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limster

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Good question. I think there's two factors that drive it:

1) Economic integration. Singapore's economy is linked far more closely with the economies of China, Malaysia and Indonesia than with, say, the economy of Australia or Germany or the USA;
2) Traders' instinct. As a corollary to #1, if people see China's economy sneezing (for example), they're going to assume that all of the south-east Asian economies will take a hit from that - whether it's true or not.

WtepvRl.jpg

EEM= Emerging markets
EWA= Australia
EWS = Singapore
VGK = Europe

Australia and Europe ETF seem to have the same or higher correlation to EEM compared to EWS in US$ terms
 

bobobob

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WtepvRl.jpg

EEM= Emerging markets
EWA= Australia
EWS = Singapore
VGK = Europe

Australia and Europe ETF seem to have the same or higher correlation to EEM compared to EWS in US$ terms

That's an interesting table, may I know where it's from? Also, is 6 months too short a time frame to draw a conclusion from this?

Taking a look at STI's top holdings, I see:

DBS - 16.65%
OCBC - 13.31%
UOB - 11.14%
HONGKONG LAND HOLDINGS - 3.5%
THAI BEVERAGE - 2.96%

All of these companies do business in China, Hongkong, Indonesia, India, Thailand. All of these are emerging markets. Can we say that STI should track emerging market indices, based on this?
 

revhappy

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There are certain characteristics of emerging markets, like high growth, high inflation, high interest rates, volatile etc BRICKS along with few others like Indonesia, Poland, Vietnam etc fit this definition perfectly.

Singapore can be bunched with Thailand, Malaysia, Korea, Australia, UK etc.

If you have to choose one deciding factor , that would be interest rates.


Sent from Xiaomi REDMI NOTE 4 using GAGT
 
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Maeda_Toshiie

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I am following msci world allocation%, excluding hk.

I am doing vusd/cspx, veud, 3126, XIU and IOZ. That is a tighter fit than what you mentioned. SJPA has less favourable dwt considerations than 3126, and I couldn't locate a proper cpxj on IB.

Is there anything you are concerned about?

I've been gathering ETF information for portfolio construction. This table is getting a bit ridiculously long even on the equities side.

World:
VXUS Vanguard Total International Stock ETF
VWRD/VWRL Vanguard FTSE All-World UCITS ETF
IWDA/SWDA iShares Core MSCI World UCITS ETF
EIMI/EMIM iShares Core MSCI EM IMI UCITS ETF
WDSC/WOSC/ZPRS SPDR® MSCI World Small Cap UCITS ETF
VFEM Vanguard FTSE Emerging Markets UCITS ETF
VWO Vanguard FTSE Emerging Markets ETF

US S&P500
SPY SPDR S&P 500 ETF Trust
VOO Vanguard S&P 500 ETF
VTI Vanguard Total Stock Market ETF
VUSD/VUSA Vanguard S&P 500 UCITS ETF
CSPX iShares Core S&P 500 UCITS ETF
(US small ETFs not included)

Europe?
ISX5/CS51/CSX5 iShares Core EURO STOXX 50 UCITS ETF
XSX6 db x-trackers Stoxx® Europe 600 UCITS ETF
EXSA iShares STOXX Europe 600 UCITS ETF (DE)
VEUD/VEUR FTSE Developed Europe UCITS ETF (VEUR)
EUN iShares STOXX Europe 50 UCITS ETF
SMEA/IMEA iShares MSCI Europe UCITS ETF EUR (Acc)
CEU/ CEU1/IEMU iShares MSCI EMU UCITS ETF
EMUE SPDR® MSCI EMU UCITS ETF

Canada:
XIU iShares S&P/TSX 60 Index ETF
XIC iShares Core S&P/TSX Capped Composite
ZCN BMO S&P/TSX Capped Composite
VCE Vanguard FTSE Canada Index
VCN Vanguard FTSE Canada All Cap Index

APAC/Australia/ANZAC
CPXJ/CPJ1 iShares Core MSCI Pacific ex-Japan UCITS ETF
IOZ iShares Core S&P/ASX 200 ETF

Japan:
IJPA/SJPA iShares Core MSCI Japan IMI UCITS ETF
3126 Vanguard FTSE Japan Index ETF
VDJP/VJPN Vanguard FTSE Japan UCITS ETF

Choyna (it's not developed, but it has a big internal market)
XCS6/XCX6 db x-trackers MSCI China Index UCITS ETF (DR)
3010/9010/83010 iShares Core MSCI AC Asia ex Japan Index ETF

Remaining information on TER, domicile, currency, dividends not included.
 
