Official Shiny Things thread Episode V, The Empire Strikes Back

[perrinrahl]

What do you guys think the ETF managers are thinking? I don't think they will do anything drastic now but if the tariffs stay and American trade goes sideways, will they begin to reallocate the component stocks? Have they done this before? We are not talking about a downturn which the companies can recover from but, it seems, a change in the basis of the global economy.

 

[BBCWatcher]

What do you guys think the ETF managers are thinking? I don't think they will do anything drastic now but if the tariffs stay and American trade goes sideways, will they begin to reallocate the component stocks? Have they done this before? We are not talking about a downturn which the companies can recover from but, it seems, a change in the basis of the global economy.

A market capitalization-weighted global stock index simply includes all the publicly traded stocks in all of the world's investable stock markets that are worth above some low limit. It's a simple mathematical exercise. A fund manager then mechanically buys and sells stocks to track this index. What's to think about?

Tariffs obviously have different impacts on different stocks, but so do myriad other factors.

 

[singaporean11]

A market capitalization-weighted global stock index simply includes all the publicly traded stocks in all of the world's investable stock markets that are worth above some low limit. It's a simple mathematical exercise. A fund manager then mechanically buys and sells stocks to track this index. What's to think about?

Tariffs obviously have different impacts on different stocks, but so do myriad other factors.

And that is the problem with a "market capitalization-weighted stock index" which may result in over-concentration in certain sector even for a specific county index, e.g. S&P500.

For example, the Market Cap of Magnificent 7 as a Share of the S&P 500 is now 32%, and when the tech sector crashed (or the Mag7 crashed) and stay low for prolonged period, S&P500 index portfolio performance will be very bad, and Retirees will have issue selling their stocks to cover their last few decades of retirement. This is also the reason why many Singaporeans prefer Dividend-investing, i.e. collect dividends for retirement (without selling their shares) instead of selling stocks without dividend payout to cover their retirement period without other income.

 

[arrakis]

No. Gonna stop you right there. Absolutely not. No. Nuh-uh. No. Never. NEVER EVER DO THIS. If there's one thing I can teach people (after "diversify, buy index funds, rebalance, hold for a few decades"), it's "foreign currency loans are a terrible idea".

And that's because foreign currency loans inevitably blow up. Swiss-franc loans, in particular, have been blowing people up since at least the 1980s. In 2008, I had friends who took out SGD mortgages on their Australian properties, and in the week when Lehman blew up and AUD tanked 20% in a week and everyone got fired, these people got calls from the bank telling them "if you don't post a quarter million dollars of extra collateral this week we're taking your house". It wasn't great!

The tradeoff for the lower interest rate on CHF or JPY loans is that you have crash risk - whenever there's some sort of crisis, CHF and JPY (especially CHF) tend to rocket higher, because everyone liquidates their bets on higher-yielding currencies and rushes into those "safe-haven" currencies—which means your loan's notional, and your interest payments, suddenly get a lot larger right when you can't afford it.

Thanks for the pointers.

Right now, CHF has already blown up. It was $1.5+ before the Trump tariff, to current $1.60+. It did touch a high of 1.6250. Current levels of 1.60 is unheard of in the last decade.

So, while it can continue to blow up, my personal take is that we are not going to see $1.70+ that was when CHF de-pegged in Jan 2015.

 

[Wonderer haha]

Hi everyone,

Just looking for some opinions on FTSE Developed World UCITS ETF (USD) Accumulating – VHVE vs IWDA. VHVE has a lower expense ratio (0.12%) compared to IWDA (0.20%).

I already have a small chunk in an S&P 500 ETF, and I’m thinking about diversifying a bit more into developed markets — mainly Europe and Japan. Instead of picking separate ETFs for those regions, I’m leaning towards just going with a broad developed markets ETF to keep things simple.

What do you guys think? Thanks !

