Portfolio advise (30 something) from NL

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Sinsji
Posts: 25
Joined: Sat Oct 06, 2018 6:23 am

Portfolio advise (30 something) from NL

Post by Sinsji » Sat Oct 06, 2018 6:40 am

[Thread updated, see below. --admin LadyGeek]

Hi, after of couple of years fancying myself as a brilliant stock picker I realized my returns are not that exceptional and with hindsight I tend to sell to soon (Amazon, FB, Apple...) A bit tired from my mediocre research I'm getting into ETFs (and Berkshire). I'd like allocate money to fixed income ETFs (although I'm 34 yrs old) because I'm a bit risk averse and red about global (corporate) debt and high stock valuations.

So far I think the following principles are relevant to bonds among others:
- increasing interest rates -> higher yield on current bonds (lower price) to compensate for the difference in coupon value.
- long term bond prices are more sensitive to changes in interest rates
- there is a lot of outstanding debt, the previous 10 years interest rates where low -> more upside than downside for current interest rates (???)

My question is twofold:
- Where to allocate? Short term bonds ETF because of interest rate unknowns? Or just buy a Global Bond ETF? These seem to have an average duration of 5-6 years.. Other options? Any motivation for this?
- Which ETFs are accessible from the Netherlands/Europe?

If you have any thoughts: thanks ahead!

Valuethinker
Posts: 36734
Joined: Fri May 11, 2007 11:07 am

Re: Bond ETF from Europe (the Netherlands)?

Post by Valuethinker » Sat Oct 06, 2018 10:22 am

Sinsji wrote:
Sat Oct 06, 2018 6:40 am
Hi, after of couple of years fancying myself as a brilliant stock picker I realized my returns are not that exceptional and with hindsight I tend to sell to soon (Amazon, FB, Apple...) A bit tired from my mediocre research I'm getting into ETFs (and Berkshire). I'd like allocate money to fixed income ETFs (although I'm 34 yrs old) because I'm a bit risk averse and red about global (corporate) debt and high stock valuations.

So far I think the following principles are relevant to bonds among others:
- increasing interest rates -> higher yield on current bonds (lower price) to compensate for the difference in coupon value.
- long term bond prices are more sensitive to changes in interest rates
- there is a lot of outstanding debt, the previous 10 years interest rates where low -> more upside than downside for current interest rates (???)

My question is twofold:
- Where to allocate? Short term bonds ETF because of interest rate unknowns? Or just buy a Global Bond ETF? These seem to have an average duration of 5-6 years.. Other options? Any motivation for this?
- Which ETFs are accessible from the Netherlands/Europe?

If you have any thoughts: thanks ahead!
If you search on my posts you will find my thoughts on European government bonds.

We have had a number of discussions about the right ETFs for Europe-based investors.

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

Re: Bond ETF from Europe (the Netherlands)?

Post by DJN » Sat Oct 06, 2018 12:28 pm

Hi there,
the following two bond ETF's are worth considering for your fixed income for an Eu investor.
The first is accumulating while the second is distributing. You might want to check your local tax position in the first instance. Both are hedged which I guess is better for you. I don't bother being too clever with bond choice, use a global dev. aggregate or Govt. from iShares or Vanguard and let them figure it out.

TICKER: AGGH (iShares) - IE00BDBRDM35
DESCRIPTION: Global aggregate
TER: 0.10%
COMMENTS: Accumulating, hedged

TICKER: IGLH - (iShares) IE00BDFK3H31
DESCRIPTION: World dev, govt
TER: 0.2%
COMMENT: Distributing, hedged

Sinsji
Posts: 25
Joined: Sat Oct 06, 2018 6:23 am

Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Sat Oct 06, 2018 3:14 pm

DJN wrote:
Sat Oct 06, 2018 12:28 pm
Hi there,
the following two bond ETF's are worth considering for your fixed income for an Eu investor.
The first is accumulating while the second is distributing. You might want to check your local tax position in the first instance. Both are hedged which I guess is better for you. I don't bother being too clever with bond choice, use a global dev. aggregate or Govt. from iShares or Vanguard and let them figure it out.

TICKER: AGGH (iShares) - IE00BDBRDM35
DESCRIPTION: Global aggregate
TER: 0.10%
COMMENTS: Accumulating, hedged

TICKER: IGLH - (iShares) IE00BDFK3H31
DESCRIPTION: World dev, govt
TER: 0.2%
COMMENT: Distributing, hedged
Thanks.
What makes you think hedged would suit me better?
Being an ETF, any idea how iShares and Vanguard figure it out?

Sinsji
Posts: 25
Joined: Sat Oct 06, 2018 6:23 am

Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Sat Oct 06, 2018 3:38 pm

Valuethinker wrote:
Sat Oct 06, 2018 10:22 am
Sinsji wrote:
Sat Oct 06, 2018 6:40 am
Hi, after of couple of years fancying myself as a brilliant stock picker I realized my returns are not that exceptional and with hindsight I tend to sell to soon (Amazon, FB, Apple...) A bit tired from my mediocre research I'm getting into ETFs (and Berkshire). I'd like allocate money to fixed income ETFs (although I'm 34 yrs old) because I'm a bit risk averse and red about global (corporate) debt and high stock valuations.

So far I think the following principles are relevant to bonds among others:
- increasing interest rates -> higher yield on current bonds (lower price) to compensate for the difference in coupon value.
- long term bond prices are more sensitive to changes in interest rates
- there is a lot of outstanding debt, the previous 10 years interest rates where low -> more upside than downside for current interest rates (???)

My question is twofold:
- Where to allocate? Short term bonds ETF because of interest rate unknowns? Or just buy a Global Bond ETF? These seem to have an average duration of 5-6 years.. Other options? Any motivation for this?
- Which ETFs are accessible from the Netherlands/Europe?

If you have any thoughts: thanks ahead!
If you search on my posts you will find my thoughts on European government bonds.

We have had a number of discussions about the right ETFs for Europe-based investors.
I found one advise to invest in "US Treasury and US TIPS or Total Bond Market & US TIPS" and a municipal bond fund.
Don't think municipal bonds are tax exempt where I live though. Thanks.
Last edited by Sinsji on Tue Oct 09, 2018 9:10 am, edited 1 time in total.

