Merriman Ultimate Portfolio in Australia

Or for a mere 3 bps extra over VGS fee one could also take advantage of hedged Global Developed (VGAD) when “currency” appears to offer “value”? Treat it as part of one’s AUD exposure.

Perhaps anything other than traditional cap weighted indexing is an attempt at juicing performance more so than looking for correlation differences. There’s no guarantee it will and even if it did does the investor have the patience for the sometimes extraordinary long wait for these factors to return to favour?

I’m guilty also of chasing ”value” product in the LIC environment where buying it at a discount is effectively like buying value upon value. But then high fees are likely to negate any potential benefit compared to low fee indexed product. I try to convince myself it’s ok as I focus on LICs likely to pay me during periods of bad performance. In saying that I choose to be blind to how that dividend is derived.

We are who we are, I’m a sucker for income at times.

 

100% agree. These are the only two international holdings I have to supplement my core of VGS.

 

I investigated the Ultimate portfolio along with a bunch of others, and it does perform well in back-testing. But not necessarily better than simpler portfolios with less volatility.

This chart is Ultimate (blue) vs 60/40 (orange) vs a simple 20/20/30/30 SC/LC/Long Bonds/Short Bonds (red).

The Golden Butterfly portfolio beloved by Portfolio Charts does even better by cutting bonds and adding gold.

Golden Butterfly

But, of course, past results etc etc.

 

Yep, The listed stuff is all active with everything that goes with that...key man, survivorship etc. Not ideal.

I think that if your portfolio is big enough you could consider just paying the $1500 pa BT Panorama fee and get access to all of the DFA products if you want to tilt. Putting together portfolios now using Vanguard Cap weight equity core and fixed interest and DFA satellite for Oz/Global Small cap value, EM and Global Property. Looks pretty good around 30-35bps across the portfolio. Vanguard and DFA in combo is a indexer who thinks he’s a little clever, though not too clever wet dream.

 

Interesting thanks.

I’ve looked at DFA funds a number of times over the years but they were only available if investing through an advisor. Am I correct in assuming that individual investors can now bypass an advisor and get direct access to DFA through BT Panorama?

I just had a quick look at BT website and saw these fees. For greater than $1 Mil wouldn’t it be $1,500 plus $540 pa? I’m guessing that if using this platform for Personal AND SMSF it would require a separate account for each and hence double the fees?

 

Sorry, right you are, admin/expense recovery/account keeping works out at 7bps. On the other hand, the $1500 admin fee can be shared across up 4 different portfolions ; i.e. SMSF, Trust, Pty Ltd, joint names.

 

Thanks mate.

From memory over the years I’ve seen commentary about DFA (enhanced) index funds being superior to the likes of Vanguard cap weighted index funds particularly due to value factor tilt etc but even in the case of core funds etc. As per your previous post a combination of the two would be much more sensible if one decided to get a little clever with indexing. All in the too complex basket for me nowadays. That said It would be fantastic to see @dunno do some analysis / comparisons of DFA funds vs market etc over the longer term.

 

Yeah DFA comes out of the Chicago school. So its Fama/French, the original factor investing. Small / Value tilt but the screens are a bit more complex than size/price to book. I think in the areas of AU/Global SCV in particular they fill a gap with long standing low cost strategies that have stood the test of time. Many of the AU funds are 20+ years old now.

 

I suppose the appealing aspect of using a platform is that having a greater number of portfolio holdings is much simplier than trying to manage them individually. So having tilts and the like especially with a higher wealth portfolio is not such a big deal.

 

I'm not really interested.

I’m not a natural tilter in passive. My ideal is at the extremes; pure market cap passive and a satellite of full on direct active.

In saying that I currently have a value tilt as I accumulate global passive. that is because a) my accumulation in global has not been over a lifetime, it is presently accelerated. b)currently I see growth stories valued far more richly than bird in the hand earnings/assets. This to me is a large-scale cyclical occurrence. Accumulating in VVLU for now suffices without the need for a platform. When the time is right, I will likely back out of this value tilt. – exactly as you described your thinking on hedged in the other thread.


From what I have heard DFA have a good product with high loadings towards their respective tilts. But long term big picture – its not a product that suits me and I wouldn't pay a platform fee to get it for the medium term.

 

Right, you just give advisors portfolio manager rebalance authority. Consolidated tax statement sent to accountant etc. Nothing to do. Advisor and accountant sort tax / distribution planning each year for sign off.

 

Bludger

 

Similar again with hedged vs unhedged being a late starter with global equity indexing and unfortunately later in life. Otherwise it would be 100% unhedged all the way. That will be the case eventually but given the circumstances in the short / medium term partial hedging seems to make sense.

Fair enough in regard to DFA.

 

Ill chime in since I use BT Panorama. So yes once your total portfolio hits above 1mill its capped at $1500 per year plus $540 per account P.A. So I pay $1500 for our personal , my super and wife's super accounts. Then $540 p.a for each account as well. So around $3k per year for all three accounts. Last year I was on the BT Wrap platform that was charging me over double that.

With regards to the advisor part. You as an individual will not be able to set up the account. An advisor must set up the account for you and then you can take over it from there. For the super accounts you must have an adviser linked to it at all times.