 

[Shiny Things]

On the contrary, what I found is that China Gov's stated policy is to encourage consumer spending to drive China's economic growth and there is a lot of room for growth in this area since most Chinese have a lot of savings or rather too much savings(!)

That's exactly the problem (see also Michael Pettis and Matt Klein's excellent Trade Wars are Class Wars). I'll believe that China has changed their policy when I see them actually doing it instead of just talking about it.

Ah, looks like many people like you have succumbed to typical western media propaganda and brain-washing!

Don't be weird.

Thanks for the pointers.

Right now, CHF has already blown up. It was $1.5+ before the Trump tariff, to current $1.60+. It did touch a high of 1.6250. Current levels of 1.60 is unheard of in the last decade.

So, while it can continue to blow up, my personal take is that we are not going to see $1.70+ that was when CHF de-pegged in Jan 2015.

Currencies can trade to unheard-of levels easily, though - I learned that the hard way in 2012 when AUD traded all the way up to $1.10 and I literally couldn't afford to move back home.

Taking a CHF loan is a lot of extra currency risk that you don't need to take. You might be saving a couple of percent a year in interest costs, but you can easily lose five years' worth of interest savings in a heartbeat.

Hi everyone,

Just looking for some opinions on FTSE Developed World UCITS ETF (USD) Accumulating – VHVE vs IWDA. VHVE has a lower expense ratio (0.12%) compared to IWDA (0.20%).
[...]
What do you guys think? Thanks !

Oh yeah, VHVE is a perfectly good choice for this part of your portfolio.

 

[singaporean11]

It's not that China isn't going to grow, it's that the benefits of that growth won't flow to private shareholders. China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth.

That's exactly the problem (see also Michael Pettis and Matt Klein's excellent Trade Wars are Class Wars). I'll believe that China has changed their policy when I see them actually doing it instead of just talking about it.

For you to say (1) "China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth", and then saying
(2) "I'll believe that China has changed their policy when I see them actually doing it instead of just talking about it"
are two totally different things altogether because:

(A) in the former, you claimed as though it is a "fact" that China has stated that their policy is to suppress consumer spending and growth in favor of SOCs and export growth, even though contrary to your claim in (1) here, according to announcement by China,

https://english.www.gov.cn/policies/policywatch/202503/18/content_WS67d8adcfc6d0868f4e8f0e9e.html

Factually, China Gov's stated policy is to encourage consumer spending to drive China's economic growth and there is a lot of room for growth in this area since most Chinese have a lot of savings or rather too much savings(!) vs US since Americans are now mostly heavily in debt.

(B) while in the latter in (2), now you are just saying that it is your opinion that China intends to suppress consumer spending and growth without telling us that what you claimed in (1) is NOT TRUE and NOT FACTUAL.

So, your claim about "China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth." is not true right (and this is just your own personal opinion masqueraded as though it is a "fact")...

What is so difficult for you to say that you have made a mistake and that your claim that "China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth" is actually just your own personal opinion and not a fact (which is what your initial claim in (1) made to appear as a "fact" in the first place) so that people will not "learn" the wrong thing after reading your posts and mistaken your "personal opinions" as though they are "facts"?

I know the western media and journalists like to play this kind of game and always like to masquerade their own "personal opinion and comments" as though they are "facts" which is why I hated this kind of tactic very much (I have been misled too many times in my early life until I learnt to throw their such writings into the dustbin )!

 

[hin999]

Hi all, have been investing DCA style for couple of years into IWDA as suggested. Given recent drop in exchange rate of USD vs SGD, what's the impact on our portfolio? Does it mean we are also suffering exchange losses albeit unrealised on top of the portfolio loss?

 

[highsulphur]

Hi all, have been investing DCA style for couple of years into IWDA as suggested. Given recent drop in exchange rate of USD vs SGD, what's the impact on our portfolio? Does it mean we are also suffering exchange losses albeit unrealised on top of the portfolio loss?

