Portfolio for retirement at 40 - advice please! [SPAIN]

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bogleeuro
Posts: 3
Joined: Fri Oct 18, 2019 5:50 am

Portfolio for retirement at 40 - advice please! [SPAIN]

Post by bogleeuro » Fri Oct 18, 2019 6:05 am

Hi everyone,

Country of Residence: Spain

International Lifestyle: No changes of country

Currency: EUR

Debt: No debt

Age: Late 30s

Current portfolio size: high seven-figures


Quick background - I'll be taking early 'retirement' in the next 2-5 years. Currently I have most of money in Vanguard Lifestrategy60 but with the whole Brexit and now living in Europe, I want to change this.

After a great deal of reading these forums and a few books, I have decided on the following portfolio (based on The Boglehead Portfolio - Complex Indexing).

It would be great to have some input on this, particularly regarding my situation (age, early retirement etc.)

I've read that the amount of money invested doesn't really change anything but I'm fortunate to be investing a high 7 figure amount into this and I also just want to make sure I'm not missing anything, I know there are simply ways of accomplishing my shares allocation but I am presuming with the figure invested, it's worth it for the smaller TER.


Bonds:

Code: Select all

[20%] Xtrackers II Global Government Bond UCITS ETF 1C - EUR Hedged | DBZB                       LU0378818131 - 0.25%
[10%] Vanguard Euro Government Bond Index Fund Investor EUR Accumulation                         IE0007472115 - 0.25%
[10%] Vanguard Eurozone Inflation-Linked Bond Index Fund Investor EUR Accumulation               IE00B04GQQ17 - 0.25%
Shares:

Code: Select all

[34%] US: iShares Core S&P 500 UCITS ETF                                                         IE00B5BMR087 - 0.07%
[12%] Europe: iShares MSCI Europe UCITS ETF (Acc)                                                IE00B4K48X80 - 0.12%
[5%] Japan: iShares Core MSCI Japan IMI UCITS ETF                                                IE00B4L5YX21 - 0.20%
[3%] Pacific without Japan: iShares Core MSCI Pacific ex Japan UCITS ETF                         IE00B52MJY50 - 0.20%
[6%] Emerging: iShares Core MSCI Emerging Markets IMI UCITS ETF                                  IE00BKM4GZ66 - 0.18%
Emergency fund:

HSBC USD FIXED 2.8% $1m - emergency fund outside of Euro currency and outside of anything stock / bond related. Realistically, 5 years expenses. Very small risk that HSBC collapses.


-----------

Notes:

1. The plan is take a 3.5% withdrawal rate, starting in the next 3 years. I'll need this for the next 40+ years (hopefully!) & I hope to preserve the initial amount (inflation adjusted).

2. Bonds allocation - Just seemed logical and diverse but not backed up by anything, would love some input on that. Maybe I should go 100% 'global' due to negative interest in Europe?

3. Emergency fund - I have the USD already and I realize I'm taking a long-term currency risk on this but at least there are fixed interest rates available on USD above inflation unlike EUR where I am.

4. Keeping 60/40 even though I will be making withdrawals soon because I need this to last a very long time.

5. Real estate, own home that is ~15% of wealth and I'm happy with that for now.


Have I missed anything obvious?

Thanks!

Valuethinker
Posts: 38990
Joined: Fri May 11, 2007 11:07 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by Valuethinker » Fri Oct 18, 2019 7:02 am

bogleeuro wrote:
Fri Oct 18, 2019 6:05 am
Hi everyone,

Country of Residence: Spain

International Lifestyle: No changes of country

Currency: EUR

Debt: No debt

Age: Late 30s

Current portfolio size: high seven-figures


Quick background - I'll be taking early 'retirement' in the next 2-5 years. Currently I have most of money in Vanguard Lifestrategy60 but with the whole Brexit and now living in Europe, I want to change this.

After a great deal of reading these forums and a few books, I have decided on the following portfolio (based on The Boglehead Portfolio - Complex Indexing).

It would be great to have some input on this, particularly regarding my situation (age, early retirement etc.)

I've read that the amount of money invested doesn't really change anything but I'm fortunate to be investing a high 7 figure amount into this and I also just want to make sure I'm not missing anything, I know there are simply ways of accomplishing my shares allocation but I am presuming with the figure invested, it's worth it for the smaller TER.