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

Re: Bond ETF from Europe (the Netherlands)?

Post by DJN » Sat Oct 06, 2018 9:44 pm

Sinsji wrote:
Sat Oct 06, 2018 3:14 pm
What makes you think hedged would suit me better?
Being an ETF, any idea how iShares and Vanguard figure it out?
Hedging your safer asset class allows for reduced volatility. There may be a flattening of your returns but the key point is safety in bonds to reduce volatility.

Sinsji
Posts: 25
Joined: Sat Oct 06, 2018 6:23 am

Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Tue Oct 09, 2018 8:58 am

I identified 5 ETF's with help from this post, that cover the globe (almost). All are accumulating, (relatively) low expense ratio and a lot of holdings within each ETF. A difficulty is how to balance between them?

Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 (covers China, Brazil, SA, India, Mexico among others) Expense ratio 0.18%
2. iShares Core S&P 500 UCITS ETF IE00B5BMR087 Expense ratio 0.07%
3. iShares MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80 Expense ratio 0.12% (covers Scandinavia, UK, Western Europe)
4. iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 Expense ratio 0.20%
5. iShares MSCI USA Small Cap UCITS ETF IE00B3VWM098 Expense ratio 0.43%

Bonds:
1. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years

I did not find one ETFs with similar coverage like the first 4 equity ETF above. There is no ETF by iShares available in Europe that really covers both 'Emerging' markets and 'Developed' markets. Vanguard neither.
I'm 33 yrs old and want to put savings from my salary into this. I intend to buy every 3 months (in this way it's free). I could put like 35% in USA, 35% in Europe 20% in EM and 10% in Japan for stocks. Equity in total would be 85%, then about 15% into Bonds. Are there any better solutions?

Please any ideas or suggestions are welcome on this list.

(On the side with like 5% of my savings I still enjoy buying stocks :oops: based on my understanding of value investing. Got some job knowledge about tech and healthcare. Further make use of Joel Greenblats approach as well).

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Lauretta
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Re: Bond ETF from Europe (the Netherlands)?

Post by Lauretta » Tue Oct 09, 2018 10:11 am

Since you like slice and dice you may consider also the iShares Core MSCI Pacific ex-Japan UCITS ETF
When everyone is thinking the same, no one is thinking at all

longvista
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Joined: Fri Aug 10, 2018 12:18 pm

Re: Bond ETF from Europe (the Netherlands)?

Post by longvista » Tue Oct 09, 2018 10:39 am

Sinsji wrote:
Tue Oct 09, 2018 8:58 am
I did not find one ETFs with similar coverage like the first 4 equity ETF above. There is no ETF by iShares available in Europe that really covers both 'Emerging' markets and 'Developed' markets. Vanguard neither.
Vanguard offers an ETF that covers both EM and DM: Vanguard FTSE All-World UCITS ETF.
I'm 33 yrs old and want to put savings from my salary into this. I intend to buy every 3 months (in this way it's free). I could put like 35% in USA, 35% in Europe 20% in EM and 10% in Japan for stocks. Equity in total would be 85%, then about 15% into Bonds. Are there any better solutions?
Yes. Do not slice-n-dice. Buy a total world stock ETF for your equity portion: VWRD or (iShares SWDA + EIMI). Keep it simple.

DJN
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Re: Bond ETF from Europe (the Netherlands)?

Post by DJN » Tue Oct 09, 2018 10:43 am

hi,
to answer your latest question I would stick with my previous hedged Bond suggestion above.
For equities I would use the following which I believe are better for me as they are simpler:
EQUITY
TICKER: SWDA (iShares) - IE00B4L5Y983
DESCRIPTION: Global, developed countries
TER: 0.20%
COMMENT: Accumulating

TICKER: EIMI (iShares) - IE00BKM4GZ66
DESCRIPTION: Emerging mkts
TER: 0.18%
COMMENT: Accumulating

OPTIONAL
TICKER: WSML (iShares) - IE00BF4RFH31
DESCRIPTION: MSCI World Small Cap
TER: 0.35%
COMMENTS: Accumulating
(I couldn't find a small cap value acc).
Good luck,
DJN

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

Re: Bond ETF from Europe (the Netherlands)?

Post by Valuethinker » Tue Oct 09, 2018 10:44 am

Sinsji wrote:
Tue Oct 09, 2018 8:58 am
I identified 5 ETF's with help from this post, that cover the globe (almost). All are accumulating, (relatively) low expense ratio and a lot of holdings within each ETF. A difficulty is how to balance between them?

Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 (covers China, Brazil, SA, India, Mexico among others) Expense ratio 0.18%
2. iShares Core S&P 500 UCITS ETF IE00B5BMR087 Expense ratio 0.07%
3. iShares MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80 Expense ratio 0.12% (covers Scandinavia, UK, Western Europe)
4. iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 Expense ratio 0.20%
5. iShares MSCI USA Small Cap UCITS ETF IE00B3VWM098 Expense ratio 0.43%

Bonds:
1. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years

I did not find one ETFs with similar coverage like the first 4 equity ETF above. There is no ETF by iShares available in Europe that really covers both 'Emerging' markets and 'Developed' markets. Vanguard neither.
I'm 33 yrs old and want to put savings from my salary into this. I intend to buy every 3 months (in this way it's free). I could put like 35% in USA, 35% in Europe 20% in EM and 10% in Japan for stocks. Equity in total would be 85%, then about 15% into Bonds. Are there any better solutions?
There's not a global equity index ETF that covers developed and emerging markets? Or 2: developed markets + EM? In other words you want to let the market do your asset allocation and rebalancing not Do It Yourself (DIY).

On bonds, I wouldn't get too stressed. The one you have identified will do the trick.
Please any ideas or suggestions are welcome on this list.

(On the side with like 5% of my savings I still enjoy buying stocks :oops: based on my understanding of value investing. Got some job knowledge about tech and healthcare. Further make use of Joel Greenblats approach as well).
In the UK that would give you serious tax problems over time - capital gains to realize and pay tax on. And if one puts it in a tax exempt account one then loses the tax advantage of capital losses which are offsettable against tax.

Shrug. We live. We die. In between it's all about the play we have ;-).

Beware though the Nisiprius question, paraphrasing it:

"It's 5% play money. But what if you lose the whole 5%? Do you "play" again?"

