same diversification. Technology by its very nature gives you diversity and exposure to all sectors . If you want worthwhile diversity and exposure to the Asian tiger and something that may shoot the lights out and make serious money, perhaps take a very small position in something like Baozun (NASDQ BZUN) Chinas Shopify, used by Microsoft, Nike, Starbucks etc. Affected by trade war but that will pass.
     
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  7. Hodor

    Hodor Well-Known Member

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    Depends on what you are trying to achieve and by what philosophy.

    Here are some thoughts anyway.

    What % of your portfolio will International represent?

    Are you looking to take a view on the market? Or are you willing to accept market returns? Do you believe the market is efficient? (ie seeking alpha isn't practical/worth the risk)

    Some might consider VAE an interesting choice given you have ignored developed markets outside of the US. Again, depends what your goals and beliefs are.
     
  8. Froxy

    Froxy Well-Known Member

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    MFF high embedded CG and key person risk

    NDQ and IVV is just a double up IMO.

    The nasdaq and s&p since 1975 (nasdaq inception) have given almost identical returns however Nasdaq has proven far more volatile. However there is a school of thought that tech stocks will kick on from here ....IE: "this time its different"
     
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  9. Tobytom

    Tobytom Well-Known Member

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    Thanks as always. Compelling thoughts which allows me further research to ascertain what is the best mix as part of my international allocation but defiantly needs a flavour outside US which I am probably over exposed
     
  10. Tobytom

    Tobytom Well-Known Member

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    Thanks Hodor. International is 25%. Majority is in Oz for obvious reasons with
    Some individual shares and DUI(some international ETFS built in) WHF VAS and MIR

    Clearly longer term the market will trend up and a believer that in the short term the market is a voting machine but long term is a weighing machine. Have some LIC that I believe can outperform the market but otherwise happy to take the greater market returns.

    Very bullish on Asia hence VAE. Just need to get my head around two much concentration in US with IVV,NDQ and MFF
     
  11. Hodor

    Hodor Well-Known Member

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    I just use VGS for international to keep things simple. Although you could argue about what advantage other developed markets have over the US leading them to perform differently (better), maybe IVV is all you need.
    I have held MFF for a few years now and obviously done well. In hindsight I would probably just keep things simple

    That's an easy decision then.

    At the end of the day with 25% how much impact are these decisions potentially worth?

    If you have 15% in IVV and 10% in VAE
    or 15% VGS, 5% MFF and 5% VAE
    or ....

    I can't say, IMO it probably isn't worth losing sleep over and more about what will give you sleep. Even if VAE returns 50% more than the other international options, what will this mean for your results and position.
    You aren't looking to shoot the lights out with individual stocks with massive potential downside.
     
  12. Tobytom

    Tobytom Well-Known Member

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    Thank
    Thanks so much @Hodor . Definitely gives me plenty to look into further and how my diversification looks. Starting to agree that simple works and dont need to over complicate it with multiple positions in multiple holdings.

    Happy NY
     
  13. Tobytom

    Tobytom Well-Known Member

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    Thinking makes sense to simplify the portfolio
    Have IVV as a Anchor of my portfolio and smaller allocations to NDQ and VAE
    Other equity I'm looking at as an anchor is an equity that has Global exposure and ex US
    Seems VEU is the answer but a no go as it's US domiciled in my view.
    Looked at VGS and IWLD but also has a fair swag of US (not sure about IWLD being a funds of funds)
    Not sure any suggestions of any Global ETFs ex US that are Oz domiciled that can be suggested for me to research further
    Cheers once again
     
  14. mtat

    mtat Well-Known Member

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    Great ETF if you don't mind filling out a 5 minute form every few years. Large/mid/small cap exposure to ~46 countries, including emerging markets, all at 0.09% MER.
     
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  15. Froxy

    Froxy Well-Known Member

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    VDHG as your core holding then add a one or two if you want to overweight US or underweight Oz.
     
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  16. Tobytom

    Tobytom Well-Known Member

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    Any thoughts on where I am at in regards to the follow up and research I have done.
    Mix of 65% Oz Shares and 30% International.

    Oz Component
    10% Direct Shares
    15% MIR.ax
    5% DUI.ax
    15% WHF.ax
    20% VAS.ax

    International
    10% VAE.ax
    20% IVV.ax

    Any feedback for further Investigation

    Cheers
     
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  17. Nodrog

    Nodrog Well-Known Member

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    Excluding direct shares Oz could be simplified to:
    VAS
    MIR (optional for small cap exposure but be aware of NTA premium)

    WHF albeit all Industrials is large cap focused as is DUI albeit with some global exposure. DUI at 5% is gonna make bugger all difference anyhow.

    Re Global exposure Ex-US Developed is still missing, perhaps that’s your intention?

    Not advice.
     
  18. mistercoffee

    mistercoffee Well-Known Member

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    QVE might be a cheaper alternative to MIR. It's been trading at a significant discount to NTA for a few months.
     
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  19. SatayKing

    SatayKing Well-Known Member

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    From the numbers it would seem to be 95% invested. Assume the remaining 5% is cash. 65% home, 30% international.

    DUI isn't going to add much as it would also only add less than 1% to international exposure and the majority of its holding would be covered by WHF, VAS and MIR in any case. Could go just for VAS but my attitude is still to hold LICs for a number of reasons which my brain justifies to itself.
     
  20. dunno

    dunno Well-Known Member

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    How much equity? How much Cash/Bonds?

    Within Equity:

    How much US?
    How Much Asia?
    How much Aus?
    How much rest of developed word?
    How much emerging?

    How much small cap do you want? In what parts of the world do you want to hold Small Caps? All or just some?

    How much foreign currency exposure do you want?

    What is your current asset exposure? How much is embedded capital gains a concern in making changes going forward?

    Do you have a preference for Active or Passive? Do you want a specific allocation to either? If you want some active, do you want factor or management risk as the active allocation?

    Answering the above first is the important part. Finding the investments that deliver on the asset allocation then becomes easy.

    Looking at the specific investments first is like putting the cart before the horse and any discussion on best fit individual investments until the asset allocation is sorted is a waste of time.

    Back to you to clarify desired asset allocation.

    This is a current article which might be relevant in relation to getting the investment thinking sequence right.
    How do your financial priorities stack up with our pyramid?
     
    Last edited: 9th Jan, 2020
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