Bonds:

Code: Select all

[20%] Xtrackers II Global Government Bond UCITS ETF 1C - EUR Hedged | DBZB                       LU0378818131 - 0.25%
[10%] Vanguard Euro Government Bond Index Fund Investor EUR Accumulation                         IE0007472115 - 0.25%
[10%] Vanguard Eurozone Inflation-Linked Bond Index Fund Investor EUR Accumulation               IE00B04GQQ17 - 0.25%
Shares:

Code: Select all

[34%] US: iShares Core S&P 500 UCITS ETF                                                         IE00B5BMR087 - 0.07%
[12%] Europe: iShares MSCI Europe UCITS ETF (Acc)                                                IE00B4K48X80 - 0.12%
[5%] Japan: iShares Core MSCI Japan IMI UCITS ETF                                                IE00B4L5YX21 - 0.20%
[3%] Pacific without Japan: iShares Core MSCI Pacific ex Japan UCITS ETF                         IE00B52MJY50 - 0.20%
[6%] Emerging: iShares Core MSCI Emerging Markets IMI UCITS ETF                                  IE00BKM4GZ66 - 0.18%
Emergency fund:

HSBC USD FIXED 2.8% $1m - emergency fund outside of Euro currency and outside of anything stock / bond related. Realistically, 5 years expenses. Very small risk that HSBC collapses.


-----------

Notes:

1. The plan is take a 3.5% withdrawal rate, starting in the next 3 years. I'll need this for the next 40+ years (hopefully!) & I hope to preserve the initial amount (inflation adjusted).
Risk free rates in the Eurozone are negative. That means for whatever percentage of your portfolio is in bonds, you will experience a negative return in nominal (and real) terms.

So to get to that average, you need equities to perform really well. Total returns of say 6% real, say. Let me say that I think that is highly unlikely in the next 10 years say (30 years, who knows) that there is a "fade" back to long term averages.

As a guide, Dimson and Marsh (Credit Suisse Annual returns yearbook) estimate long run returns on a constant currency basis (ie using the USD) for global markets 1900-2016 are about 5.0% real. Periods of high returns (as we have experienced since 2009, but not since 2000) are often followed by periods of sub par returns (equities lost c. 40% real in the 1970s, something similar in the 1930s I believe).

So to both maintain your capital in real terms *and* take a return out of it (which also grows with inflation, ie constant real return) is not impossible but less say it is challenging, in a world of negative real and nominal interest rates.

Note that a single global equity fund would do your asset allocation for you. No messy reweighting. Or a global developed market fund + an EM fund.
2. Bonds allocation - Just seemed logical and diverse but not backed up by anything, would love some input on that. Maybe I should go 100% 'global' due to negative interest in Europe?

3. Emergency fund - I have the USD already and I realize I'm taking a long-term currency risk on this but at least there are fixed interest rates available on USD above inflation unlike EUR where I am.
The cost of hedging a currency position is just the difference between the risk free interest rates of those 2 currencies (so it can be either negative or positive, depending on which side you are on) at that maturity - Covered Interest Parity is what it is formally called.

So if your bond funds are currency hedged, you will get the German (risk free Eurozone) rate (ie negative) plus a bit for higher credit risk.

If you do not hedge the funds, then you will have currency volatility. Our belief here is that is a form of volatility for which the investor is not rewarded (unlike, say, equity return volatility).

For your Eurozone government bond funds note that Italy is very much the largest borrower. And Germany does not issue inflation linked bonds. So in the latter case you get a lot of Italian, and quite a few French. This is not a zero credit risk investment. On nominal bonds, last time I checked, the German 10 year yield was about 2.5% lower than the equivalent Italian yield. That means the market thinks there is about a 2.5% greater chance per annum that Italy will default, than Germany (it's nothing so simple as that, because the market would then have to estimate what percentage of money Italy would actually repay, what happens to the Euro, etc.).
4. Keeping 60/40 even though I will be making withdrawals soon because I need this to last a very long time.

5. Real estate, own home that is ~15% of wealth and I'm happy with that for now.


Have I missed anything obvious?

Thanks!
Only that prospective returns on assets make the plan difficult. If you are prepared to "flex" down your spending in years of poor returns that helps, a lot.

Brexit. If you are not a British national then I don't think it concerns you. We will deal with the consequences.