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Maeda_Toshiie

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[2/2]

Essentially, I'm looking at portfolio construction based on economic bloc for the developed countries. I assume that developed economies are more mature with significant internal consumption and less volatile than developing ones. Choyna is not classified as developed and is an export led economy, but it is big enough to warrant being an economic bloc on its own. For the developing ones, there seems to be less interest in them by investors and I'm OK with lumping them in EIMI for now.

I'm not sure how much the Canucks correlate with the US, or how NZ correlated with Straya.



I don't feel trading volume is particularly important, as compared to fund size.
 

w1rbelw1nd

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Anyway, good job being annoying with the choicd of using terms like choyna and Canucks, it's fairly effective. :)

I don't get your point of construction based on economic blocs, since a typical broad etf would have factored that in, no? Seems like what you need can be done with a simple iwda/eimi allocation.

Just to reiterate, my purpose is to minimise TER, minimise DWT, and have greater diversification in terms of sheer number of underlying companies I own.

[2/2]

Essentially, I'm looking at portfolio construction based on economic bloc for the developed countries. I assume that developed economies are more mature with significant internal consumption and less volatile than developing ones. Choyna is not classified as developed and is an export led economy, but it is big enough to warrant being an economic bloc on its own. For the developing ones, there seems to be less interest in them by investors and I'm OK with lumping them in EIMI for now.

I'm not sure how much the Canucks correlate with the US, or how NZ correlated with Straya.



I don't feel trading volume is particularly important, as compared to fund size.
 

JYJZERO

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Rebalancing in a POSB Invest-Saver account is a little tricky, for obvious reasons (you can't really sell-and-buy without a little bit of work). That said, you don't need to be too picky with your rebalancing: if you're out by a couple hundred dollars, that's totally fine; at that level I'd just say "don't worry about rebalancing this time around".

Hey Shiny, why do you say it's tricky to rebalance using POSB Invest Saver? Sorry if I'm missing something really obvious here, haven't yet gone along my investing journey long enough to need to rebalance haha
 

Maeda_Toshiie

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Anyway, good job being annoying with the choicd of using terms like choyna and Canucks, it's fairly effective. :)

I don't get your point of construction based on economic blocs, since a typical broad etf would have factored that in, no? Seems like what you need can be done with a simple iwda/eimi allocation.

Just to reiterate, my purpose is to minimise TER, minimise DWT, and have greater diversification in terms of sheer number of underlying companies I own.

World wide ETFs are cap weighted according to constituent companies. My thinking is to be able to weigh the different regions with my own weightage, eg. equal. I know this goes against the tenant of Bogleheads, but I may, given certain circumstances, may want to reduce exposure to one region.
 
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Maeda_Toshiie

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Hey Shiny, why do you say it's tricky to rebalance using POSB Invest Saver? Sorry if I'm missing something really obvious here, haven't yet gone along my investing journey long enough to need to rebalance haha

Well, such RSP do not trade like normal brokerage. You'd have to adjust the buy amount (or even change to sell) for that particular month for rebalancing, and then change the instructions again to go back to your regular schedule.
 

JYJZERO

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Well, such RSP do not trade like normal brokerage. You'd have to adjust the buy amount (or even change to sell) for that particular month for rebalancing, and then change the instructions again to go back to your regular schedule.

Oh I see. Okay I guess I still have a few months before my first rebalancing so I'll find out then :) thanks!
 

Pherenike

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Thanks ST and all the contributors in the thread! I'll be practising the 110 minus age rule and have set aside 82% for ETFs and 18% for A35. For the ETFs, half of it has gone to VWRD (instead of IWDA) as I prefer the emerging markets bit, and the other half will go into ES3 (haven't bought any yet as the market was closed today).

