[One Year Later] Core portfolio for retirement in Europe - Living in Singapore

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EUR-SGD
Posts: 13
Joined: Sat Aug 18, 2018 12:49 am

[One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by EUR-SGD » Mon Aug 12, 2019 9:38 am

[Topic split from earlier thread, original linked below. -- Moderator oldcomputerguy]

Hi All,

It has been a year ago since I started this thread and that I started investing according to the Bogle-principles. I like the fact that I buy at fixed times and that I do not have to think about timing. Funnily enough all experts advised strongly against equities (they had been rising for 10 years at the time) and definitely against bonds as interest was bound to go up. The overall portfolio made about 4.3% for the first year while the bonds portion made 5.5% - goes to show you just never can tell.

I started with the following portfolio: 30% bonds, 10% REITS, 60% global equity trackers. Only the bonds are hedged. I use Interactive Brokers - which is the cheapest option in Singapore.

30% AGGH - iShares Core Global Aggregate Bond UCITS ETF - EUR Hedged (LSE - London Stock Exchange) - Accumulating
10% IPRP - iShares European Property Yield UCITS ETF - EUR (AEB - Amsterdam Exchange)
27% IWDA - iShares Core MSCI World UCITS ETF - EUR (AEB) - Accumulating (MSCI World index, excluding EM)
3% EMIM - Emerging Markets - iShares Core MSCI EM IMI UCITS ETF (AEB) - Accumulating
30% VWRL - Vanguard (FTSE World Index)

VWRL includes Emerging Markets, IWDA does not.
After 6 month I started to simplify the portfolio and since then I buy each month 54% IWDA and 6% EMIM. The liquidity in these funds seems much larger, resulting in closer bid-offer spreads.

I would like to hear your opinions on the following questions:
  • Should I cash in on the AGGH portion now Brexit is becoming more likely - or is the common view that LSE traded ETFs will still be accessible for EU Citizens (without detrimental tax consequences?)
  • What would be a good replacement for AGGH? - Keen to hear suggestions
  • I work with the assumptions that EM is 10% of the global market but I believe the emerging market share has recently increased? How can I accurately track/determine the appropriate global market share for Emerging Markets?
  • Was the IWDA/VWRL diversification a better portfolio approach or does IWDA and EMIM suffice?
  • The IPRP portion has been the most volatile and least performing portion - I chose additional real estate exposure because I do not own real estate in The Netherlands. Is this an appropriate approach or is it leading to unnecessary exposure and volatility? - keen to hear your views.
The reason for the above questions is that I would like to fine tune my portfolio for the coming period/next year(s). The last time you all really helped me with your comments. Looking forward to your replies and please don't be shy to give your honest feedback/opinion!

Regards,

glorat
Posts: 158
Joined: Thu Apr 18, 2019 2:17 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by glorat » Mon Aug 12, 2019 9:15 pm

EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
  • I work with the assumptions that EM is 10% of the global market but I believe the emerging market share has recently increased? How can I accurately track/determine the appropriate global market share for Emerging Markets?
  • Was the IWDA/VWRL diversification a better portfolio approach or does IWDA and EMIM suffice?
I can only answer these two.

See https://www.msci.com/world. IWDA covers 88% of the world and EM covers the remaining 12%

IWDA/VWRL have huge overlap so don't diversify. Was that a typo? The IWDA/EIMI combo is a very sensible way to cover the full stock market. (VWRL is also good but misses some small caps and is a little more expensive than IWDA/EIMI)

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BeBH65
Posts: 1461
Joined: Sat Jul 04, 2015 7:28 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by BeBH65 » Tue Aug 13, 2019 3:13 am

EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
[Topic split from earlier thread, original linked below. -- Moderator oldcomputerguy]

Hi All,

It has been a year ago since I started this thread and that I started investing according to the Bogle-principles. I like the fact that I buy at fixed times and that I do not have to think about timing. Funnily enough all experts advised strongly against equities (they had been rising for 10 years at the time) and definitely against bonds as interest was bound to go up. The overall portfolio made about 4.3% for the first year while the bonds portion made 5.5% - goes to show you just never can tell.
Show you how "expert" the "experts" are + I am not sure that this is what the "experts" on this forum advised.
EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
I started with the following portfolio: 30% bonds, 10% REITS, 60% global equity trackers. Only the bonds are hedged. I use Interactive Brokers - which is the cheapest option in Singapore.

30% AGGH - iShares Core Global Aggregate Bond UCITS ETF - EUR Hedged (LSE - London Stock Exchange) - Accumulating
10% IPRP - iShares European Property Yield UCITS ETF - EUR (AEB - Amsterdam Exchange)
27% IWDA - iShares Core MSCI World UCITS ETF - EUR (AEB) - Accumulating (MSCI World index, excluding EM)
3% EMIM - Emerging Markets - iShares Core MSCI EM IMI UCITS ETF (AEB) - Accumulating
30% VWRL - Vanguard (FTSE World Index)

VWRL includes Emerging Markets, IWDA does not.
After 6 month I started to simplify the portfolio and since then I buy each month 54% IWDA and 6% EMIM. The liquidity in these funds seems much larger, resulting in closer bid-offer spreads.