What's your net sgd pnl? That should be what matters in the end.

 

[Goldmansachs]

Is vwrd still one of the lowest cost option?

I want distributing etf and spend some dividends occasionally

 

[BBCWatcher]

Is vwrd still one of the lowest cost option?

Yes, one of.

I want distributing etf and spend some dividends occasionally

Why? Do you have problems managing day to day cash? Or is your savings rate negative — that you’re spending more than your income from work? That (for example) you’re buying $1,000 of fund shares per month but spending $3,000 of fund dividends per month?

If you’re in that situation, that’s not necessarily a financial problem if you’re also semi-retired and can afford to be. It’s just a bit silly since you could simply supplement your part-time income from work by selling $2,000 worth of accumulating fund shares per month to raise exactly the same amount as the above example. (Or $6,000 per quarter.) Is that your situation, that you’re semi-retired and want to enjoy a lifestyle that your employment income alone cannot support?

 

[Shiny Things]

Hi all, have been investing DCA style for couple of years into IWDA as suggested.

Nice! The most important thing is to pick a strategy and stick to it, so you're doing the right thing here.

Given recent drop in exchange rate of USD vs SGD, what's the impact on our portfolio? Does it mean we are also suffering exchange losses albeit unrealised on top of the portfolio loss?

So the first thing to point out is that the exchange rate drop you're talking about has happened since April 7th. Since that time, the SGD's gained about 5% vs the USD—but IWDA has gained 15%. So even in SGD terms, you're up 10% since the exchange-rate move started.

More broadly—yes, exchange rates will go up and down, and if you have a globally diversified portfolio, that will add to your returns sometimes, and detract from them sometimes as well.

 

[BBCWatcher]

….More broadly—yes, exchange rates will go up and down, and if you have a globally diversified portfolio, that will add to your returns sometimes, and detract from them sometimes as well.

Importantly, this part is dollar cost averaging too — Singapore dollar cost averaging. The security might be quoted in U.S. dollars for convenience as so many things are — oil, gold, wheat, Picasso paintings, Ariana Grande vinyl records. But you’re Singapore dollar cost averaging into the investment, and that’s powerful.

 

[highsulphur]

i have both A35 and MBH bought over the years. The current yield for both are around 2.2% and 3.3%

Quite contented with MBH's yield but find A35's to be too low given it is not that much different to MBH in terms or risk profile. Should I leave it or look to convert it to MBH?

 

[BBCWatcher]

Quite contented with MBH's yield but find A35's to be too low given it is not that much different to MBH in terms or risk profile. Should I leave it or look to convert it to MBH?

What’s your time horizon for your A35 holding?

 

[highsulphur]

What’s your time horizon for your A35 holding?

I have no plans to sell. Plan to retire in 5 to 7 years time. Even then will just continue to hold.

Just wondering if I should switch to MBH

 

[Hopeful33]

Hi everyone, currently is there any method to automate the monthly purchase of iwda/vwra? Appreciate any advice given. Thanks.

 

[highsulphur]

Hi everyone, currently is there any method to automate the monthly purchase of iwda/vwra? Appreciate any advice given. Thanks.

You can set a recurring deposit of sgd or usd into your ibkr account and a recurring investment at ibkr for iwda or vwra.

 

[BBCWatcher]

Just wondering if I should switch to MBH

I think so, although you could take this opportunity to decide if you want a multi-currency index-based basket of bonds — CRPA, for example. I think the yield premium that should come with investment grade corporate bonds is well worth collecting over the long term.

 

[highsulphur]

I think so, although you could take this opportunity to decide if you want a multi-currency index-based basket of bonds — CRPA, for example. I think the yield premium that should come with investment grade corporate bonds is well worth collecting over the long term.

I currently hold about 400k of A35 with scb. Is it most economical to transfer it to fsmone to buy/sell given the fixed commission? I actually email nikko am to see if it's possible to do a switch directly but I'm not hopeful