If you can't answer that question to your own satisfaction then you need to be careful of this strategy.

Sinsji
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Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Tue Oct 09, 2018 12:38 pm

Thanks for the ideas. Vanguard has more to offer than I could find initially, still their ETFs seem to be distributing.

Indeed I don't really feel qualified to the this re balancing myself. Still the suggested MSCI World ETF doesn't cover several European countries (Sweden, Finland, Spain, Denmark, Italy, Ireland, Poland) which I find strange. Maybe the Market Cap of these countries companies is too small. Another point is that The S&P500 ETF has a smaller TER (0.07% vs 20%). I though using 3 individual ETF for USA, Europe and Japan gives more diversification and is a bit cheaper. In the MSCI World ETF 'thing' the USA makes up 62%, Japan 8% and the 'remaining' 30% goes to Europe and Australia.

If I start losing the 5% I probably will continue/quit when halfway burning that money, after I analyzed whether it was my ignorance or pure bad luck/unknowns...

ICH
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Re: Bond ETF from Europe (the Netherlands)?

Post by ICH » Tue Oct 09, 2018 1:39 pm

Sinsji wrote:
Tue Oct 09, 2018 12:38 pm
Thanks for the ideas. Vanguard has more to offer than I could find initially. Indeed I don't really feel qualified to the this re balancing myself, maybe just stubborn. Still the suggested MSCI World ETF doesn't cover several European countries (Sweden, Finland, Spain, Italy, Ireland, Poland) which I find strange. Probably the Market Cap of these countries is relatively small. Another point is that The SP500 ETF has a smaller TER (0.07% vs 20%). I though using 3 individual ETF for USA, Europe and Japan gives more diversification and is a bit cheaper. In the MSCI World ETF 'thing' the USA makes up 62%, Japan 8% and the remaining 30% goes to Europe and Australia.

If I start losing the 5% I probably will continue/quit when halfway burning that money, after I analyzed whether it was my ignorance or pure bad luck/unknowns...
Just to note that plenty if people (including myself) have thought about slicing and dicing because of the cheper ERs. Some people (including myself) have also tried it.
My conclusion: does not worth the effort. It will probably turn out that it is not cheaper And it creates far more complication than I can handle. It is simply easier to stay
the course with the smallest number of moving parts. I have VWRD, because I prefer to receive the dividends in cash (check taxes in your country).

By the way, when comparing the expenses, you need to add the tax expense ratio to the fund expense ratio. Have a look here:
https://www.bogleheads.org/wiki/Nonresi ... Irish_ETFs

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galeno
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Re: Bond ETF from Europe (the Netherlands)?

Post by galeno » Tue Oct 09, 2018 1:52 pm

I sliced our TBM ETF for two bond ETFs.

100% SUAG (ER = 0.25%) for 50% VTDY + 50% VDCP (ER = 0.12%)

3 Benefits: Lower ER. Eliminated MBS. I prefer Vanguard vs iShares.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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BeBH65
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Re: Bond ETF from Europe (the Netherlands)?

Post by BeBH65 » Tue Oct 09, 2018 1:58 pm

Sinsji wrote:
Tue Oct 09, 2018 12:38 pm
Thanks for the ideas. Vanguard has more to offer than I could find initially, still their ETFs seem to be distributing.

Indeed I don't really feel qualified to the this re balancing myself. Still the suggested MSCI World ETF doesn't cover several European countries (Sweden, Finland, Spain, Denmark, Italy, Ireland, Poland) which I find strange. Maybe the Market Cap of these countries companies is too small. Another point is that The S&P500 ETF has a smaller TER (0.07% vs 20%). I though using 3 individual ETF for USA, Europe and Japan gives more diversification and is a bit cheaper. In the MSCI World ETF 'thing' the USA makes up 62%, Japan 8% and the 'remaining' 30% goes to Europe and Australia.

If I start losing the 5% I probably will continue/quit when halfway burning that money, after I analyzed whether it was my ignorance or pure bad luck/unknowns...
Have a look at https://www.msci.com/world for a description of the index.
It covers 23 developed makets covering about 76% of the free float-adjusted market capitalization - most of the countries mentioned are covered (Poland not, it is an emerging market)
The weights mentioned represent the sixes of the companies and markets

Which country are you from?
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

Sinsji
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Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Tue Oct 09, 2018 2:05 pm

galeno wrote:
Tue Oct 09, 2018 1:52 pm
I sliced our TBM ETF for two bond ETFs.

100% SUAG (ER = 0.25%) for 50% VTDY + 50% VDCP (ER = 0.12%)

3 Benefits: Lower ER. Eliminated MBS. I prefer Vanguard vs iShares.
Thanks. Google doesn't recognize VTDY...
What does MBS stand for? EDIT: Morgage Backed Securities (@ICH)
Why Vanguard over iShares?

Lots of questions from the Netherlands. The Dutch government is discussing to stop dividend taxes currently.
Capital gains are taxed by a standard percentage (4%) on the whole portfolio value I think, regardless of the actual gain/loss.
Last edited by Sinsji on Tue Oct 09, 2018 2:09 pm, edited 3 times in total.

ICH
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Re: Bond ETF from Europe (the Netherlands)?

Post by ICH » Tue Oct 09, 2018 2:06 pm

galeno wrote:
Tue Oct 09, 2018 1:52 pm
I sliced our TBM ETF for two bond ETFs.

100% SUAG (ER = 0.25%) for 50% VTDY + 50% VDCP (ER = 0.12%)

3 Benefits: Lower ER. Eliminated MBS. I prefer Vanguard vs iShares.
Can't argue for the lower ER.
Why eliminate Mortgage Backed Securities? I don't think they 're riskier than the corporates.
Can't argue about Vanguard vs ishares preference. However Vanguard lately launched total world aggregate bond ETF in the US and isharesb is having it in Europe for more than a year now. Check the expense ratio of 0.10%
https://www.ishares.com/uk/individual/e ... dist)-fund

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galeno
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Re: Bond ETF from Europe (the Netherlands)?

Post by galeno » Tue Oct 09, 2018 5:56 pm

I was stretching for the "no MBS" excuse. You're right. And I really don't mind them. But pure US treasuries and pure US corps LOOKS cleaner. It's simpler. If Ireland Vanguard had a TBM ETF like Ireland Ishares I'd go for it. I love simplicity.