I would like to hear your opinions on the following questions:
  • Should I cash in on the AGGH portion now Brexit is becoming more likely - or is the common view that LSE traded ETFs will still be accessible for EU Citizens (without detrimental tax consequences?)
There is no reason to think that one would not be able to buy anymore on the London Stock Exchange, nor that the costs would go up.
EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
  • What would be a good replacement for AGGH? - Keen to hear suggestions
  • I work with the assumptions that EM is 10% of the global market but I believe the emerging market share has recently increased? How can I accurately track/determine the appropriate global market share for Emerging Markets?
The regional weight constantly changes, as regions perform well, or less well.
The Credit Suisse Yearbook typically has a graph showing that - See also viewtopic.php?t=274302
- below is an older post on that:
siamond wrote:
Fri Mar 30, 2018 11:30 am
Maybe it would be good to also add a historical perspective, namely Figure 2 of the Credit Suisse publication? What do you think? (click to see a larger display)

Image
The good thing: as the regional weights changes the fund weight IWDA/EMIM in your portfolio changes as well. So as an investor your portfolio continues to match the real-life regional weight. Unless you rebalance to a fixed weight :-)

EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
  • Was the IWDA/VWRL diversification a better portfolio approach or does IWDA and EMIM suffice?
IWDA+EMIM is similar (contains the same stocks as) to VWRL or its new accumulating variant VWRA - the first combination has a slighthly lower ER.
EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
  • The IPRP portion has been the most volatile and least performing portion - I chose additional real estate exposure because I do not own real estate in The Netherlands. Is this an appropriate approach or is it leading to unnecessary exposure and volatility? - keen to hear your views.
REIT is known to show higher volatile. Your stock funds already include the same REITS at market weight. Overweighting REITS is a personal choice.
It is important to remember that in a good diversified portfolio the different element will evolve independently - one will zig, while the other will zag.
EUR-SGD wrote:
Mon Aug 12, 2019 9:38 am
The reason for the above questions is that I would like to fine tune my portfolio for the coming period/next year(s). The last time you all really helped me with your comments. Looking forward to your replies and please don't be shy to give your honest feedback/opinion!

Regards,
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

Topic Author
EUR-SGD
Posts: 13
Joined: Sat Aug 18, 2018 12:49 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by EUR-SGD » Tue Aug 13, 2019 8:23 am

Thanks BeBH65!

Very useful like always.
Show you how "expert" the "experts" are + I am not sure that this is what the "experts" on this forum advised.
The people on this forum advised quite the opposite indeed. I was referring to the financial advisers from the banks who all came with a high expense ratio solutions (and therefore high commission for themselves I guess.)
Should I cash in on the AGGH portion now Brexit is becoming more likely - or is the common view that LSE traded ETFs will still be accessible for EU Citizens (without detrimental tax consequences?)

There is no reason to think that one would not be able to buy anymore on the London Stock Exchange, nor that the costs would go up.
On your comment above on AGGH/LSE: would you mind sharing what makes you so sure of this?

Kind regards,

User avatar
BeBH65
Posts: 1461
Joined: Sat Jul 04, 2015 7:28 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by BeBH65 » Tue Aug 13, 2019 9:10 am

EUR-SGD wrote:
Tue Aug 13, 2019 8:23 am
Should I cash in on the AGGH portion now Brexit is becoming more likely - or is the common view that LSE traded ETFs will still be accessible for EU Citizens (without detrimental tax consequences?)

There is no reason to think that one would not be able to buy anymore on the London Stock Exchange, nor that the costs would go up.
On your comment above on AGGH/LSE: would you mind sharing what makes you so sure of this?

Kind regards,
I do not see why the LSE or Ishared Europe would kill the goose with the Golden eggs.

If you are really concerned you could by the same fund on the Milan exchange, or the Frankfurt XSWW exchange.
- iShares Global Aggregate Bd ETF EUR HAcc LSE:AGGH EUR
- iShares Global Aggregate Bd ETF EUR HAcc EUR MIL:AGGH EUR
- iShares Global Aggregate Bd ETF EUR HAcc EUR XSWX:AGGH EUR
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

ohai
Posts: 918
Joined: Wed Dec 27, 2017 2:10 pm

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by ohai » Tue Aug 13, 2019 9:19 am

OP, how old are you or what is your target retirement date? This should determine your allocation, rather than market news.

Topic Author
EUR-SGD
Posts: 13
Joined: Sat Aug 18, 2018 12:49 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by EUR-SGD » Tue Aug 13, 2019 10:10 am

Hi Ohai,

Agreed. I am 46 with an aimed retirement age of 65-67.

Topic Author
EUR-SGD
Posts: 13
Joined: Sat Aug 18, 2018 12:49 am

Re: [One Year Later] Core portfolio for retirement in Europe - Living in Singapore

Post by EUR-SGD » Tue Aug 13, 2019 10:19 am

Thanks BeBH65,
If you are really concerned you could by the same fund on the Milan exchange, or the Frankfurt XSWW exchange.
- iShares Global Aggregate Bd ETF EUR HAcc LSE:AGGH EUR
- iShares Global Aggregate Bd ETF EUR HAcc EUR MIL:AGGH EUR
- iShares Global Aggregate Bd ETF EUR HAcc EUR XSWX:AGGH EUR
I actually buy them through Frankfurt indeed (IBIS2 exchange on Interactive Brokers platform) but thought that the underlying exposure will still be at LSE as that is the exchange were the head/parent fund is quoted?

Having said that - I agree with you that it is very unlikely that either the UK or LSE (or iShares for that matter) would limit their liquidity by putting in extra trade hurdles.

Regards,

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