Portfolio review, Age 30

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
jenson.b
Posts: 6
Joined: Tue Jul 24, 2018 3:02 am

Portfolio review, Age 30

Post by jenson.b » Thu Aug 09, 2018 4:18 am

Hey everyone,

I'm new to the forum so please let me know if my question doesn't comply with the established format!

Personal info

- 30 years old
- Living in the EU
- 70% of my wealth is in USD and the rest in EUR. My current and future earnings are in EUR too.

Desired allocation

70% Stocks
30% Bonds

High-level portfolio decisions

- Prefer global ETFs to be as diversified as possible
- Invest in accumulating Irish domiciled ETFs to avoid extra tax costs as my country doesn't not tax dividend reinvestment
- My bond holdings will be hedged to the Euro to avoid currency risk in the risk averse part of my portfolio

Portfolio #1

Stocks

- iShares Core MSCI World UCITS ETF USD (SWDA)

Bonds

- iShares Global Aggregate Bond UCITS ETF EUR Hedged (AGGH)

Portfolio #2

Stocks

- 50% iShares Core MSCI World UCITS ETF USD (SWDA)
- 50% iShares MSCI EMU UCITS ETF EUR (CEU1)

Bonds

- iShares Global Aggregate Bond UCITS ETF EUR Hedged (Acc) (AGGH)


Questions

1. I'm inclined to choose Portfolio #2 because it contains some "domestic" assets (Eurozone) so I'd minimize currency risk. Am I correct thinking about this or should I ignore this risk?

2. Is this more or less a typical European investor portfolio or am I missing something?

3. Is there an online tool that I can use to compare the performance of those two portfolios?

DarkHelmetII
Posts: 112
Joined: Mon Jul 24, 2017 12:25 pm

Re: Portfolio review, Age 30

Post by DarkHelmetII » Thu Aug 09, 2018 6:40 am

jenson.b wrote:
Thu Aug 09, 2018 4:18 am
3. Is there an online tool that I can use to compare the performance of those two portfolios?
https://www.portfoliovisualizer.com/

jenson.b
Posts: 6
Joined: Tue Jul 24, 2018 3:02 am

Re: Portfolio review, Age 30

Post by jenson.b » Thu Aug 09, 2018 8:31 am

DarkHelmetII wrote:
Thu Aug 09, 2018 6:40 am
jenson.b wrote:
Thu Aug 09, 2018 4:18 am
3. Is there an online tool that I can use to compare the performance of those two portfolios?
https://www.portfoliovisualizer.com/
Thanks for sharing this. None of my tickers are available in the tool. For example, searching for SWDA it returns zero results.

megabad
Posts: 362
Joined: Fri Jun 01, 2018 4:00 pm

Re: Portfolio review, Age 30

Post by megabad » Thu Aug 09, 2018 9:45 am

jenson.b wrote:
Thu Aug 09, 2018 4:18 am
1. I'm inclined to choose Portfolio #2 because it contains some "domestic" assets (Eurozone) so I'd minimize currency risk. Am I correct thinking about this or should I ignore this risk?

2. Is this more or less a typical European investor portfolio or am I missing something?

3. Is there an online tool that I can use to compare the performance of those two portfolios?
Sorry I don't have enough experience in European tax laws to give a good opinion here. Personally, I would not overweight to Europe given the same tax treatment, but that is merely my opinion. Your portfolio also has limited exposure to emerging markets which may or may not be a good thing. I agree with hedging of bonds to home currency for short duration holdings (near retirement), but I would worry about having such a heavy government debt holding. Just my thoughts, but once again, not a European expert.
jenson.b wrote:
Thu Aug 09, 2018 8:31 am
DarkHelmetII wrote:
Thu Aug 09, 2018 6:40 am
jenson.b wrote:
Thu Aug 09, 2018 4:18 am
3. Is there an online tool that I can use to compare the performance of those two portfolios?
https://www.portfoliovisualizer.com/
Thanks for sharing this. None of my tickers are available in the tool. For example, searching for SWDA it returns zero results.
In most cases you will need to look an actual exchange ticker from XETRA, LSE, etc and not the letters that a fund company assigns it. Portfolio visualizer should work with those.

jenson.b
Posts: 6
Joined: Tue Jul 24, 2018 3:02 am

Re: Portfolio review, Age 30

Post by jenson.b » Thu Aug 09, 2018 11:08 am

megabad wrote:
Thu Aug 09, 2018 9:45 am

Sorry I don't have enough experience in European tax laws to give a good opinion here. Personally, I would not overweight to Europe given the same tax treatment, but that is merely my opinion. Your portfolio also has limited exposure to emerging markets which may or may not be a good thing. I agree with hedging of bonds to home currency for short duration holdings (near retirement), but I would worry about having such a heavy government debt holding. Just my thoughts, but once again, not a European expert.
Thanks for the input. Agree with you. SWDA is missing emerging markets so I might add iShares Core MSCI Emerging Markets IMI UCITS ETF (EMIM) in the mix!

About the government debt part, my understanding is that government bonds are the most trustworthy. Is that a wrong assumption?
DarkHelmetII wrote:
Thu Aug 09, 2018 6:40 am

In most cases you will need to look an actual exchange ticker from XETRA, LSE, etc and not the letters that a fund company assigns it. Portfolio visualizer should work with those.
Again thanks for clarifying this. I'll check the actual ticker from the exchanges.

megabad
Posts: 362
Joined: Fri Jun 01, 2018 4:00 pm

Re: Portfolio review, Age 30

Post by megabad » Thu Aug 09, 2018 11:28 am

jenson.b wrote:
Thu Aug 09, 2018 11:08 am
About the government debt part, my understanding is that government bonds are the most trustworthy. Is that a wrong assumption?
No not wrong. I may have misspoken about my personal opinion (not fact). I believe that US government debt is very "trustworthy". I am not a fan of non-US government debt in very large quantities. This is primarily reflective of my own home bias and my belief that US debt provides a better risk adjusted return that many other countries debt. This is indeed me attempting to predict [bond] market returns, however, I personally do not feel that the "efficient market" hypothesis necessarily has unlimited applicability across global government debt markets. I would prefer to own foreign debt in limited quantities in general, but I would also prefer more market based foreign debt to better ensure the risk/return profile was tied to the market (ie. corporate bonds). I could easily be completely wrong in my predictions/preferences.

jenson.b
Posts: 6
Joined: Tue Jul 24, 2018 3:02 am

Re: Portfolio review, Age 30

Post by jenson.b » Fri Aug 10, 2018 5:32 am

Understood! Thanks for sharing your thoughts.

Post Reply