If you are a UK national then you have to figure in private health insurance costs for residing in an EU country unless your country has said otherwise? Or you plan to take out Spanish citizenship? A lot of expat Brits may find themselves returning to the UK to take advantage of the good old NHS (which is not in good shape). Welcome back to Blighty , enjoy the weather ;-).

Valuethinker
Posts: 38990
Joined: Fri May 11, 2007 11:07 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by Valuethinker » Fri Oct 18, 2019 8:20 am

bogleeuro wrote:
Fri Oct 18, 2019 6:05 am
Hi everyone,

Country of Residence: Spain

International Lifestyle: No changes of country

Currency: EUR

Debt: No debt

Age: Late 30s

Current portfolio size: high seven-figures


Quick background - I'll be taking early 'retirement' in the next 2-5 years. Currently I have most of money in Vanguard Lifestrategy60 but with the whole Brexit and now living in Europe, I want to change this.

After a great deal of reading these forums and a few books, I have decided on the following portfolio (based on The Boglehead Portfolio - Complex Indexing).

It would be great to have some input on this, particularly regarding my situation (age, early retirement etc.)

I've read that the amount of money invested doesn't really change anything but I'm fortunate to be investing a high 7 figure amount into this and I also just want to make sure I'm not missing anything, I know there are simply ways of accomplishing my shares allocation but I am presuming with the figure invested, it's worth it for the smaller TER.


Bonds:

Code: Select all

[20%] Xtrackers II Global Government Bond UCITS ETF 1C - EUR Hedged | DBZB                       LU0378818131 - 0.25%
[10%] Vanguard Euro Government Bond Index Fund Investor EUR Accumulation                         IE0007472115 - 0.25%
[10%] Vanguard Eurozone Inflation-Linked Bond Index Fund Investor EUR Accumulation               IE00B04GQQ17 - 0.25%
Shares:

Code: Select all

[34%] US: iShares Core S&P 500 UCITS ETF                                                         IE00B5BMR087 - 0.07%
[12%] Europe: iShares MSCI Europe UCITS ETF (Acc)                                                IE00B4K48X80 - 0.12%
[5%] Japan: iShares Core MSCI Japan IMI UCITS ETF                                                IE00B4L5YX21 - 0.20%
[3%] Pacific without Japan: iShares Core MSCI Pacific ex Japan UCITS ETF                         IE00B52MJY50 - 0.20%
[6%] Emerging: iShares Core MSCI Emerging Markets IMI UCITS ETF                                  IE00BKM4GZ66 - 0.18%
Emergency fund:

HSBC USD FIXED 2.8% $1m - emergency fund outside of Euro currency and outside of anything stock / bond related. Realistically, 5 years expenses. Very small risk that HSBC collapses.


-----------

Notes:

1. The plan is take a 3.5% withdrawal rate, starting in the next 3 years. I'll need this for the next 40+ years (hopefully!) & I hope to preserve the initial amount (inflation adjusted).

2. Bonds allocation - Just seemed logical and diverse but not backed up by anything, would love some input on that. Maybe I should go 100% 'global' due to negative interest in Europe?

3. Emergency fund - I have the USD already and I realize I'm taking a long-term currency risk on this but at least there are fixed interest rates available on USD above inflation unlike EUR where I am.

4. Keeping 60/40 even though I will be making withdrawals soon because I need this to last a very long time.

5. Real estate, own home that is ~15% of wealth and I'm happy with that for now.


Have I missed anything obvious?

Thanks!
Another way of looking at this is what is the inflation linked annuity rate you can get for your capital. That is your safe withdrawal rate, in effect.

For a 65 year old UK man, right now, female partner 60 w 50% survivor benefit, that is c. £2,300 per £100k premium, I believe (I have not checked this in a while).

Annuities don't usually work for ages much below 55, say (or even, some would say, 65-70), because the mortality credit is so poor.

Now indexed linked gilts (inflation linked bonds) are yielding c. -2.0% real right now - if inflation is as the market expects, and the bonds are held to maturity (and the coupons reinvested at the same yield) then real return will be minus 2.0%.

