Bogleheads.org

tradez

invest2bfree wrote: ↑Sun Feb 19, 2023 3:33 pm
I have 97% of my portfolio in corporate bonds and use the cash flow to buy stocks.

This is very interesting as I am starting to wonder that given the current uncertainty in the market, and world equities at all-time highs despite potential recession fears, would it not be much better risk-reward to just transfer the majority of an equity portfolio into a diverse corporate bond portfolio and almost certainly lock-in 7-8% pa for the next 12-24 months. Sure, markets could go up more than that, but there’s a lot more downside risk too… 30% on the downside perhaps? Seems like a lot of risk...

tradez

By AA I meant “asset allocation”. Nothing to do with the grade of bond.

tradez

Certain corporate bonds and corporate bond portfolios are now yielding more than 8%. If I was allocating a certain part of my portfolio to them, would it be sensible to replace the equity allocation as opposed to the government bond allocation, since they are considered high risk? Whilst I know corporate bonds have not been considered a great investment in the past, with a large portfolio (7-8 figures or more), it does seem like a strong diversifier.

[Thread moved to the Investments - Theory, News & General subforum and title clarified by moderator Kendall.]

tradez

My base currency is GBP so I would assume I trade VWRP, however, VWRP is up 4.25% YTD whilst VWRA is up 7% YTD. My assumption is it's just pricing in the FX loss but I wanted to check.

If so, does the ETF put a wide spread on GBP/USD conversion or could it be better to convert my funds to USD and then trade VWRA? Also, I plan on dollar cost averaging and their deposit rates on USD is 1% more than GBP so is there an argument to convert it all into USD...

tradez

I plan on passively investing 7 to 8 figures into VWRP/VAGU in the near future thanks to this forum.

Whilst ETFs are inherently safe, and assets are segregated from the provider, is there an argument to diversify across multiple issuers, e.g. iShares, Vanguard, and Invesco, as well as across not just ETFs but regular funds too? Nobody can predict the future.

tradez

I have been doing further research into the Bank's historical performance on the 60/40 and 80/20 portfolios and can confirm that on a 3yr, 5yr and 10yr basis, it has outperformed LifeStrategy 60 and 80 (GBP) net of fees. I am reminded that what a private bank discretionary portfolio does is not actively stock pick, but in essence, does what LifeStrategy does where your appropriate risk-based AA is split across multiple funds and indexes. I expect that most bogleheads would advise to still go with LifeStrategy over a bank, but the data would suggest otherwise. My understanding is LifeStrategy isn't the best though so hopeful that the suggested 2 or 3 fund strategies have outperformed however I am not sure how to backtest these. Having read S...

tradez

Got it. I am still trying to understand the difference between the two Vanguard bond funds, especially as they have different TER.

tradez

I noticed this has a 2* rating on Morningstar whilst 'Vanguard Global Bond Index Fund GBP Hedged' receives 3*. Could anyone let me know the main difference?

https://www.morningstar.co.uk/uk/etf/sn ... 0P0001HSBK
https://www.morningstar.co.uk/uk/funds/ ... F000003VEC

I also note that the Lifestrategy Products do not simply use one of these funds but also add a number of smaller bond funds to the portfolio. Is there a particular reason why? The fund that forms the bulk of the bonds is the 2* Aggregate fund though.

tradez

This is splitting hairs. 12% or 13% in Emerging Markets does not make any difference. (And of course do the MSCI ACWI or FTSE All-World indices actively update their EM weighting....to market weight) If you want to overweight EM, 70%/30% DM/EM starts to make a difference. A 3-fund portfolio is a US-centric concept. If your home country has by far the largest market in the world and the leading currency, it probably makes sense to say 40% Total US stocks/20% International stocks/40% Total US bonds. From a European perspective, it would make more sense to go with say 50% MSCI ACWI or FTSE All-World/10% European stocks/40% Global Aggregate Bond if you definitively want a 3-fund Portfolio. I think just a two-fund portfolio of 80% MSCI ACWI and...

tradez

tradez wrote: ↑Fri Jan 27, 2023 1:07 pm SO MSCI ACWI, and FTSE All-World have a 12% weighting of EM. I did some research and it appears that EM equities are closer to 13%. Do either index actively update their EM weighting? Also, is this an argument to have a 3-fund portfolio so you can weigh EM higher than the current indexes have?

tradez

SO MSCI ACWI, and FTSE All-World have a 12% weighting of EM. I did some research and it appears that EM equities are closer to 13%. Do either index actively update their EM weighting? Also, is this an argument to have a 3-fund portfolio so you can weigh EM higher than the current indexes have?

tradez

We've seen the markets grow consistently since their inception, but are we now entering a new stage in world development; technology so advanced, AI that is making human work redundant, blockchain... Is there an argument that the future may be so different to the past that we cannot assume markets will move the same way? Could they stagnate for the next 10 years, could they even decline?

