ETF portfolio sanity check

[AdrianOS]

Hi all,

I'm about to set up a portfolio with about 100k and was hoping I could get some opinions on asset allocation and ETF choice. I will rebalance yearly, but otherwise leave it alone for 15-20 years (although perhaps I'll up the bond % after 10 years or so).

My current idea is as follows:

• 40% Australian shares (80% VAS; 20% ARG or some other LIC)
• 30% International shares (70% VTS; 30% VEU)
• 20% Fixed interest bonds (IAF)
• 5% Property (VAP or SLF)
• 5% Cash (emergency money)

I'm not sure if I should bother including property or just keep it simpler and stick that 5% in bonds or shares? I also wonder if I have too strong a home bias? If there's other ETFs/funds I should consider I'm all ears.

Thanks in advance,
Adrian

 

[Panaman]

This is worth a read for setting up portfolios with ETF,s, i have just done this in the last 12 months with my Super, i only use one of iShares etf,s though (IHD), for most i use Vanguard or State Street.

http://au.ishares.com/about_ishares/using_ishares.do

there is also a service called stockpot who run ETF portfolios, dont use them myself but does sound ok, here is a link.

https://www.stockspot.com.au/how-it-works/how-it-works/

With LIC,s, the best in my opinion for the ASX 200 is BKI and its my second biggest holding, for Cash check out AYF, its a fund that invests in Hybrids so a bit more risk than cash but far better yield and price is pretty stable.

Good luck

 

[AdrianOS]

Thanks Panaman,

I have more or less based my portfolio on the ishares, vanguard and stockspot sample portfolios, but added a tiny bit of satellite as well. Stockspot even lists the ETFs they include in their portfolios which I found slightly surprising seeing as they can then be easily replicated (unless I'm missing something).

Thanks for the heads up on BKI and AYF - I'll check them out.

 

[sydboy007]

You may want to think about a higher allocation on international now with the AUD still relatively high. Could provide a hedge against market falls.

I have the ishare IOO global 100 in my SMSF. With the fall in the AUD it's now yielding around 5% which is not bad.

 

[AdrianOS]

Thanks sydboy007,

I have been wondering about that - maybe I should (at least) evenly split Australian and foreign shares. I could even increase my risk slightly and put the property allocation into the US market as well.

I know no-one can predict forex movement, but it'd seem highly likely that over the med-long term the Australian dollar will depreciate relative to the USD and in this case having more exposure to the US market would be a good thing.

 

[stockspot]

Hi Adrian and others,

This is Chris from Stockspot. You asked why we publish our constituent ETFs - our philosophy is to be transparent about our investment process and portfolios. As our service includes execution, rebalancing, tax reporting and an ongoing review of the ETF universe it appeals to many people who would rather have their portfolio managed for them. We recognise that there are also people would prefer to manage the investment process themselves, which we welcome too.

We have just published a pinwheel to help investors compare the 90+ ASX listed ETFs which you may also find useful: https://www.stockspot.com.au/insights/australian-etfs/

The ETFs can be compared across a range of metrics including fees, distribution yield and returns. Any feedback would be appreciated as we will try and build on other features if there's demand for them.

 

[minwa]

To OP:

I know you asked for ETF choice but I think this is pretty (more) important.

Do you beleive the stock market (foreign & domestic) will continue to go up from here ? No right or wrong here just something you should think about.

If yes, do you think the risk to reward is good ? Valuations are at 2007 & 2000 levels now, meaning on a historic basis they are expensive.

If no, do you think now is the best time to invest heavily into the stock index ?

Since you are holding for the long term, are you going to have a bailout point or will you hold it no matter what drop comes ? Are you going to average in with more funds during a draw down or into a rise ?

You don't have to answer them here if you don't want to but I hope you have the answers for yourself before you put in $100k.

 

[AdrianOS]

Thanks for the explanation Chris. I think your site and offering are attractive and I'm sure you'll get a lot of business. I'm in the process of leaving my financial adviser and think I'll be happier managing everything myself (although getting a consolidated tax report is appealing).

The pinwheel page is good, but the comparison page is perhaps even more useful from my point of view. An issue with the wheel is that it's difficult to keep it all on the screen at once. Perhaps if the fund details popped up on mouseover instead of being at the bottom of the page that would help?

Thanks also minwa. It's always good to ask the bigger picture questions - thanks for doing so. I realise the market is now relatively high, but yes, I do expect it to be higher still in 15-20 years time. I don't really want to try and time the market. I am planning to ride out whatever drop it might sustain, and will only add back in the income it generates itself (once a year as I rebalance).

The money I'm investing has been in managed funds since 01/2010 and has seen good growth (~30% including income). I'm moving it into ETFs mainly to reduce the fees I'm currently paying (which would have compounded into something significant in the med-long term).

 

[stockspot]

The pinwheel page is good, but the comparison page is perhaps even more useful from my point of view. An issue with the wheel is that it's difficult to keep it all on the screen at once. Perhaps if the fund details popped up on mouseover instead of being at the bottom of the page that would help?

Thanks for the feedback Adrian. We have updated the ETF pinwheel to make it easier to view on one page - https://www.stockspot.com.au/australian-etfs/ You will see we have also rated each ASX listed ETF from 1 to 5 spots based on our criteria of Fees, Slippage, Liquidity, Size and Lending Policy. Hope this helps you and others.