However, my partner thinks I should still diversify my ETF portfolio even further to reduce the impact from the US market should prices go down. (We just finished watching "Inside Job" and somehow he's got this notion that every 10 years something bad will happen to the stock market, especially since it's been doing well in recent years.) He suggested that I get another that focuses on China/emerging markets. I told him that VWRD tracks emerging markets (about 5%?), and STI too to some extent (can someone enlighten me on how STI does this please?). I understand his point about diversification but I don't want to get another ETF and find out later that it actually doesn't do anything for my portfolio and I end up incurring more fees and hassle.
 
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Shiny Things

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However, my partner thinks I should still diversify my ETF portfolio even further to reduce the impact from the US market should prices go down. He suggested that I get another that focuses on China/emerging markets. I told him that VWRD tracks emerging markets (about 5%?), and STI too to some extent (can someone enlighten me on how STI does this please?).

You can point out a couple of things:
1) All markets go down at one time or another; that’s why you diversify across countries, and diversify between stocks and bonds. The US is only about 20% of your portfolio, so you’re plenty diversified.
2) Yep, VWRD owns about 10% in emerging markets, so you already have an allocation to them. Emerging markets are riskier and more volatile than developed markets, so you don’t want to be too heavily allocated to them (even if you think, as I do, that EM stocks are generally solid investments).

To your question about the STI: I mentioned this upthread, but the general idea is that investors tend to group Singapore in with China and other emerging markets, so they tend to trade them together. That said, I saw those stats upthread as well showing that I might be wrong about Singapore’s correlations, so I’m going to take a look at that this weekend and see if I need to reevaluate my assumptions there.

I understand his point about diversification but I don't want to get another ETF and find out later that it actually doesn't do anything for my portfolio and I end up incurring more fees and hassle.

Yeah, exactly. If you bought an EM ETF, you’d be adding extra transaction costs, and extra exposure to EM stocks.

(We just finished watching "Inside Job" and somehow he's got this notion that every 10 years something bad will happen to the stock market, especially since it's been doing well in recent years.)
So I see this occasionally and it drives me UP THE FRICKIN’ WALL, because it’s just so wrong.

If people say “oh, the market crashed in 1987, 1997, and 2007!”... remind them that even with the Black Monday crash, the US market finished 1987 up; that the GFC really kicked in in 2008, not 2007; and that 2017 was the best year for stocks since 2013.

If people say “oh, the market crashed in 1998 and 2008!”, then tell them “but it didn’t crash in 1978 or 1988. It’s a coincidence”.

If people say “oh, there was the credit correlation explosion in 2005 when Ford and GM got downgraded, and then there was the emerging-markets selloff in 2015, so we should all panic in 2025!”, then... I mean, that’s a pretty impressive memory, but they’re really making a reach.

And even so: the point of investing is that you’re in it for the long term. While you’re still investing, like you and your partner are, a downturn is a good thing - it’s a buying opportunity! If a downturn does come along, then by getting started now, you’ll be ready to buy when the market is down and take advantage of stocks being on sale. After the lows of the 1998 Asian crisis, the STI tripled in two years; if you’d been avoiding the market, you’d have missed that huge rally.
 
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peipei1

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This stupig ABF bonds ETF keeps dropping! Dividend-ex drop, correction drop, recovery drop! :s12:

I fully endorsed SSB for long term holdings, 10 years and fully liquid, capital protected at higher eir of above 2%, to make up the bonds component!

Happy gong xi fa cai to all ST clubbers! :s12:
 

doomslaver

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Thank you all for your kind sharing. I started investing in IWDA on IB since October 2017 (entered the workforce in August 2017) and have taken a while to finish reading all 600+ pages. The forum posts have given me a better understanding of long term investments. :)

I have held back on purchasing local etf and bond fund (i.e. G3B and A35) as I may be posted to New York in early 2019 or mid 2019 for up to 5 years. In a such a case, does it still make sense to buy G3B and A35? Also, would IWDA still be a worthwhile investment from a US tax resident point of view?
 

