Lics and ETF

Thanks @Nodrog . Thought I may have over diversified with OZ Exposure. Maybe a piece to scrap DUI and cycle it into VAS.

Internationally I have left it to US (S and P) and Asia. If VEU was every Oz domiciled I think that would be perfect but not to be at this stage obviously. Looked at VGS but a significant percentage is in the US anyway as is many of the "International" ETF's

Your thoughts but definetly not seen as advice is timeless

 

Thanks @SatayKing . Correct 5% in cash. As I am still 30 years till "retirement" thought this percentage to cash (Especially also I am very comfortable with an aggressive strategy)

Makes a lot of sense with DUI which I will further investigate

Thanks

 

Core and Sattelite approach questions.

Above mentioned terminology has been used with various types of investments and i am intetested to know if ETF is core e.g. VAS and satelite can be a fund that is trying to beat the index or it has to be LICs or direct shares?

Given the time/knowledge limitation (share market) trying to find.out the simple.version.of this approach. I must say that Lics aren't popular among the FA's .

 

Index ETF like VAS, A200 are design to track the index and you get index return minus management fees
(the lower fee the better as they just tracking the index, buy sell and weight according to the index make up)

There are two ways you can beat the index and try to yield extra return on the satelite
1. pick individual stocks
2. buy into LIC which is a basket of stocks pick by fund manager and it usually has much higher fees

Most fund manager cant beat the index over a long time frame, in fact Warren Buffet has a 1m bet with a hot shot hedge fund manager that he cant beat S&P 500 over 10 years period and guess what Warren Won , a million bucks went to Charity (2008 - 2017)

 

Thanks @PandS , appreciate it!!

(A) Not easy to pick individual stocks other than banks, mining and other famous blue chip-one need to know all the ins /outs etc.
(B) well there are few to choose from as per the basic rules-low fee, been there for ong time and regular divis.

Can the above be possible for debt recycling ? Only issues with LIC is Not much CG

 

Also S&P 500 (SPY) give you the widest coverage of the US economy around 80% with no specific sector it the whole economy, covers tech, to retails, to manufacturer to finance etc...

 

A) Yes picking stocks you face individual risk and you need to know a bit about individual business and have a knack for risk if you no good at it stick with the index.

The advantage of picking stock is if you pick the right stock It can amplified your wealth tremendously but it has higher associated risk than Index or LIC.
I have always picked stock and throw some money into index ETF, I dont buy into LIC but that just me other people has other ideas


B) No Index ETF just picked the one with the cheapest fees, it doesn't matter if it been around for 10 years or 2 years because they all do EXACTLY the same thing, it just some start life earlier than other.

price reflect the current index so if you buy now on an ETF that start 10 years ago or ETF that start 2 years ago, price earning/dividend ratio will be the same, price maybe different for different products due to its structures but the underlying fundamental will be exactly the same, there are no advantage in older fund, the only thing that matter is fees

it not an individual business where you need track record.

Neither index ETF or LIC can out perform Index that much so you get close to the index return on either side, one of the reason LIC fund manager don't want to risk falling behind the market too far (These are the smart one) because they lose fund and people interest so they picked stock that closely resemble the market with tinkling around the edge and want to stay in the game for a long time, slow and steady fees.

That one that venture far from this risk way under perform the market or beat it they have a year or two of lime line then market start to quacked them and they fall way behind then people start to lose interest

and finally there are some just serial under-performer anyway venturing too far (the one that they think they are smart, take a chance see if they can get some head line and grab some more fund), there are plenty of them just check them out and compared them to the index

 

@PandS
I Was playing around inline and attached is the wholesale funds performance that is after the fee so what ETF should I use to conduct the comparison?

 

They include a customs benchmark for you already and look like they under perform the benchmark so a basically they under perform the index they are compared against.

again further proof most fund can’t beat the index so why pay more for underperformance?

there is no equivalent benchmark that you can readily compared because the asset is a mix of a lot of thing so you have to come up
With some sort of custom benchmark that takes all those index, Slice and dice according to your weighting allocation

if you want to have an idea I think the closest thing would be msci world index but then again it not accurate as a variation of .5% or 1% is a lot because it not the exact mix

 

If I am doing Debt Recycling-I am afraid , I do mot want to put money in LIC due to no or low CG. I should explore.more ETFs/Direct shares other than banks too