Regarding AGGH (my region's Total World Aggregate Bond ETF) right now we're staying with USA USD domiciled bonds. We get higher yields. Lower durations. Better credit ratings. USD is still the world's dominant currency. Also AGGH is an accumulating ETF. I prefer distributing ETFs.

The aggregate world bond ETF
ICH wrote:
Tue Oct 09, 2018 2:06 pm
Can't argue for the lower ER.
Why eliminate Mortgage Backed Securities? I don't think they 're riskier than the corporates.
Can't argue about Vanguard vs ishares preference. However Vanguard lately launched total world aggregate bond ETF in the US and isharesb is having it in Europe for more than a year now. Check the expense ratio of 0.10%
https://www.ishares.com/uk/individual/e ... dist)-fund
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

Sinsji
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Re: Bond ETF from Europe (the Netherlands)?

Post by Sinsji » Wed Oct 10, 2018 3:25 am

galeno wrote:
Tue Oct 09, 2018 5:56 pm
I was stretching for the "no MBS" excuse. You're right. And I really don't mind them. But pure US treasuries and pure US corps LOOKS cleaner. It's simpler. If Ireland Vanguard had a TBM ETF like Ireland Ishares I'd go for it. I love simplicity.

Regarding AGGH (my region's Total World Aggregate Bond ETF) right now we're staying with USA USD domiciled bonds. We get higher yields. Lower durations. Better credit ratings. USD is still the world's dominant currency. Also AGGH is an accumulating ETF. I prefer distributing ETFs.

The aggregate world bond ETF
ICH wrote:
Tue Oct 09, 2018 2:06 pm
Can't argue for the lower ER.
Why eliminate Mortgage Backed Securities? I don't think they 're riskier than the corporates.
Can't argue about Vanguard vs ishares preference. However Vanguard lately launched total world aggregate bond ETF in the US and isharesb is having it in Europe for more than a year now. Check the expense ratio of 0.10%
https://www.ishares.com/uk/individual/e ... dist)-fund
Sorry which ETF is VTDY, i.e. the full name? I can't find it.

Valuethinker
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Re: Bond ETF from Europe (the Netherlands)?

Post by Valuethinker » Wed Oct 10, 2018 3:45 am

ICH wrote:
Tue Oct 09, 2018 2:06 pm
galeno wrote:
Tue Oct 09, 2018 1:52 pm
I sliced our TBM ETF for two bond ETFs.

100% SUAG (ER = 0.25%) for 50% VTDY + 50% VDCP (ER = 0.12%)

3 Benefits: Lower ER. Eliminated MBS. I prefer Vanguard vs iShares.
Can't argue for the lower ER.
Why eliminate Mortgage Backed Securities? I don't think they 're riskier than the corporates.
Can't argue about Vanguard vs ishares preference. However Vanguard lately launched total world aggregate bond ETF in the US and isharesb is having it in Europe for more than a year now. Check the expense ratio of 0.10%
https://www.ishares.com/uk/individual/e ... dist)-fund
US MBS have a particular property called "negative convexity" (technically the second derivative of the price wrt to yield is negative, if I recall correctly).

This arises from the fact that although mortgages in America tend to be up to 30 years at a fixed rate, homeowners can repay them early - a "refi" if prevailing interest rates fall. Conversely if interest rates rise then they will repay as late as possible (in the 1970s when inflation was running 10%+ at times, many homeowners had 5% fixed rate mortgages they had taken out in the 1960s).

That's why people like Larry Swedroe don't like them - see his bond book. His view is it adds needless complexity and increases your risk. The bonds will go down by more than straight US Treasuries if interest rates rise, and up by less if they fall. Arguing against that the GNMA fund by Vanguard has had pretty similar performance to a US Intermediate term Treasury Bond fund-- it's not in practice been a big problem for investors.

On a credit rating sense, GNMA and some other bonds are legally guaranteed by US Treasury. FMAC and FNMA are under US government conservatorship and thus have a de facto if not a de jure guarantee.

international001
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Re: Bond ETF from Europe (the Netherlands)?

Post by international001 » Wed Oct 10, 2018 4:58 am

galeno wrote:
Tue Oct 09, 2018 5:56 pm
I was stretching for the "no MBS" excuse. You're right. And I really don't mind them. But pure US treasuries and pure US corps LOOKS cleaner. It's simpler. If Ireland Vanguard had a TBM ETF like Ireland Ishares I'd go for it. I love simplicity.

Regarding AGGH (my region's Total World Aggregate Bond ETF) right now we're staying with USA USD domiciled bonds. We get higher yields. Lower durations. Better credit ratings. USD is still the world's dominant currency. Also AGGH is an accumulating ETF. I prefer distributing ETFs.

The aggregate world bond ETF
Which is your currency? For EUR, you need a euro hedged etf for bonds. Otherwise it's lots of risk with little return.
Which fund are you using?
If you have the choice of an accumulation etf/fund, why not to use it? Unless you plan to always spend exactly the distribution amount, it's worth it.

international001
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Re: Bond ETF from Europe (the Netherlands)?

Post by international001 » Wed Oct 10, 2018 5:11 am

longvista wrote:
Tue Oct 09, 2018 10:39 am


Yes. Do not slice-n-dice. Buy a total world stock ETF for your equity portion: VWRD or (iShares SWDA + EIMI). Keep it simple.
Problem with slice-n-dice is rebalancing.
But it seems that soon some europeans brokers will allow you to move money between ETF tax free (Same that currently with funds)

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Lauretta
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Re: Bond ETF from Europe (the Netherlands)?

Post by Lauretta » Wed Oct 10, 2018 5:21 am

international001 wrote:
Wed Oct 10, 2018 5:11 am
longvista wrote:
Tue Oct 09, 2018 10:39 am


Yes. Do not slice-n-dice. Buy a total world stock ETF for your equity portion: VWRD or (iShares SWDA + EIMI). Keep it simple.
Problem with slice-n-dice is rebalancing.
But it seems that soon some europeans brokers will allow you to move money between ETF tax free (Same that currently with funds)
Do you know which brokers?
When everyone is thinking the same, no one is thinking at all

TedSwippet
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Re: Bond ETF from Europe (the Netherlands)?

