3 fund portfolio for europeans?

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Dutchman
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3 fund portfolio for europeans?

Post by Dutchman » Wed Nov 29, 2017 10:43 am

hi,

how would you apply the 3 fund portfolio for europeans?
https://www.bogleheads.org/wiki/Three-fund_portfolio
Which ETFs are commonly user when buying 33% Europe stock, 33% inter. stock and 33% EU-bond trackers, all in EUROs ?

More specific,
i live in europe so want to stay in euro etf's.
also want to keep it simple one ETF that tracks bonds (in euro domination) and one that tracks European stock (also in euro) and one that tracks world wide stocks again in euro's.

i found this site with IShares ETF's (change language)
https://www.ishares.com/nl/particuliere ... &fac=43515

But still many options... (go for largest fund or lowest cost?...)
i did search the board but couldn't find a clear answer. and there is quite a lot to browse though... :?

i'm sure other European have set this up
Would appreciate all comments ,

Dutchman
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Joined: Wed Nov 29, 2017 10:26 am

Re: 3 fund portfolio for europeans?

Post by Dutchman » Sun Dec 03, 2017 9:44 am

anybody?

ryman554
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Joined: Sun Jan 12, 2014 9:44 pm

Re: 3 fund portfolio for europeans?

Post by ryman554 » Sun Dec 03, 2017 3:08 pm

The same to that you would do in US.

80% total world (50/50 us, intl) and 20% home (euro) bonds. You certainly don't want 50% euro stocks. That's way over weighted and could suffer Japan issue.

I have no idea mechanically how to do this, but that's the idea.

imperia
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Joined: Tue Feb 21, 2017 6:31 am

Re: 3 fund portfolio for europeans?

Post by imperia » Sun Dec 03, 2017 4:45 pm

3 fund portfolio for Europe is something like this:
Stocks:

iShares Core MSCI World UCITS ETF (IWDA) 90%
iShares Core MSCI Emerging Markets IMI UCITS ETF (EIMI) 10%

Bonds:
iShares Core Euro Government Bond UCITS ETF (SEGA)


If you are from Netherland read this:

https://www.bogleheads.org/wiki/Investi ... etherlands

minimalistmarc
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Re: 3 fund portfolio for europeans?

Post by minimalistmarc » Sun Dec 03, 2017 4:50 pm

imperia wrote:
Sun Dec 03, 2017 4:45 pm
3 fund portfolio for Europe is something like this:
Stocks:

iShares Core MSCI World UCITS ETF (IWDA) 90%
iShares Core MSCI Emerging Markets IMI UCITS ETF (EIMI) 10%

Bonds:
iShares Core Euro Government Bond UCITS ETF (SEGA)


If you are from Netherland read this:

https://www.bogleheads.org/wiki/Investi ... etherlands
Vanguard all world has emerging markets in it (VWRL) so you only need one ETF

Dutchman
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Joined: Wed Nov 29, 2017 10:26 am

Re: 3 fund portfolio for europeans?

Post by Dutchman » Mon Dec 04, 2017 6:27 am

thanks guys...

VWRL is in us$, i prefer an EURO based etf.

>iShares Core MSCI World UCITS ETF (IWDA) 90%
>iShares Core MSCI Emerging Markets IMI UCITS ETF (EIMI) 10%

those look good, is the 90/10 standard? or personal?

i think for bonds i'll go for a mix of gov bonds vs company bonds to get around 3% or 4%

Oh and the dutch boglehead link has some outdated info, eg.Net wealth (assets-liabilities) tax is not fixed anymore to 1,2%, etc
https://www.bogleheads.org/wiki/Investi ... etherlands

ryman554
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Re: 3 fund portfolio for europeans?

Post by ryman554 » Mon Dec 04, 2017 9:39 am

Dutchman wrote:
Mon Dec 04, 2017 6:27 am
i think for bonds i'll go for a mix of gov bonds vs company bonds to get around 3% or 4%
Don't chase yields with bonds. Understand the purpose of bonds in your portfolio. It's not for "interest", it's for an asset class which is not correlated strongly (for good or for bad) with equities.

Corporates are "stockish bonds" and track their equities much more closely. Why invest, then, in things which give worse yield and no correlation benefit?

imperia
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Re: 3 fund portfolio for europeans?

Post by imperia » Mon Dec 04, 2017 11:57 am

IWDA and EIMI are accumulation ETF(reinvest dividend), thats way I prefere them instead of VWRL.
90%IWDA
10%EIMI
Thatis standard, maybe you can go 85%, and 15%.

All this ETF you can buy in USD, EUR, GBP, CHF in Amsterdam, Milano, Frankfurth, Zurich, London stocks exchanges.
Currency depends of stocks that ETF hold, and that is only important.
American stocks are in USD, German in EURO, ....
IWDA is 60% USD, and other 40% are in other currencys.

TedSwippet
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Re: 3 fund portfolio for europeans?

Post by TedSwippet » Mon Dec 04, 2017 3:00 pm

Dutchman wrote:
Mon Dec 04, 2017 6:27 am
VWRL is in us$, i prefer an EURO based etf.
VWRL trades in Euros on the Amsterdam Euronext exchange.

