Looking to start an ETF/LIC Portfolio.

Hi all. Just doing a bit of research (feel free to critique) I've decided to create a portfolio of ETFS/LICS with a 70/30 split of International/Australian. Because of the new recently domiciled Ishares ETFS I have decided to allocate as follows:

Australian

20% Argo/mlt or vas if NTA for lics at premium
10% Mid cap aus (either qve,mir)

International
10% Smallcap U.S: IJR or IJH
10% either VAE or IAA (Asian exposure)
50% Either VGS or IVV.

Just had a few questions if anyone knows the answer to these would be great. Also if you have any feedback in regards to allocation % or the lics/etfs chosen please let me know.
1. Should I even bother having a U.S midcap/smallcap at 10% or should I just skip and put right into IVV or VGS?
2. Although it seems the fees on this would be lower than just going VDHG is VDHG the better option for auto rebalance/easier admin on 1 etf and not 5.

Thank you.

 

I have a similar split:

50% VGS
20% VAS/lics
10% VAE
10% IJR
10% VVLU

You can easily rebalance using inflows, so you dont really pay more in brokerage vs vdhg.

I like it because they are all au domicile so tax is easier. Total cost is 0.19%.... less if u skip VVLU. If there was a low cost world ex us product au domicile product i would have prolly gone IVV and then a ex us fund.

Imo its worth keeping IJR as US small caps have a long history of giving a return premium over large caps (but with higher volatility/bigger drawdown in crashes)

When a global/ex us small cap etfproduct becomes available (like vanguard international small companies fund) i plan to trim 10% from VGS and add that.

I like vae over vge because of slightly lower fee and it includes korea which is frustratingly absent from VGS. The downside is it has a lot less companies than VGE and skips some countries like brazil, russia etc

 

Thanks for the feedback I feel a little more confident in my approach now cheers!

 

Are any of these an Australian domicile pure S&P500(US) index.

 

Hi yes. Only recently was IVV and IJR added as Australian domiciled U.S based ETFS. Low fees of 0.07 mer too.

 

Just a quick note

VGS is all developed world
IVV is just the US (ie about half of VGS) and you may want to split between IVV and IVE if not going with VGS unless you specifically intended to leave out the rest of the developed world.

If Vanguard one day finally releases their developed world small caps fund as an ETF, which is already half US small caps, why would you take out 10% from your VGS allocation to put into it instead of switch from IJR to that?

 

Thats a good point. Yes probably would end up with VGS and globalsmallcaps combo instead of all three

What i would really like is aussie etfs to achieve a Paul Merriman style combo of US large, US small, world ex US large, world ex US small, and value oriented versions of each. Our etf market is so behind...

 

Okay so decided I might skip the whole midcap in AUS as the returns seem on par with the bigger lics like ARG/MLT unless I choose to pay a premium and higher fees like for WAM. So ARG IVV IJR VAE seem like easier to rebalance with only 4.

 

I'm a 'set and forget' type. Mine is very simple.

I have VDGH - 50% (has all those other ETFs you wanted, but it does all the re-balancing for you and less fees)
ARGO -50%, as it has a better dividend yield than the ETF.

I keep re-buying these every 6 months.

 

Hi Shazz@

I like your style.

Could you give us simpletons a break down on how VDGH is working for you.

 

Just to add to the thought process

Busting the Myth About Size

Many market participants (including investors, product providers, and analysts alike) assume that, just as value stocks on average outperform growth, small-cap stocks on average outperform large-caps. Unlike value, however, and contrary to popular opinion, there is little solid evidence that stock size affects performance.

A recent Research Affiliates article by Hsu and Kalesnik (2014) concluded that there are at best three factors from which investors can benefit through passive investing: market, value, and low beta. The size premium was conspicuously missing from that short list. In this article we explore empirical evidence behind the size premium in more detail. The summary below offers a preview of our findings. We let the reader examine the evidence and draw his or her own conclusion. In our opinion the preponderance of evidence does not support the existence of a size premium.

 

No ones concerned with the up coming Stockmarket crash? I hear it’s going to make 2008 look like nothing...

 

Not much history as very different asset allocation to the previous diversified funds.

The vanguard diversified funds have been discussed a number of times but for what it’s worth here’s my thoughts earlier on:

Vanguard

In regard to AMIT which has been discussed at times it seems to have help with the capital gains being more fairly treated but in the process created a bit of a record keeping headache?

Overall though if behavioural issues are a concern and simplicity is very important then there’s a lot of positives.

 

Don’t worry that’s just me spreading rumours in the hope of picking up some bargains.

 

Possibly, but the problems of 2008 weren’t fixed, they were made worse by borrowing and throwing cheap money at it.

Not to mention the 10 year bull run to immediately follow it.

 

And yet price wise the ASX has still not reached it’s GFC high:



What can you do though? Go to cash, keep waiting on the sidelines or just keep investing month after month, year after year knowing that sometimes shares are a bargain and other times they’re not.

Each needs to decide for thrmselves but I’ve never sold in expectation of a crash but I did make sure I had a LOC(s) in place to take advantage of these rare opportunities.

 

I hope so. Do you know the date is begins and where the bottom will be?

 

I'd like to subscribe to this newsletter.

 

Having a quick search on ebay and gumtree for a crystal ball! No luck as yet!