HWZ Forums

Login Register FAQ Mark Forums Read

*Official* Shiny Things club

Like Tree4658Likes
Closed Thread
 
LinkBack Thread Tools
Old 12-03-2018, 11:06 PM   #9526
Supremacy Member
 
Maeda_Toshiie's Avatar
 
Join Date: May 2007
Posts: 6,277
The EM allocation would be ~10% of the global part right? Or does the exact weightage not matter that much and 5-10%ish is fine?
The weightage doesn't need to be exact. It is meant to be a small punt on EM to outperform.

Also just had a thought about IWDA - why actually is it recommended over everything else? I was just trying to compute the effective TER considering the dividend withholding tax: IWDA has a 15% withholding tax while something like SPY has 30%? So the difference is 15%, and if the 15% difference on the dividends + the difference between the TER is higher for IWDA, would that suggest that the other option be better?
Currently, S&P500 throws off 2% dividends. Unless the dividends increase significantly, this favours an Irish domiciled ETF with current TERs.

Another issue with US listed ETFs is their estate tax on non resident aliens (NRAs), ie those of us who do not live in the US, are not US citizens or US green card holders (in other words, not US tax payers). Buying Ireland domiciled, UK listed stocks avoid this issue. I know that most people here are quite young and have relatively small portfolios, but IMO, it is better to make things easier right from the start.

IWDA is >50% US, but also contains other parts of the developed world as well. Now, if you really want to just buy the S&P500, there are two ETFs (one by Vanguard, one by iShares Blackrock) listed on London.

I also have a question about IWDA's methodology of being optimised rather than replicated - could anyone comment on that? Just wondering if that necessarily is better/worse than simply replicating the MSCI World Index, and if we are paying more for this?
Optimized/sampled means that not all of the underlying components are bought by the manager. This is primarily due to low liquidity/ high cost of acquring certain securities, typically the smaller stocks. Instead, the manager will buy other securities that are highly correlated but are easier/cheaper to acquire. The securities held within the fund are still manged in a way that they replicate the index's performance. This approach is actually meant to lower costs.

Full replication just means every single component is bought according to the weightage.


In terms of risk of outliving the portfolio, anything less than 40% is probably too risky for comfort..this is probably more important that the usual understanding of risk as volatility..

the tweaks proposed doesn't seems to have any significant impact (not at least for a 90/10 portfolio)
In exhibit 2, P1, P5, P10 are the bequest (after 30 years) on the left tail (ie poor market performance). We can take that as the amount left available if the person lives beyond 30 years and needs to continue the drawdown. For P5 and P10, the modified strategies do give some benefits. Of course, if the market performs on the average, the leftover is significantly larger (unsurprisingly).
JYJZERO likes this.
__________________
イエッタイガー
Maeda_Toshiie is offline  
Old 13-03-2018, 07:24 AM   #9527
Master Member
 
Join Date: Dec 2010
Posts: 3,031
This part ya some over-reaction but holy molly this ABF today end even lower! While the stocks market closing in to go past the 10% correction levels! I get that new bond yields are inching upwards, i seen banks offering FD at 1.70-1.75% pa and the latest SGS 30 years is near 3%. Makes me wonder how ABF going to pay us higher dividends?? The scary part dividends is not assured unlike bonds and stuffs!

The EIMI is also scary now that Xi is emperor of China, the country may be more efficiently governed going forward, but they will lose the creative sparks, like all top down economies do, i am afraid Chinese MMC will find it hard to compete with US. India is going side ways and nowhere that leaves us with nothing to look forward too! These emerging markets need to buck up! I planning to reduce to 15% of my allocation from 25%!
Just a suggestion for you. You may want to understand how bond prices work against interest rates changes, and thus have the proper knowledge of how A35 will fluctuate.

You may also want to stop trying to draw links between very macro views on politics to the performance of a broad based equity ETF. We imagine the cause and effect of many market news on even individual stock prices. We can never be sure of how the 1 million and 1 things actually affect stock prices. And even so, trying to rationalise certain market news to ETF prices is even more absurd.