Maeda_Toshiie

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Thank you all for your kind sharing. I started investing in IWDA on IB since October 2017 (entered the workforce in August 2017) and have taken a while to finish reading all 600+ pages. The forum posts have given me a better understanding of long term investments. :)

I have held back on purchasing local etf and bond fund (i.e. G3B and A35) as I may be posted to New York in early 2019 or mid 2019 for up to 5 years. In a such a case, does it still make sense to buy G3B and A35? Also, would IWDA still be a worthwhile investment from a US tax resident point of view?


1. If you are going to retire in SG, nothing wrong with getting STI.

2. The IWDA is not aimed at US based investors (no tax advantages). You can't dodge the US tax if you are in the US (don't try). It depends on how long you will be spending time in the US. If you are going to be in the US for the long term (eg. a decade or more), get one of those tax deferred accounts (traditional, Roth, 401(k)) types to invest in US based low cost funds (mutual or ETFs). If your employer does contribution matching and you can qualify for it, grab it.
 

bobobob

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This stupig ABF bonds ETF keeps dropping! Dividend-ex drop, correction drop, recovery drop! :s12:

I fully endorsed SSB for long term holdings, 10 years and fully liquid, capital protected at higher eir of above 2%, to make up the bonds component!

Happy gong xi fa cai to all ST clubbers! :s12:

Holy **** why did it drop so much lately. Thought this thing was supposed to be stable.
 

w4rdsg

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I have held back on purchasing local etf and bond fund (i.e. G3B and A35) as I may be posted to New York in early 2019 or mid 2019 for up to 5 years. In a such a case, does it still make sense to buy G3B and A35? Also, would IWDA still be a worthwhile investment from a US tax resident point of view?

I think it’s fine, but I strongly advise you to get professional tax advice before becoming US tax resident. You may need to employ tactics like going to cash to reset capital gains and some life insurance schemes may be problematic.
 

Pherenike

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You can point out a couple of things:
1) All markets go down at one time or another; that’s why you diversify across countries, and diversify between stocks and bonds. The US is only about 20% of your portfolio, so you’re plenty diversified.
2) Yep, VWRD owns about 10% in emerging markets, so you already have an allocation to them. Emerging markets are riskier and more volatile than developed markets, so you don’t want to be too heavily allocated to them (even if you think, as I do, that EM stocks are generally solid investments).

To your question about the STI: I mentioned this upthread, but the general idea is that investors tend to group Singapore in with China and other emerging markets, so they tend to trade them together. That said, I saw those stats upthread as well showing that I might be wrong about Singapore’s correlations, so I’m going to take a look at that this weekend and see if I need to reevaluate my assumptions there.


Yeah, exactly. If you bought an EM ETF, you’d be adding extra transaction costs, and extra exposure to EM stocks.


So I see this occasionally and it drives me UP THE FRICKIN’ WALL, because it’s just so wrong.

If people say “oh, the market crashed in 1987, 1997, and 2007!”... remind them that even with the Black Monday crash, the US market finished 1987 up; that the GFC really kicked in in 2008, not 2007; and that 2017 was the best year for stocks since 2013.

If people say “oh, the market crashed in 1998 and 2008!”, then tell them “but it didn’t crash in 1978 or 1988. It’s a coincidence”.

If people say “oh, there was the credit correlation explosion in 2005 when Ford and GM got downgraded, and then there was the emerging-markets selloff in 2015, so we should all panic in 2025!”, then... I mean, that’s a pretty impressive memory, but they’re really making a reach.

And even so: the point of investing is that you’re in it for the long term. While you’re still investing, like you and your partner are, a downturn is a good thing - it’s a buying opportunity! If a downturn does come along, then by getting started now, you’ll be ready to buy when the market is down and take advantage of stocks being on sale. After the lows of the 1998 Asian crisis, the STI tripled in two years; if you’d been avoiding the market, you’d have missed that huge rally.
Thanks Shiny - this was exactly what I said to my partner but he wasn't convinced, probably because I'm a novice (but so is he!). But then I showed him your post and he had nothing more to say :s13:
 
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