Post by TedSwippet » Wed Oct 10, 2018 6:11 am

international001 wrote:
Wed Oct 10, 2018 5:11 am
But it seems that soon some europeans brokers will allow you to move money between ETF tax free (Same that currently with funds)
I don't follow this.

Depending on the investor's country of residence, a switch from one ETF to another might recognise a taxable capital gain which that investor would then have to report and pay tax on to their country's fisc. But it is the investor's country of residence that controls this. The selection of broker holding the ETFs plays no part in it.

I suppose it is possible that a broker based in a given country might enforce that country's national tax laws on resident investors, perhaps including some notion of capital gains taxes, but that would be an exception rather than a general rule.

Sinsji
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[The Three-Fund Portfolio - Netherlands]

Post by Sinsji » Wed Oct 10, 2018 6:51 am

[Split into a new thread from: The Three-Fund Portfolio --admin LadyGeek]

[Updated post, see below. --admin LadyGeek]

Being relatively new to allocating my savings to index funds, I got a few questions. After an extra study I just restarted my working. I've got about 13 k in savings. No car. Renting an apartment attractively. I intend to put money aside each month for savings, possibly about 500,- euro.

In Holland both iShares and Vanguard ETFs are available. For Vanguard it's to find out the actual options available through my broker (deGiro). I found iShares more insightful so far, regarding holdings, geography, distribution policy etc.
These ETF's are on my 'shortlist':

Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 (covers China, Brazil, SA, India, Mexico among others) Expense ratio 0.18%
2. iShares Core S&P 500 UCITS ETF IE00B5BMR087 Expense ratio 0.07%
3. iShares MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80 Expense ratio 0.12% (covers Scandinavia, UK, Western Europe)
4. iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 Expense ratio 0.20%
5. iShares MSCI USA Small Cap UCITS ETF IE00B3VWM098 Expense ratio 0.43%

Bonds:
1. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years

For Bonds I was advised to look instead at in Europe:
- 50% VETY + 50% VECP. (TBM ETF in Euros is IUAG)
- US 'originals' are: 50% VDTY + 50% VDCP. (TBM ETF in USD is SUAG)

It was strongly advised to replace stock nr 2 till 5 with something like iShares Core MSCI World UCITS ETF to simplify the process.

The possible holdings would be:
Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 TER 0.18%
2. iShares Core MSCI World UCITS ETF IE00B4L5Y983 TER 0.2%
Bonds (a or b):
3a. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years (Hedged)
3b. 50% VETY + 50% VECP

Questions regarding this policy are:
- the individual region ETFs contain more holdings on aggregate and have lower expense ratio's
* doesn't this allow more diversification and lower cost?
- I though accumulating funds would be more efficient? Or does it only depend on (Dutch) tax law?
- Does dividend payment has benefits besides hearing the money 'ring'?
- Any good websites that shows Vanguard alternatives to iShares in EUROPE!?

Any advice is welcome!

Found good advise on the Wiki as well, but the ones suggested are not available at my stockbroker it seems:
* iShares Core S&P Total Market ETF (ITOT)
* iShares Core MSCI Total International Stock ETF (IXUS)
* iShares Core Total U.S. Bond Market ETF (AGG)
Last edited by Sinsji on Wed Oct 10, 2018 3:45 pm, edited 1 time in total.

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Re: Bond ETF from Europe (the Netherlands)?

Post by international001 » Wed Oct 10, 2018 9:22 am

TedSwippet wrote:
Wed Oct 10, 2018 6:11 am
international001 wrote:
Wed Oct 10, 2018 5:11 am
But it seems that soon some europeans brokers will allow you to move money between ETF tax free (Same that currently with funds)
I don't follow this.

Depending on the investor's country of residence, a switch from one ETF to another might recognise a taxable capital gain which that investor would then have to report and pay tax on to their country's fisc. But it is the investor's country of residence that controls this. The selection of broker holding the ETFs plays no part in it.

I suppose it is possible that a broker based in a given country might enforce that country's national tax laws on resident investors, perhaps including some notion of capital gains taxes, but that would be an exception rather than a general rule.
Of course. You are always correct ;-)
I didn't explain properly. It depends on the country of residence laws. Spain just starting allowing it. Now it's a problem of brokers offering the service. Unfortunately it's not an automatic

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Re: Bond ETF from Europe (the Netherlands)?

Post by BeBH65 » Wed Oct 10, 2018 9:33 am

The Spain case,
Wasn't this within some kind of "wrapper" account (maybe a "retirement" account or an "insurance" account) ?
the movelment in and out of that "wrapper" would be monitored and taxed (similar to an IRA in the US?)
If I remember correctly there was a yearly cost to such account that was higher then the ER of the ETFs.

What are the other characteristics and constraints of such account in Spain?

As mentioned before, please do not refer to practices are laws that would be "EUropean" . For fiscal and taxation legislation EUrope does not really exist. Every country is autonomous.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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Re: The Three-Fund Portfolio

Post by steve321 » Wed Oct 10, 2018 9:51 am

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
Being relatively new to allocating my savings to index funds, I got a few questions.

In the Netherlands both iShares and Vanguard ETFs are available through broker 'deGiro'. For Vanguard it's kinda challenging to read more about the ETFs available from Europe (NL). I found iShares more insightful so far, regarding holdings, geography, distribution policy etc.
These ETF's are on my list:

Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 (covers China, Brazil, SA, India, Mexico among others) Expense ratio 0.18%
2. iShares Core S&P 500 UCITS ETF IE00B5BMR087 Expense ratio 0.07%
3. iShares MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80 Expense ratio 0.12% (covers Scandinavia, UK, Western Europe)
4. iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 Expense ratio 0.20%
5. iShares MSCI USA Small Cap UCITS ETF IE00B3VWM098 Expense ratio 0.43%

Bonds:
1. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years

For Bonds someone advised to look instead at:
1. VTDY > can't find this one based on abbreviation...
2. VDCP (Vanguard USD Corperate Bond ETF)

It was advised to replace nr 2-5 from the stock ETF with something like iShares Core MSCI World UCITS ETF.