I am by no means a conspiracy theorist however I thought this could be an interesting topic to discuss, as a lot rests on the equity markets for a lot of us.

tradez

If your private bank is calling robotics a "sector," something is badly wrong. Not to mention the bank is, as Nisiprius said, erroneously referring to thematic funds as sector funds, which also casts doubt on the fabulosity of this exclusive, well-heeled bank. To confirm, these were referred to as thematic funds by the bank; it was me the misspoke as I am new to all this terminology. The bank is one of Goldman Sachs, Credit Suisse, HSBC Private, UBS or BNP Paribas, so all pretty well-heeled if you ask me... :wink: They tend to suggest the equity part of the portfolio is made up approx 80% a regular global equity mix, and the remainder in these thematic funds to try and bring additional upside, but at additional risk, of course. H...

tradez

If your private bank is calling robotics a "sector," something is badly wrong. Not to mention the bank is, as Nisiprius said, erroneously referring to thematic funds as sector funds, which also casts doubt on the fabulosity of this exclusive, well-heeled bank. To confirm, these were referred to as thematic funds by the bank; it was me the misspoke as I am new to all this terminology. The bank is one of Goldman Sachs, Credit Suisse, HSBC Private, UBS or BNP Paribas, so all pretty well-heeled if you ask me... :wink: They tend to suggest the equity part of the portfolio is made up approx 80% a regular global equity mix, and the remainder in these thematic funds to try and bring additional upside, but at additional risk, of course.

tradez

tubaleiter wrote: ↑Tue Jan 24, 2023 12:39 am
If you just take the "true" Bogleheads advice and do 100% VWRP for 40 years, there isn't a lot to talk about!

I assume the tendency to go for VWRP instead of SSAC is because a) this forum loves Vanguard, and b) up until not long ago, TER was 0.6% from iShares vs 0.22% for Vanguard. Now, iShares ETF is just 0.20% with virtually identical allocation and performance.

tradez

If my calculations are correct, Portfolio Visualizer shows that MSCI ACWI is the equivalent of 88/12 IWDA + EIMI?

What is the reason people don't like the split that IWDA provides? My understanding of passive investing is you simply follow the market. If you adjust the split too much you end up becoming an active investor surely...

tradez

[Thread merged into here --admin LadyGeek] I have large investments with a major private bank. One of the benefits they pride themselves on is access to high-performing funds from well-respected fund managers. These tend to not be available to Joe Public retail investors. Whilst I understand the data suggests that 80% of funds do not beat their benchmark for a long period of time, is there any data that is based on fund size? Further to this, some of these funds are more short-term play as opposed to long-term. Below are two examples of funds I invested in about 18 months ago. Granted, they have underperformed their own benchmark recently which isn't the best example to provide, but nonetheless, are there arguments FOR investing in certain...

tradez

galeno wrote: ↑Sun Jan 22, 2023 8:17 am Why?

VWRD PE = 14.3
WSML PE = 11.8
VDEM PE = 11.2

We only hold VWRD. But very tempted to sell 20% and put the half the proceeds into developed world SCs and the other half into EM.

Unless I misunderstand, are you saying that VWRD is performing the best? I am not quite sure what "PE = 14.3" means! (Still learning)

tradez

I don't buy the argument of "What do you know that the market doesn't know about China? It's already priced in". I could argue the same with people that choose to add an EM ETF to their VWRP or IWDA market portfolio. What do they know about the market that means they want to add even more weight to emerging markets, or small caps etc.

tradez

Has anybody invested in MSCI EM excluding China instead of EIMI? I believe the ticker is EMXC. I am bullish on emerging markets in the long term (mainly India), but less optimistic about China. It does put a lot more emphasis on Taiwan however, which is also not ideal.

tradez

Thank you for the response. Is there a tool I can compare IWDA + EIMI with SSAC, to see exactly how the tilt/split changes?

tradez

... when you can simplify it with SSAC or VWRP if you want emerging markets too? Is there a noticeable difference in weighting / tilt?

Furthermore, it looks like MSCI world has consistently outperformed the others so why do more people not just scrap the emerging markets and just buy IWDA?

tradez

TomatoTomahto wrote: ↑Fri Jan 20, 2023 7:58 am
Imo, you aren't in a category to need alternatives (eg, college endowment, family office, etc).

Why would the category I am in matter? Looking after money is the same regardless of wealth. That being said, I have a fairly large portfolio with them, although soon to be reduced as I have been convinced by the forum!

tradez

[Thread merged into here --admin LadyGeek]

My private bank strongly believes in investing in alternatives in addition to fixed income to ensure a diverse set of investments.

The traditional fixed-income elements of their discretionary portfolios actually have a portion of alternatives. For example, in their 60/40 portfolio, 40% is actually made up of 25% fixed income, and 15% alternatives (hedge funds and commodities).