So that's the only truly safe return (and it ignores tax effects, which can be painful, especially at higher inflation rates).

oogZoo
Posts: 28
Joined: Mon Sep 02, 2019 12:05 pm

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by oogZoo » Fri Oct 18, 2019 8:44 am

bogleeuro wrote:
Fri Oct 18, 2019 6:05 am
Have I missed anything obvious?
You are missing Canada. :)

glorat
Posts: 281
Joined: Thu Apr 18, 2019 2:17 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by glorat » Fri Oct 18, 2019 9:30 am

oogZoo wrote:
Fri Oct 18, 2019 8:44 am
bogleeuro wrote:
Fri Oct 18, 2019 6:05 am
Have I missed anything obvious?
You are missing Canada. :)
To make a serious point of this, it seems a bit complex to try to cover the whole world with multiple funds when you can do the same with 1 or maybe 2 low cost funds. One is at risk of missing something (like Canada) or accidentally tilting. At minimum, pick a global index (e.g. MSCI World) and mirror it (e.g https://www.msci.com/world). Unless you really were deliberately constructing your own weightings...

Topic Author
bogleeuro
Posts: 3
Joined: Fri Oct 18, 2019 5:50 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by bogleeuro » Fri Oct 18, 2019 11:11 am

Thank you for the replies, most appreciated.

Regarding the bonds - so I'm taking it that there isn't really a solution to this problem, except reduce the withdrawal % and wait to see if things improve? One thing that does confuse me and I'm sure it's something stupidly basic:

Vanguard Euro Government Bond Index Fund Investor EUR Accumulation YTD 9.25% - what's happening here if everything has a negative yield?

https://www.morningstar.es/es/funds/sna ... 4SGN&tab=1

I tried the portfolio with only Global Bonds and the results were worse since 2012 (I know this time frame is nothing..) but I had imagined it would be better, again because of the negative yield bonds in Europe.
glorat wrote:
Fri Oct 18, 2019 9:30 am
To make a serious point of this, it seems a bit complex to try to cover the whole world with multiple funds when you can do the same with 1 or maybe 2 low cost funds. One is at risk of missing something (like Canada) or accidentally tilting. At minimum, pick a global index (e.g. MSCI World) and mirror it (e.g https://www.msci.com/world). Unless you really were deliberately constructing your own weightings...
No, the only reason was the reduced TER than say using 'Vanguard FTSE All-World UCITS ETF USD Acc', I did a quick calculation and it was about €8k/year saving I think. But I agree, I don't want to make it more complex than it needs to be and I definitely don't want to miss out anything (Canada!), I had just seen this mix in a few places and copied it..

I also got better results using this 5 fund approach to equity than using the iShares World & Emerging back tested since 2012 (101% vs 93%) but again, I know this a very short period of time.

So I will update the equity so as not to miss anything:

Code: Select all

[54%] World: iShares Core MSCI World UCITS ETF USD (Acc) (EUR)                                   IE00B4L5Y983  - 0.20% 
[6%]  Emerging: iShares Core MSCI EM IMI UCITS ETF USD (Acc) (EUR)                               IE00BKM4GZ66  - 0.18%
The reason for mentioning Brexit - Old Mutual said that I can no longer have the GB LifeStrategy in a no deal situation and that's what started the ball rolling on looking for alternatives. Though, back testing to 2012 my 'new' portfolio with ishares equity does worse (93% vs 115%) and LS60 is less volatile apparently.. not sure why, maybe the UK tilt on LS60 has been favorable over this time? I wanted to recreate a Euro version but maybe I should just stick with LS60 (if I can, thank you Brexit).

Valuethinker
Posts: 38990
Joined: Fri May 11, 2007 11:07 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by Valuethinker » Fri Oct 18, 2019 11:49 am

bogleeuro wrote:
Fri Oct 18, 2019 11:11 am
Thank you for the replies, most appreciated.

Regarding the bonds - so I'm taking it that there isn't really a solution to this problem, except reduce the withdrawal % and wait to see if things improve?
Yes. But beware Japan. It's been waiting to improve for 20+ years. If you look at European economy & demographics there are a lot of similarities to Japan. The Italian banking system looks for example a lot like the Japanese one in the 1990s. However to be fair there has been no giant debt bubble in most countries.
One thing that does confuse me and I'm sure it's something stupidly basic:

Vanguard Euro Government Bond Index Fund Investor EUR Accumulation YTD 9.25% - what's happening here if everything has a negative yield?

https://www.morningstar.es/es/funds/sna ... 4SGN&tab=1

I tried the portfolio with only Global Bonds and the results were worse since 2012 (I know this time frame is nothing..) but I had imagined it would be better, again because of the negative yield bonds in Europe.
Global bonds hedged into Euros will have similar returns to a Eurozone bond fund of similar credit risk. Global bonds unhedged probably outperformed by quite a fair bit due to weakness of the Euro.