The new holding would be like:
Stocks:
1. iShares Core MSCI EM IMI UCITS ETF IE00BKM4GZ66 TER 0.18%
2. iShares Core MSCI World UCITS ETF IE00B4L5Y983 TER 0.2%
Bonds (a or b):
3a. iShares Global Aggregate Bond UCITS ETF IE00BZ043R46 Expense ratio 0.10% Weighted age to maturity: 8.65 years (Hedged)
3b. 50% VTDY + 50% VDCP

Some questions before I change my 'policy':
- the individual ETFs contain more holdings on aggregate, doesn't this allow more diversification?
- the individual ETF have a slightly lower total expense ratio
- anyone familiar with Dutch equity tax law? I though accumulating funds would be more tax efficient?
- any clear websites that shows Vanguard alternatives to iShares in EUROPE?

(Being impressed by value investing, I'm a bit worried that ETFs are some sort of self perpetuating machines. They sell holdings when everyone sells for example?)

EDIT:
Found good advise on the Wiki as well:
* iShares Core S&P Total Market ETF (ITOT)
* iShares Core MSCI Total International Stock ETF (IXUS)
* iShares Core Total U.S. Bond Market ETF (AGG)

Will keep me busy. But any advice is welcome!
Did you check that Degiro is safe? They seem to have very few clients, I am not sure how reliable this broker is.
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Re: The Three-Fund Portfolio

Post by Sinsji » Wed Oct 10, 2018 12:43 pm


Did you check that Degiro is safe? They seem to have very few clients, I am not sure how reliable this broker is.
They have over 300.000 accounts according to their site and services in 18 countries.
They do not have a bank license which might be a problem regarding deposit protection from the government in bankruptcy. They state all customer assets are secured in a holding separate from the company itself. Still I do consider to open an account with a bank as well.

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Re: Portfolio advise (30 something) from NL

Post by galeno » Wed Oct 10, 2018 1:42 pm

It was probably me who advised 50% VDTY + 50% VDCP. I count in USD. A TBM ETF in USD is SUAG.

If you count in Euros then you want 50% VETY + 50% VECP. A TBM ETF in Euros is IUAG.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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Re: Bond ETF from Europe (the Netherlands)?

Post by ICH » Wed Oct 10, 2018 2:15 pm

Sinsji wrote:
Wed Oct 10, 2018 3:25 am
galeno wrote:
Tue Oct 09, 2018 5:56 pm
I was stretching for the "no MBS" excuse. You're right. And I really don't mind them. But pure US treasuries and pure US corps LOOKS cleaner. It's simpler. If Ireland Vanguard had a TBM ETF like Ireland Ishares I'd go for it. I love simplicity.

Regarding AGGH (my region's Total World Aggregate Bond ETF) right now we're staying with USA USD domiciled bonds. We get higher yields. Lower durations. Better credit ratings. USD is still the world's dominant currency. Also AGGH is an accumulating ETF. I prefer distributing ETFs.

The aggregate world bond ETF
ICH wrote:
Tue Oct 09, 2018 2:06 pm
Can't argue for the lower ER.
Why eliminate Mortgage Backed Securities? I don't think they 're riskier than the corporates.
Can't argue about Vanguard vs ishares preference. However Vanguard lately launched total world aggregate bond ETF in the US and isharesb is having it in Europe for more than a year now. Check the expense ratio of 0.10%
https://www.ishares.com/uk/individual/e ... dist)-fund
Sorry which ETF is VTDY, i.e. the full name? I can't find it.
Oh, there is a typo. Galeno should type VUTY. It's the US treasury bond ETF.

https://www.vanguardinvestor.co.uk/inve ... _fund_link

Note that Galeno is not a Eurozone investor. For you, better to go with one of DJN proposals. Global aggregate or global government, hedged to the euro, distributing or accummulating depending in how your government taxes the dividends and capital gains.
If you want to stay eurozone only bonds (acceptable also) then you can go with the Eurozone Vanguard ETFs if distributing is better, or something similar from ishares if you want accummulating.

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Re: Bond ETF from Europe (the Netherlands)?

Post by galeno » Wed Oct 10, 2018 2:22 pm

Sorry for the typo. It's VDTY. Not VTDY. We're NOT Eurozone investors. We're USD investors.

When I go on the Vanguard non-USA site. First I click on "Americas" then click on "Caribbean and Offshore". Then I click on "ETFs".

On the non-USA iShares site I click on "United Kingdom"

I never click anywhere else.

I don't look at any ETFs other than Ireland Vanguard and Ireland iShares. I prefer Ireland Vanguard over Ireland iShares.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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Re: Bond ETF from Europe (the Netherlands)?

Post by ICH » Wed Oct 10, 2018 2:46 pm

galeno wrote:
Wed Oct 10, 2018 2:22 pm
Sorry for the typo. It's VDTY. Not VTDY. We're NOT Eurozone investors. We're USD investors.

When I go on the Vanguard non-USA site. First I click on "Americas" then click on "Caribbean and Offshore". Then I click on "ETFs".

On the non-USA iShares site I click on "United Kingdom"

I never click anywhere else.

I don't look at any ETFs other than Ireland Vanguard and Ireland iShares. I prefer Ireland Vanguard over Ireland iShares.
I check on the Vanguard UK site.
Apparently VDTY is the ticker for trading in USD. VUTY is traded in GBP or EUR or CHF. As always, tickers create some confusion :-)

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Re: Portfolio advise (30 something) from NL

Post by LadyGeek » Wed Oct 10, 2018 4:32 pm

Sinsji had a duplicate post, which I have removed. There was one reply (galeno) which I have merged into here.
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Re: Bond ETF from Europe (the Netherlands)?

Post by galeno » Wed Oct 10, 2018 5:14 pm

Where I go on non-USA Vanguard (Americas: Caribbean and Offshore) it's VDTY for USD and VETY for Euros.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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Re: [The Three-Fund Portfolio - Netherlands]

Post by ICH » Thu Oct 11, 2018 9:07 am

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
Questions regarding this policy are:
- the individual region ETFs contain more holdings on aggregate and have lower expense ratio's
* doesn't this allow more diversification and lower cost?
I am not sure what the difference in aggregate number of holdings is, but it will be trivial. The 2 ETFs with developed and emerging markets hold a total of 1,643+2,045=3,688 different securities, covering approx 45 countries or so. It's diversified enough. In the individual ETF list, I am not sure you 're capturing Canada for example.

