Property & Infrastructure Funds Real Estate Investment Trusts (REITs)

Yeah correlation really means nothing to us given we can live well on income alone even in a historically worst case scenario. So Smoothing of capital volatility is of little concern. I find it intellectually interesting though.

I use to think like you but have gotten a bit more conservative of late. Having enough capital to be able to take some risk off the table without impacting lifestyle is very comforting for potential insurance against future unknowns. But really it’s more a SANF thing which is different for all of us with investors generally tending to become more conservative with age.

I have no interest in bonds. As for inflation holding cash and mostly short duration term deposits in a tax free environment should do a reasonable job in keeping up with normal inflation. Should that fail well the remaining allocation of around 80% in equities should do the job.

 

Shame on you for not keeping up to date with PC forum posts.

 

Yeah that my my first thought when I posted that awhile back. It would be nice. Even better if VEU converted also.

Trouble is you start investing in some ETFs then a better ones come along. What to do. Add more or sell incurring CGT to switch? To much temptation.

 

I agree..but long term I always wanted to invest in US market excluding other developed markets for overseas exposure. As a trade off I invested in VGS. I am seriously thinking of going back to my long term plan of VAS + some LICs for Australia and IVV + IJR + VAE for international.

Will think about it for next few days before I take any action.

Cheers,
Oracle.

 

why not including japan?

 

Have mixed views about Japan and other developed markets. Possibly due to my lack of knowledge and following. Having done some research aboutdidn't excite me

I follow the US stock market closely and feel comfortable to have invested in it as majority overseas exposure. I like Asia in particular China, Taiwan, Hong Kong, India, South Korea and think those markets will do well over the coming decades hence invest in VAE to capture exposure to those markets.

So for me Australia (VAS & some LIC) + US (IVV & IJR), China, Taiwan, India, Hong Kong, South Korea (VAE) are good enough balance between diversification and future returns potential based on my personal views.

Cheers,
Oracle.

 

Given your keeness as expressed in numerous posts for AUS domiciled US exposure you must be stoked about the changes to IVV & IJR. US small caps have been a great asset class and as a separate ETF overweighting is an option. From memory getting the changes through should be a formality as I don’t think many votes are required?

 

Yes, happy about these changes. As they say better late than never.

The other thing I like about the US market is it is high capital growth low yield market (Similar to the Australia property market). Which works for me because I am already paying too much tax and would much other prefer my investment returns from capital growth than yield. This way over the long term I have more dollars compounding for me.

The only thing I don't like about the US market is the current 9 year bull market. Stops me from going hard now. I would not try to wait and time the market because you just never know this bull market could go on for another 9 years. So I have decided to dollar cost average.

Cheers,
Oracle.

 

I must've spent hundreds of hours recently learning about shares and just about ready to start, but as you say, the long bull run is a worry, but so is the fact that they had a bull run from 90-95 and if you took your money out thinking it was too high, you would have missed out on doubling your money again over the next 5 years. I think I need to bite the bullet and start moving some in. My consolation is that if the market drops after I have 50% or even 60% of available cash invested, I can still make up for the drop by being able to buy low with the rest of the available cash.

Although I'm not sure why people are saying the Aus market is at risk too. The graph doesn't seem all that great and still has not even hit it's previous high from a decade ago. I understand that if the US market gets hit, likely so will everywhere else, but since the Aus market is not valued so highly (I think) like the current US market is, that if the Aus market did get a hit from a US downturn, it would recover to the fundamental price which is probably roughly where it is now.

 

I was looking up "dow jones global real estate index history" and came upon this 10 year history.
Going just by that, it doesn't look all that much like it would lower some of the short-medium term volatility through diversification from equities. Or is this more a case of too short a period of time for meaningful correlation?

 

Do you know how soon after the vote will the existing ETFs be converted to Australian domiciled ETF? Haven't seen any timetable provided.

Are you going to look into investing in any of the Blackrock ETFs once the conversion happens?

Cheers,
Oracle.

 

According to page 3 of following it just says after the meeting via announcement on market:

https://www.asx.com.au/asxpdf/20180503/pdf/43tr9dp61f1864.pdf



Not looking to invest in these myself. I was looking at VGS’s Index this morning. The addition of small caps has minimal impact on performance. So from a simplicity viewpoint VGS covers 85% of developed markets in a single package. Hence I doubt I would change from VGS now to something else.

And VGS (+ underlying wholesale fund) with FUM of over $15 Bil I feel confident it’ll be around long after I’m gone.

 

@dunno speaking of Infrastructure I recall you looking at that awhile back. If you don’t mind me asking did you find anything of interest? I’m not looking to invest myself at this stage but these things keep the little grey cells active.

Locally the unlisted version of RINC (ASX AReits & Infrastructure) albeit actively managed seems to have done well gathering over $625M FUM. No doubt in part due to the chase for yield. As perceived bond proxies real assets will likely cop a hit as rates rise but then should do ok as things steady.

These are the main listed product for others interested:

 

No.

I wanted global and I wanted unhedged. DJRE seemed a simple robust alternative to an Infrastructure allocation. I decided either would suit my needs, I don't need both.

I did consider ALI but management fees expensive and preferred a trust to a company structure. Discount would have made it somewhat more palatable, but that also adds other potential dimensions which is not something I want for a long term asset allocation decision.

If/when Vanguard list their Global Infrastructure Index Fund as an ETF I will seriously look at swinging my future purchases over to that, in the meantime DJRE suffices.

 

Thanks mate.

I’d only consider adding a local Real Asset fund(s) to the SMSF pension portfolio if franking credit refunds get abolished. The Areit Index is so god damn concentrated. A combined Areit / Infrastructure Fund would dilute overall concentration. Then again I reckon should FC refunds go there’ll be no shortage of new / existing funds vying for investors chasing higher yield unfranked income.

I don’t know why Vanguard haven’t created ETFs for Int Property / Infrastructure / Small Caps yet. Just about everything else has an ETF equivalent.

 

Adding a local A-reit fund is a dumb idea, but then so is abolishing franking credit refunds, so I guess the question becomes - do two dumbs make a smart?

 

Don’t know. I’ve never found anyone as dumb as me to see if the combination works.

 

Don't despair

I thought I would never meet my equal for dumbness but then I discovered:



Now we’re an inseparable dumb and dumber partnership.

 

I own ALI and it is by far the most expensive fund I own. Bought it at a pretty big discount and management doing the right thing by undertaking a (small) buyback.

Would love to sell it off at closer to NTA and be able to transfer into the Vanguard Global Infra fund but not an option yet unfortunately.

 

I rang Vanguard recently and politely got up them for not having created ETFs for Int Property / Infrastructure / Small Caps. Maybe if everyone on PC did the same they might do something about it.