YTD performance has nothing to do with yield. If interest rates fall, then bond prices go up (and bond yields fall), no matter what happens (assuming no credit risk issues).

There's 2 components to returns from a bond. One is the coupon, usually fixed, usually paid either once or twice a year. For example a UK gilt (govt bond) will typically pay a 2% coupon, so £100 of face value of the bond will pay £1 twice a year at legally defined dates (gilts pay semi annually, German govt bonds pay once a year).

The other though is the price you pay, knowing that you get $100 or £100 or EUR 100 back at the maturity date. And that can be a positive return (capital gain) if you pay less than $100, and a negative return if you pay more than $100.

A negative Yield to Maturity just means that say you paid $115 for a 1% coupon bond, due in 5 years. Your total outlay is $115. Your total receipts will be 5 x $1 coupons over time, plus $100 face value/ par value/ redemption value at maturity date. Thus $105 is less than $115, so your Yield To Maturity is negative. How much it is negative in per cent per annum is something called the internal rate of return (in other contexts) and is usually worked out by trial and error by the computer.

Now if the yield to maturity on a bond moves from +5% Yield to -5% Yield , for example, the price will have gone up a lot. For a new buyer of that bond that's an issue because say the bond price went from 95 to 115. Then you are going to buy in at 115 but you know you only get back 100 at redemption/ maturity. So you are going to lose 15.

But for someone who already owned that bond at 95, they have pocketed a $20 capital gain *plus* whatever coupon the bond was paying over that time period.

So if you already own the bond fund, you profited from the fall in interest rates. The +9.6%. As markets have become aware that the Eurozone is teetering on the edge of recession, expectations of interest rates have fallen, thus bond prices moved up.

But going forward, you might get say 2 EUR per 100 EUR of face value of bonds in coupons (if that is the average coupon on the bonds in the fund), but you cannot expect much price appreciation. Indeed your total return could well be negative (if the yield is now negative).

It's a rough estimate that the future return of a bond is going to be its Yield To Maturity, because lots of things can happen on the way. But the YTM calculation, which takes into account both the coupons the bond will pay (normally fixed), the time left to maturity, and the price paid (a discount or premium to the $100 face value of the bond, which is what the bond will redeem at ie $100), is as best as you can get.

If you buy a German 10 year bond right now, and yield is -1.0%, then you can expect on average a return pa of -1% over the next 10 years.

Inflation linked bonds are somewhat weirder, because both your coupon and redemption value are indexed to inflation. A negative real yield means something slightly different - but the implications in terms of reducing capital are the same.
glorat wrote:
Fri Oct 18, 2019 9:30 am
To make a serious point of this, it seems a bit complex to try to cover the whole world with multiple funds when you can do the same with 1 or maybe 2 low cost funds. One is at risk of missing something (like Canada) or accidentally tilting. At minimum, pick a global index (e.g. MSCI World) and mirror it (e.g https://www.msci.com/world). Unless you really were deliberately constructing your own weightings...
No, the only reason was the reduced TER than say using 'Vanguard FTSE All-World UCITS ETF USD Acc', I did a quick calculation and it was about €8k/year saving I think. But I agree, I don't want to make it more complex than it needs to be and I definitely don't want to miss out anything (Canada!), I had just seen this mix in a few places and copied it..

I also got better results using this 5 fund approach to equity than using the iShares World & Emerging back tested since 2012 (101% vs 93%) but again, I know this a very short period of time.

So I will update the equity so as not to miss anything:

Code: Select all

[54%] World: iShares Core MSCI World UCITS ETF USD (Acc) (EUR)                                   IE00B4L5Y983  - 0.20% 
[6%]  Emerging: iShares Core MSCI EM IMI UCITS ETF USD (Acc) (EUR)                               IE00BKM4GZ66  - 0.18%
The reason for mentioning Brexit - Old Mutual said that I can no longer have the GB LifeStrategy in a no deal situation and that's what started the ball rolling on looking for alternatives. Though, back testing to 2012 my 'new' portfolio with ishares equity does worse (93% vs 115%) and LS60 is less volatile apparently.. not sure why, maybe the UK tilt on LS60 has been favorable over this time? I wanted to recreate a Euro version but maybe I should just stick with LS60 (if I can, thank you Brexit).
[/quote]

OK so Brexit is only an administrative inconvenience? Hard to believe it will become impossible to buy UCITS VI compliant funds - they will just get a listing on a European exchange.