For the cost, I am certain it will be cheaper to go for the simple version.
1. You are comparing expense ratios only. What's the difference if you add the effect of tax withholding? It will be smaller. Check this page: https://www.bogleheads.org/wiki/Nonresi ... Irish_ETFs
2. The less ETFs you have, the less trading costs you will be paying.
3. Point #2 is particularly relevant to rebalancing.
4. Assuming you want to follow a global market cap approach, you will be rebalancing more often (even more costs).
5. You will be tempted to change your asset allocation. The less moving parts you have, the easier it is to stay the course (simplicity)

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
- I though accumulating funds would be more efficient? Or does it only depend on (Dutch) tax law?
Depends on Dutch tax law. If dividends are taxed if distributed but not taxed if accummulated, it is a no-brainer.
If you were in the UK, you would prefer distributing.

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
- Does dividend payment has benefits besides hearing the money 'ring'?
It's a nice sound :happy . It 's relevant to taxation, as stated above.
(Note: if you are using Degiro, there is an extra charge every time a dividend is credited to your account)

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
- Any good websites that shows Vanguard alternatives to iShares in EUROPE!?
https://www.vanguardinvestor.co.uk/what ... f-products
https://www.justetf.com/en/free.html

Sinsji wrote:
Wed Oct 10, 2018 6:51 am
Found good advise on the Wiki as well, but the ones suggested are not available at my stockbroker it seems:
* iShares Core S&P Total Market ETF (ITOT)
* iShares Core MSCI Total International Stock ETF (IXUS)
* iShares Core Total U.S. Bond Market ETF (AGG)
Ignore these ETFs. These are US domiciled and currently not available to EU brokers. In addition there is the US estate tax + 30% tax withholding on dividends. Check the link: https://www.bogleheads.org/wiki/Outline ... _domiciles

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Re: The Three-Fund Portfolio

Post by ICH » Thu Oct 11, 2018 9:31 am

Sinsji wrote:
Wed Oct 10, 2018 12:43 pm

Did you check that Degiro is safe? They seem to have very few clients, I am not sure how reliable this broker is.
They have over 300.000 accounts according to their site and services in 18 countries.
They do not have a bank license which might be a problem regarding deposit protection from the government in bankruptcy. They state all customer assets are secured in a holding separate from the company itself. Still I do consider to open an account with a bank as well.
I have opened an account with them to see how it is. I use the custody account, as I do not want them touching my securities.
It is by far the cheapest you can find.
They have become quite popular over the years, so number of clients is not an issue. If they go down, there will be plenty of people with problems :D
There is a guarantee by the Dutch Investor Protection Scheme covering 20k EUR. Of course the limit is low, but it is unfortunately common in Europe. There is no SIPC 500k USD like the US.
They also protect you further by automatically taking the cash from your account and putting it in a money market fund. Hence it becomes a security and should be in a seggragated account
I consider it a + that they are not a bank. It's easier for a stressed bank to put their hands on the honey...
I have found only one negative issue which I believe is resolved now: http://www.amsterdamtrader.com/2015/10/ ... ients.html

For the bank option: Most banks I know of in Europe use the Interactive Brokers platform. Check the costs and it may be more economical to open directly with them instead of using the bank as intermediary.

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Re: Portfolio advise (30 something) from NL

Post by BeBH65 » Thu Oct 11, 2018 10:01 am

Hello Sinsji,

Simplicity is one of the principles of Bogleheads investing (see wiki).
You are starting your investment carreer with a small initial amoutt and minimal monthly contributions.

One fund for your equity and one investment for the stable portion is sufficient for now.
- For equity take IWDA or VWRL. Group your purchases per quarter or ever 4 months.
- For the stable part of your portfolio look at IEAG, IEGA, AGGH. But it might even be beter to keep it in a saving account: what is the interest percentage that you can get on savings?
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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Re: Portfolio advise (30 something) from NL

Post by Sinsji » Thu Oct 11, 2018 11:29 am

@ICH and BeBH65.

Thanks for the advise.
For the taxes: below 30k of assets (stocks, housing) capital gains are not a problem in Holland. Above this level, the government will tax and they assume you make 4% gains annually, they don't examine (which is nice if your profits are higher). Currently government considers to cancel dividend taxes, but there is a lot of discussion about this topic. So at the moment dividends are taxed and I think it is more efficient to accumulate...(?)

Interest on savings is about 0.00% maybe a bit above.

Most Brokers and Banks in NL charge for 'inactivity'. They earn from both trades and the account balance on regular base: a fixed number like 4-6 euro and a percentage. ING offers free trading of ETFs (they can't provide a list). For deGiro it's free to a limited nr/month for a subset of all ETF's, otherwise they charge 2-4 euro depending on the index.
Will take a look at interactive Brokers.

One more question:
- does it make sense to look at IWDE? This one is hegded.

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Re: Portfolio advise (30 something) from NL

Post by ICH » Thu Oct 11, 2018 1:05 pm

The European tax authorities are nuts! Anyway, that's not the topic.

If dividends are taxed AND the accummulated dividends are not taxed, obviously select accummulated ETFs. Forget what the government may or may not change in the future...

Zero interest on savings is typical at the moment in the Eurozone. You may get something with fixed term deposits.

IWDE: With an expense ratio of 0.55%, I 'd look the other way :-)

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Re: Portfolio advise (30 something) from NL

Post by LadyGeek » Thu Oct 11, 2018 3:08 pm

Sinsji - In order to give appropriate advice it is best to keep all of the information in one discussion. I have merged your earlier thread into here.
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Re: Bond ETF from Europe (the Netherlands)?