Most of Vanguard's non-US domiciled ETFs are also available on Euronext if you want to slice and dice rather than use a single global ETF holding.

Dutchman
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Re: 3 fund portfolio for europeans?

Post by Dutchman » Tue Dec 05, 2017 5:57 am

ryman554 wrote:
Mon Dec 04, 2017 9:39 am
Dutchman wrote:
Mon Dec 04, 2017 6:27 am
i think for bonds i'll go for a mix of gov bonds vs company bonds to get around 3% or 4%
Don't chase yields with bonds. Understand the purpose of bonds in your portfolio. It's not for "interest", it's for an asset class which is not correlated strongly (for good or for bad) with equities.

Corporates are "stockish bonds" and track their equities much more closely. Why invest, then, in things which give worse yield and no correlation benefit?
So what is the main idea about bonds? Since currently gov. bonds give 0 to 1%
or to put it differently, i get it that you like a 'buffer' (something with low correlation to stocks) especially when gov. bonds are doing 3 to 5% but is a bond buffer strategy still what you want in current (low %) climate?
You could just keep your money as cash, or set it away for 6 to 12 months, also 0 to 1% with i would guess less risk than invested in bonds.
At the moment, here up to 100,000 is guaranteed by the government so even when a bank crashes...
Above e100,000 you could even spread out over a few banks...

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BeBH65
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Re: 3 fund portfolio for europeans?

Post by BeBH65 » Tue Dec 05, 2017 8:34 am

Please have a careful look at the "investing from the Netherlands" page mentioned above it adresses the particular case for Dutch investors, both for the "equity for growth" as well as the "bonds and cash for stability".

For the bonds/cash portion, please also have a look at the forum for the discussions in threads named like "why bonds?", "100% stock".
Related to currencies for funds have a look at Base_currency_vs._trading_currency_vs._currency_of_the_underlying_asset


Please come back here with additional questions.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

ryman554
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Re: 3 fund portfolio for europeans?

Post by ryman554 » Tue Dec 05, 2017 9:33 am

Dutchman wrote:
Tue Dec 05, 2017 5:57 am
ryman554 wrote:
Mon Dec 04, 2017 9:39 am
Dutchman wrote:
Mon Dec 04, 2017 6:27 am
i think for bonds i'll go for a mix of gov bonds vs company bonds to get around 3% or 4%
Don't chase yields with bonds. Understand the purpose of bonds in your portfolio. It's not for "interest", it's for an asset class which is not correlated strongly (for good or for bad) with equities.

Corporates are "stockish bonds" and track their equities much more closely. Why invest, then, in things which give worse yield and no correlation benefit?
So what is the main idea about bonds? Since currently gov. bonds give 0 to 1%
or to put it differently, i get it that you like a 'buffer' (something with low correlation to stocks) especially when gov. bonds are doing 3 to 5% but is a bond buffer strategy still what you want in current (low %) climate?
You could just keep your money as cash, or set it away for 6 to 12 months, also 0 to 1% with i would guess less risk than invested in bonds.
At the moment, here up to 100,000 is guaranteed by the government so even when a bank crashes...
Above e100,000 you could even spread out over a few banks...
The idea of bonds earning much about 0% real have long since gone since the world is a much safer place (really, it's true!). You are correct in that you could just as well stick stuff in an interest-bearing account -- if such a thing still exists in the negative interest rate environment in Europe. Typically bonds still win out, just by a little bit, and have the advantage of being fully liquid to adapt to market movements, where the best "cash" in the US typically is locked away for a designated time wtih 6 month interest penalties.

You don't go to cash if you think we are in an inflationary environment (look at the US). Don't focus on the interest rate, focus on the forward-looking inflation-adjusted yield.

So, yeah, today, bonds are really just treading water, to be used as "dry powder" when things go bad and "keeping more of your earnings" when things go well. I look at it and I'm not sure I really should be investing in them, but I can't make myself pull the trigger to get out.

To the larger point, having lots of uncorrelated things make a lot of sense (go look up "permanent portfolio" threads). If you go with correlated things, you are generally better off in the long run with getting the things with the highest expected return. That would mean equities over corporate stocks.

Dutchman
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Re: 3 fund portfolio for europeans?

Post by Dutchman » Wed Dec 06, 2017 11:28 am

thanks guys...

if we want something safe, Swiss bonds may be interesting since its another currency and bonds that give some % (if there are etfs out there?)
you could just re-balance by having cash (instead of bonds) and have that cash in eg. 25% swiss franks and 25% euro (remaining 50% stock)

despite the attempts of swiss government to keep the swiss frank somewhat linked to the euro, it keeps slowly crawling away
see chart here: https://finance.yahoo.com/quote/EURCHF% ... EURCHF%3DX

if i find the time this weekend i'll run an analysis with yahoo historic data...

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randomizer
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Re: 3 fund portfolio for europeans?

Post by randomizer » Wed Dec 06, 2017 11:37 am

Why the Swiss francs? You're just exposing yourself to uncompensated currency risk. And you seem to be most interested in yield. Perhaps you should go 100% stocks, or even go leveraged if you are that hungry. :twisted:

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