Bogle three fund book

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jonconner
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Joined: Wed Jun 23, 2021 12:00 am

Bogle three fund book

Post by jonconner »

Hi does the The Bogleheads' Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk apply too non us investors?

thanks
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Bogle three fund book

Post by TedSwippet »

jonconner wrote: Wed Jun 23, 2021 6:47 am Hi does the The Bogleheads' Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk apply too non us investors?
I've not read this one, but given the ethos around here I'd guess that its basic concepts should certainly apply -- simplicity, time in the markets, and so on. From the look of things, this book will be very much written for an audience of US investors, and so the parts that most likely won't apply will include any specific fund choices, US-specific tax rules, and perhaps example asset allocations.

The non-US section of the wiki should give you ideas about how you might translate this into something that works for you. For example:

Outline of non-US domiciles - Bogleheads
Simple non-US portfolios - Bogleheads

If you say which country you live in, how much you're planning to invest, and so on, that may help to draw out some more targeted replies.
Valuethinker
Posts: 42748
Joined: Fri May 11, 2007 11:07 am

Re: Bogle three fund book

Post by Valuethinker »

jonconner wrote: Wed Jun 23, 2021 6:47 am Hi does the The Bogleheads' Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk apply too non us investors?

thanks
The main adaptations are:

- bond funds are usually hedged as to currency, and you want one that has high quality government bonds hedged to your currency. In the Eurozone the largest borrower is Italy, which is not of the highest credit quality. Thus a global bond fund hedged into Euros is a better bet, potentially, than a European govt bond fund

- a global equity fund, with currency unhedged, is probably the best choice. You still get the sort of exposure to USA Bogle talks about (roughly 60% of a developed market index) and all its wonderful tech companies, etc, but with greater diversification

- if the global equity fund or ETF is developed markets only, then you have to consider Emerging Markets. I would say roughly 10-20% of your equity portfolio. It is possible to omit it altogether. The main concern is that EM index is heavily weighted towards China (good news, bad news, who knows?) and there are concerns about the accounting of, and shareholder value orientation of, Chinese companies - it may be the peculiarities of China's exchange and financial controls, government interventions etc lead to inflated stock market valuations**.

So if you are 40% bonds, 60% equities (a common choice) then your EM would be 6%-12% of your overal portfolio. Personally I would aim for the lower end of that range, but there's certainly a case for the higher.

What matters is not so much the choice, as that you stick to your strategy (target percentages) through thick and thin via rebalancing. Selling equities to rebalance when they are rising, buying equities when they are falling. It's much harder to do in practice than in theory. During stock market crashes the smart person is in there buying. Me? I just turn off the screen and don't look at my portfolio valuations.

** you could point to similar anomalies in developed markets, and in other emerging markets. It's just China is such a big part of those markets. China + Taiwan + Hong Kong is typically over 50% of the index.
glorat
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Joined: Thu Apr 18, 2019 2:17 am

Re: Bogle three fund book

Post by glorat »

There's this thread which has a similar book with same Bogle philosophy but for non-US

viewtopic.php?f=22&t=350532

I have read it through and can vouch that the advice in it is excellent.
Valuethinker
Posts: 42748
Joined: Fri May 11, 2007 11:07 am

Re: Bogle three fund book

Post by Valuethinker »

glorat wrote: Fri Jun 25, 2021 1:11 am There's this thread which has a similar book with same Bogle philosophy but for non-US

viewtopic.php?f=22&t=350532

I have read it through and can vouch that the advice in it is excellent.
Yes and Lars Krojer, who runs the Monevator blog, and is a former hedge fund manager.
Genghis
Posts: 78
Joined: Fri Jun 26, 2020 6:53 am

Re: Bogle three fund book

Post by Genghis »

I thought Lars was just a guest contributor?
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