Post by Peppergrass » Fri Oct 12, 2018 9:05 pm

Sinsji wrote:
Tue Oct 09, 2018 8:58 am


(On the side with like 5% of my savings I still enjoy buying stocks :oops: based on my understanding of value investing. Got some job knowledge about tech and healthcare. Further make use of Joel Greenblats approach as well).
5% is not bad.. there really is no 'good" or "bad" because it's all theory and a little gamble... if we go into major depression for next 30 years, you would look like a fool compared to the guy in 90% bonds because he's scared.. vice versa.. another example is the SoftBank guy who took 25 million and believe made something like 20 billion.... it happens as some stocks explode 20,000% percent + .. to me you had a lot of great picks.. this is all theory but to me apple will follow Microsoft in returns and I believe apple to generate another 20,000% return in the next 20-30 years easily.. am I right or wrong, who knows..

there is few stocks that move the thousand dollar investor to millionaire but it happens and it happens enough I do believe people should have a little "play" as individual stocks.. the right ones are guaranteed to far far far far outperform the market, plain and simple. is It gambling.. isn't putting your money into a basket of stocks expecting them to return more to you just "because" ... nothing is guaranteed in life and we take calculated risk.. I don't think 5%is risky at all in my opinion....

I can tell you no one ever got super rich with index funds.. did they go broke, nope, but they didn't make a "killing" .. go look at the top billionaire list virtually half of them are because concentrated stock portfolios, plain and simple.. they didn't get there with index funds and bond funds..

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Re: Bond ETF from Europe (the Netherlands)?

Post by international001 » Wed Oct 17, 2018 11:43 am

BeBH65 wrote:
Wed Oct 10, 2018 9:33 am
The Spain case,
Wasn't this within some kind of "wrapper" account (maybe a "retirement" account or an "insurance" account) ?
the movelment in and out of that "wrapper" would be monitored and taxed (similar to an IRA in the US?)
If I remember correctly there was a yearly cost to such account that was higher then the ER of the ETFs.

What are the other characteristics and constraints of such account in Spain?

As mentioned before, please do not refer to practices are laws that would be "EUropean" . For fiscal and taxation legislation EUrope does not really exist. Every country is autonomous.
Retirement accounts are differnet
I'm talking to a plain investment account. Today, you don't have to pay taxes to exchange from fund A -> fund B. On top of this, most people use accumulation funds. So no taxes involved at all till you decide to retire your funds.

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Re: Bond ETF from Europe (the Netherlands)?

Post by TedSwippet » Wed Oct 17, 2018 1:02 pm

international001 wrote:
Wed Oct 17, 2018 11:43 am
Retirement accounts are differnet
I'm talking to a plain investment account. Today, you don't have to pay taxes to exchange from fund A -> fund B. On top of this, most people use accumulation funds. So no taxes involved at all till you decide to retire your funds.
So this is a recent development for residents of Spain? The OP lives in the Netherlands, so Spanish rules would be irrelevant to them.

If you want to discuss specific Spanish tax rules, please start a new thread rather than posting non sequiturs in this one.

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Re: Portfolio advise (30 something) from NL

Post by Sinsji » Thu Oct 18, 2018 2:25 pm

Okay so I came up with the following idea based on the input here and some reading:

Stocks (70%):
- 34.3% iShares Core MSCI Developed World accumulating (TER 0.2%) <- about 60% USA
- 21.6% iShares Core MSCI EM accumulating (TER 0.2%) <- about 30% China
- 8.10% iShares Developed World Small Cap (TER 0.35%) <- about 60% USA
- 6 % personal choice stocks (primarily tech, consumer stuff and health care)

Bonds (15%)
- 7% iShares Global Aggregate Bond UCITS ETF accumulating (TER 0.10%) -> EURO HEDGED
- 3% Vanguard EUR Corperate Bond (TER 0.12%)
- 3% Vanguard EUR Government Bond (TER 0.12%)
- 2% iShares US TIPS (TER 0.27%)

Property (7.5%)
- 3.75% iShares US Property Yield UCITS ETF Distr. (TER 0.4%)
- 3.75% iShares European Property Yield UCITS ETF Distr. (TER 0.4%)

Cash (7.5%)
- Euro's

Income/savings in euro's. Location is the Netherlands.

A few questions/points still :shock: :
- what is the best alternative to stocks? Bonds should match my investment horizon (?), but also read that I shouldn't bother and buy an aggregate ETF AND... I read that I should consider currencies in this allocation. Currently I'm motivated to save most of my income.
- The bond allocation still is hap hazard, see considerations above. I consider replacing the iShares stuff with the Vanguard US alternatives: both the Corperate and Government Bonds.
- The large cap and small cap allocation is about 75% - 25%
- For stocks the allocation to developed market is about 65% versus 35% in EM at this point.

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Re: [The Three-Fund Portfolio - Netherlands]

Post by BeBH65 » Thu Oct 18, 2018 2:47 pm

You are overthinking this, certainly based on this:
Sinsji wrote:
Wed Oct 10, 2018 6:51 am
I've got about 13 k in savings. I intend to put money aside each month for savings, possibly about 500,- euro.
Consider limiting yourself to the first equity fund and the first bond fund.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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Re: [The Three-Fund Portfolio - Netherlands]

Post by Sinsji » Fri Oct 19, 2018 12:14 am

BeBH65 wrote:
Thu Oct 18, 2018 2:47 pm
You are overthinking this, certainly based on this:
Sinsji wrote:
Wed Oct 10, 2018 6:51 am
I've got about 13 k in savings. I intend to put money aside each month for savings, possibly about 500,- euro.
Consider limiting yourself to the first equity fund and the first bond fund.
Thanks. Definitely will change the bond funds.
Any good sources that can stimulate my thinking on bonds? And how to understand currency risk?
The goal of the savings is to let it grow and I thought to start with coverage of small cap and EM doesn't hurt :happy .
Further I think property is important to include, this could be genetic... (family is keen on owning instead of renting).

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Re: Portfolio advise (30 something) from NL

Post by BeBH65 » Fri Oct 19, 2018 12:33 am

- Property is already included in the other stock funds
- You propose positions of 2%: Generally it is accepted that positions of less the 5% are too small to significallny change the outcome of the total portfolio. In you case this will be 260 Euro, as a percentage, your transactions costs will be significant
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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Re: Portfolio advise (30 something) from NL

Post by international001 » Mon Oct 22, 2018 10:00 am

around 1/3 of your stocks in EM is to much. Folks usually have ~10%. I would not go beyond 20%
I think there is no need of bonds being other than AGGH. No reason to tilt towards Europe, as long as they are hedged in EUR.

For currency risk, it doesn't matter much for stocks, since they have a higher volatility than currency. But for bonds, it's better to have it hedged, since in general they have lower volatility than currency.

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