I would not worry about Canada, much. 40% of the index is 5 banks + some smaller financials. Another 40% is natural resources companies, mostly oil & gas. Having it/ not having it is not going to be a major source of diversification.

oogZoo
Posts: 28
Joined: Mon Sep 02, 2019 12:05 pm

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by oogZoo » Sat Oct 19, 2019 4:04 am

bogleeuro wrote:
Fri Oct 18, 2019 11:11 am
So I will update the equity so as not to miss anything:

Code: Select all

[54%] World: iShares Core MSCI World UCITS ETF USD (Acc) (EUR)                                   IE00B4L5Y983  - 0.20% 
[6%]  Emerging: iShares Core MSCI EM IMI UCITS ETF USD (Acc) (EUR)                               IE00BKM4GZ66  - 0.18%
If you are after smaller TER, then you might want to consider the following newer, cheaper and smaller MSCI World ETF instead:

Code: Select all

SPDR MSCI World UCITS ETF (Acc) (EUR)                               IE00BFY0GT14 SPPW/SWRD - 0.12%
AUM is only $311 million as it was started just February this year. So it is not really well established yet.

TedSwippet
Posts: 2502
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by TedSwippet » Sat Oct 19, 2019 4:26 am

Valuethinker wrote:
Fri Oct 18, 2019 11:49 am
glorat wrote:
Fri Oct 18, 2019 9:30 am
... The reason for mentioning Brexit - Old Mutual said that I can no longer have the GB LifeStrategy in a no deal situation and that's what started the ball rolling on looking for alternatives.
OK so Brexit is only an administrative inconvenience? Hard to believe it will become impossible to buy UCITS VI compliant funds - they will just get a listing on a European exchange.
Vanguard Lifestrategy 60 is a UK domiciled OEIC, so unlike an ETF there may be no ready way to list such a beast on any EU exchange.

It is not clear whether Old Mutual are right here -- and maybe even they don't know definitively, as with all things Brexit (sigh) -- but if they are then moving from Lifestrategy might be unavoidable, with UCITS ETFs being the obvious substitute. Annoying in itself, but worse if moving realises taxable capital gains.

Topic Author
bogleeuro
Posts: 3
Joined: Fri Oct 18, 2019 5:50 am

Re: Portfolio for retirement at 40 - advice please! [SPAIN]

Post by bogleeuro » Sat Oct 19, 2019 6:35 am

Thank you for the detailed reply regarding bonds Valuethinker.

I think I'm just about getting there, so you can still make money with Euro Gov Bonds at the moment but only if interest rates fall and obviously that's not going to happen all the time and less likely in the future.

One thing, my cash assets to invest are currently 50/50 in EUR and USD.

I was planning to not exchange the USD to EUR now because I don't know whether now is a good time and of course what will happen in the future - I also like the idea of not holding 100% EUR because of what might happen in the years to come.

This USD was planned to be invested equally in Equity and Bonds but I just thought, maybe I should invest the USD only in Global Bonds NOT hedged.

I would be taking the currency risk anyway - so why not use it for better value bonds? Does that make sense?

The only problems I can see are,

1. The currency risk when I need to make a withdrawal (which would already be there if split equally equity/bonds)
2. Re-balancing, I could need to top up with EUR in the future and increase currency exchange risks

Just did a back test of this and actually the Euro Gov Bonds in EUR produced better results since 2012 which I don't 100% understand why.. so maybe this isn't a great idea anyway.
oogZoo wrote:
Sat Oct 19, 2019 4:04 am
If you are after smaller TER, then you might want to consider the following newer, cheaper and smaller MSCI World ETF instead:

Code: Select all

SPDR MSCI World UCITS ETF (Acc) (EUR)                               IE00BFY0GT14 SPPW/SWRD - 0.12%
AUM is only $311 million as it was started just February this year. So it is not really well established yet.
Thanks, yes I would definitely consider it in a couple of years time.

I wish Vanguard would just release a LifeStrategy for Europeans without the UK tilt - I would sign up for it tomorrow, to not have to think about it again.

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