It is an interesting angle, as it has as an example offered some protection in the last year when fixed income declined.

tradez

Here's what a simple two fund portfolio would have done in USD after fees: USD 60/40 - VT/BND - 1.51% 3Y, 3.32% 5Y, 5.43% 10Y You raise an interesting point, but there are still choices to be made as to whether you choose a US-heavy Large Cap, All-World, Emerging Markets etc. All have performed differently, and an adviser would argue they can use tactical allocation to move things around if there is a macro need too. My bank has suggested 1% uplift for TAA. As it so happens, this thread has no doubt convinced me that I should go down the bogle route (should I expect anything less from this forum!) and my mind is moving towards IWDA + EIMI. Unless I am analysing it incorrectly, it seems like the iShares MSCI World Index has performed better...

tradez

Discuss:

https://www.nasdaq.com/articles/debunki ... 2021-06-03

This article is a little old, so if it has been previously discussed please feel free to discard.

tradez

Wow, some extremely valuable responses. Thank you. I think it would be unfair for me to name the specific private bank I am with, but it is one of the major European players. i.e. UBS, Pictet, HSBC Private, Credit Suisse, BNP Paribas etc. It is not the retail arm, and the investments are not being picked by one of many financial advisors. They have large global teams dedicated to it. They have a handful of discretionary portfolios based on equity/bond AA. I actually have about 80% of my holdings there, and the remaining in more aggressive themes, e.g. Asia, Hedge Funds, Private Credit etc. I can confirm the fee is 1% and I pay this independently, it does not come out of the portfolio. It is extremely transparent and there are no hidden fees...

tradez

4. they have knowledge that the "passive investor may not have"? first, let's remember that people all too often confuse information with knowledge. they can't have any information that everybody else doesn't also have. That's the beauty of a publicly traded market. All information has to be made publicly available to all participants at the same time. Otherwise if some had information others didn't, it wouldn't be a fair market and nobody would play in that game. so they can't profit because they know the same things everyone else does. They have to know something others don't. But they can't act on that because that's insider trading. Now even though they have the same information as everyone else, they could make conclusions o...

tradez

arcticpineapplecorp. wrote: ↑Wed Jan 18, 2023 6:00 pm How do you explain the spiva data that shows only 20% of active funds beat the s&p index in any given year?

Would they be considered an active fund though?

I guess it’s also the comfort knowing that if there was a huge macro economic change, they would rebalance the portfolio or change the weighting whilst a passive investor may not have that knowledge.

tradez

Full transparency - I have a 7-figure discretionary portfolio with a global private bank. Their fees are about 1% PA + product costs. Breaking down the portfolio I am 60/40 split and it’s made up of about 20 equity ETFs/Funds, and 5 bond funds. They make changes every few months. (Side note: I know this is too conservative given I am in mid 30s) I’ve spent far too much time now reading about passive investing, and I’m very intrigued to pull the money out and invest it myself. Question I have is why the bank (and most other wealth managers) would invest in so many funds. There must be an advantage to doing this or they would minimize the number/complexity. I don’t believe they do it simply for optics in order to make it look like they are do...

tradez

Hello, This is my first post having spent far too many hours reading up on passive investing! I am conscious that a huge amount of literature has been created by US-domiciled individuals however these ETFs are not suited for non-US individuals. I am UK based, but shortly moving to the UAE where tax is not an issue, however, I understand I must still not invest in US-domiciled products. I was wondering if there is a list of common tickers, or even better, portfolio examples that are preferential for non-US citizens. I must apologise if this is already covered in the forum or Wiki already, however, I have not come across it. The notes app on my phone is now full to the brim with different tickers I have picked up throughout my research, and I...

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Search found 31 matches

Re: Corporate Bonds within AA [Asset Allocation]

Re: Corporate Bonds within AA

Corporate Bonds within AA [Asset Allocation]

VWRP and VWRA difference

Mitigating risk through multiple ETF providers and funds

Re: My private bank has a lot of funds

Re: Vanguard Global Aggregate Bond (Hedged) rating

Vanguard Global Aggregate Bond (Hedged) rating

Re: Why IWDA + EIMI...

Re: Why IWDA + EIMI...

Re: Why IWDA + EIMI...

Could this be the beginning of the end [predictability of market direction]

Re: What about specific sector funds?

Re: What about specific sector funds?

Re: Why IWDA + EIMI...

Re: Why IWDA + EIMI...

What about specific sector funds?

Re: MSCI EM excluding China

Re: MSCI EM excluding China

MSCI EM excluding China

Re: Why IWDA + EIMI...

Why IWDA + EIMI...

Re: Alternatives or No Alternatives

Alternatives or No Alternatives

Re: My private bank has a lot of funds

They Say You Can't Beat the Market, But You Can

Re: My private bank has a lot of funds

Re: My private bank has a lot of funds

Re: My private bank has a lot of funds

My private bank has a lot of funds

Is there a list of common tickers or portfolios?