Asset allocation review (international)

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oneoftwo
Posts: 5
Joined: Fri Jan 26, 2018 6:04 pm
Location: Sweden

Asset allocation review (international)

Post by oneoftwo » Tue Dec 04, 2018 5:08 am

So far my investments have mostly been into savings accounts and real estate, but the latter isn't really an option here in Sweden, prompting me to expand my investment planning and thus to lurk on these here very useful forums & wiki. Thanks in advance for any advice!

Age: 32
Debt: none
Citizenship: Austria
Tax Residence: Sweden (for the next two-three years or so)
Income: split between Sweden (salary), Austria (rental & interest) and US (rental & interest)
Tax Rate: 15% treaty rate for US dividends; 30% taxation in Sweden


Asset allocation plan:

I'm aware of the various taxation issues with holding US ETFs as a non-US person, and non-US ETFs as a potentially future US person, and would like to exclude those from the discussion here - already got some good input in an earlier thread. My current plan involves splitting my portfolio to partially take advantage of the lower US expense ratios, but to also partially insulate myself from estate tax issues.

Equity -- goal of (100-age)%, though will take some time to hit that target (see below)

General strategy: 45-45% US-international split, 10% home-country/currency (eurozone) bias, some focus on ESG

Fidelity (US), taxable account (already opened when I lived in the US)
35% ITOT iShares Core S&P Total U.S. Stock Market ETF (0.03% TER)
10% ESGU iShares ESG MSCI USA ETF (0.15% TER; consider ramping up vs. ITOT if liquidity & expense ratio improve)
45% IXUS iShares Core MSCI Total International Stock ETF (0.1% TER)

Degiro (AT), taxable account
10% LU0629460675 UBS ETF MSCI EMU Socially Responsible UCITS ETF (0.28% TER)
xx% IE00B3RBWM25 Vanguard FTSE All-World UCITS ETF (0.25% TER; for EUR-denominated investments, this can take the place of ITOT+ESGU+IXUS)


Fixed income -- goal of age%

Real estate (pre-existing in US & AT): there doesn't seem to be consensus on how to treat real estate in asset allocation, but for me it seems to make sense in the fixed-income section; can't really assign a fixed percentage though
Savings accounts (pre-existing): 12 months expenses (again, not a percentage); at up to 2% yield, not the worst option
Bonds: Intended to pad out the fixed income portion to reach the overall target balance with equity; due to other existing fixed income assets, this would increase rather slowly, probably beginning with individually-held 30-year TIPS


Questions:

1) Any thoughts on my equity asset allocation strategy or the particular ETFs chosen?
2) Is there a feasible EU/Eurozone alternative to US TIPS? Should I even care?
3) If I want to additionally diversify into corporate bonds, should I worry about international diversification there?
Last edited by oneoftwo on Thu Dec 06, 2018 4:26 am, edited 2 times in total.

DJN
Posts: 163
Joined: Mon Nov 20, 2017 12:30 am

Re: Asset allocation review (international)

Post by DJN » Tue Dec 04, 2018 7:13 am

Hi,
I don't know if you have investigated Wiki yet but if not have a look at these insights and you are sure to gain some extra information and guidance. (There is not a specific section on Sweden at this time). The Europe section suggests some fund combinations which suit the BH style.
https://www.bogleheads.org/wiki/EU_investing
I believe that Sweden has some homegrown funds which are specific to your pension industry. First thing for you to consider is your current location and your tax position. For example the ITOT ETF you quote is not UCITS compliant. In addition if you intend returning to Austria you might think about that in relation to what you buy from Sweden.
Anyway best to go through the whole BH investment planning process and come up with your own plan.
good luck,
DJN

oneoftwo
Posts: 5
Joined: Fri Jan 26, 2018 6:04 pm
Location: Sweden

Re: Asset allocation review (international)

Post by oneoftwo » Thu Dec 06, 2018 4:24 am

Thanks for the input! Yes, the wiki is indeed quite helpful -- even if there's no specific section on Sweden, some of the country-specific ones still more or less apply. As mentioned, though, I've already evaluated the location and taxation issues and had some discussion in a previous thread. Based on that, I had ultimately decided to not invest anything directly in Sweden -- my short duration of stay here makes the local pension funds uninteresting, so long-term European assets make more sense in Austria (and in Euros). And indeed, e.g. ITOT I can't buy here, but there's nothing preventing me from buying it through Fidelity US (which I also already have an account with). I've updated the original post a bit to also clarify that my income is split across SEK, EUR, and USD (another reason besides low TERs that I've chosen to stick with a US-based account in addition to the AT one).

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