Just spend the time used on drawing potentially non-existent/complex links between economies and markets to brush up on your basic finance.
Shiny Things likes this.
__________________
We can learn nothing in an echo chamber, can we?
w1rbelw1nd is offline  
Old 13-03-2018, 07:42 AM   #9528
Master Member
 
Join Date: Dec 2010
Posts: 3,031
The EM allocation would be ~10% of the global part right? Or does the exact weightage not matter that much and 5-10%ish is fine?

Also just had a thought about IWDA - why actually is it recommended over everything else? I was just trying to compute the effective TER considering the dividend withholding tax: IWDA has a 15% withholding tax while something like SPY has 30%? So the difference is 15%, and if the 15% difference on the dividends + the difference between the TER is higher for IWDA, would that suggest that the other option be better?

I also have a question about IWDA's methodology of being optimised rather than replicated - could anyone comment on that? Just wondering if that necessarily is better/worse than simply replicating the MSCI World Index, and if we are paying more for this?
Well if it wasnt obvious enough, the main goal of investing is to maximise returns, while ensuring that the returns has a high confidence level within a range of high returns.

Buying just IWDA and ES3 may fulfill the goal above for now. End of the day the stocks covered in IWDA (Googles/Microsoft/Facebook and the giant US firms) drives the current and probably the short term world markets. I personally do believe that companies like Tencent, Alibaba, Samsung (yes f***ing South Korea is not a developed market but SG is) will play a bigger role in the global economy. You may not be significantly worse off just investing in IWDA and ES3 now, but that may not be the case 10 years down the road.

Don't fall in love with tickers, with allocation ratios, or even with current tax efficient domiciliation. The advantages of these things are transient. Principles and logic of good investing are eternal and those are the things we need to learn and adopt in our investing strategy.
Shiny Things and JYJZERO like this.
__________________
We can learn nothing in an echo chamber, can we?
w1rbelw1nd is offline  
Old 13-03-2018, 01:27 PM   #9529
Member
 
Join Date: Dec 2009
Posts: 263
Mostly because if people fixate on the yield of a stock, they end up doing dumb things like buying a stock because it's got a 10% yield or whatever and then taking it up the ringpiece when the dividend inevitably gets cut.

Bond coupons are a contractual agreement. They can't be cut without the company imploding. Stock dividends are just something the company gives you out of the goodness of its heart; they can evaporate at any time.
Sorry for noob questions. Doesn't a stock represent ownership of a piece of a company and thus entitlement to a bit of its earnings?

How are dividends decided upon? Are there rules regulating it? How exactly do investors judge the value of a stock if not by the dividends it pays out? If a company is making loads of money but not paying good dividends to the shareholders, what value is the stock then to the investors?
bobobob is offline  
Old 13-03-2018, 02:17 PM   #9530
Member
 
Join Date: Feb 2015
Posts: 494
Sorry for noob questions. Doesn't a stock represent ownership of a piece of a company and thus entitlement to a bit of its earnings?

How are dividends decided upon? Are there rules regulating it? How exactly do investors judge the value of a stock if not by the dividends it pays out? If a company is making loads of money but not paying good dividends to the shareholders, what value is the stock then to the investors?
Ask Amazon shareholders
Dividends are decided by the board. They may feel that profits are better reinvested than distributed.

Some investors want steady dividend paying stocks (think retirees) while others want growth above all. If you buy the index you get a blend of both.
w4rdsg is offline  
Old 13-03-2018, 03:15 PM   #9531
Junior Member
 
Join Date: Dec 2013
Posts: 48
This part ya some over-reaction but holy molly this ABF today end even lower! While the stocks market closing in to go past the 10% correction levels! I get that new bond yields are inching upwards, i seen banks offering FD at 1.70-1.75% pa and the latest SGS 30 years is near 3%. Makes me wonder how ABF going to pay us higher dividends?? The scary part dividends is not assured unlike bonds and stuffs!

The EIMI is also scary now that Xi is emperor of China, the country may be more efficiently governed going forward, but they will lose the creative sparks, like all top down economies do, i am afraid Chinese MMC will find it hard to compete with US. India is going side ways and nowhere that leaves us with nothing to look forward too! These emerging markets need to buck up! I planning to reduce to 15% of my allocation from 25%!
Hey there, i think from your posts here you are definitely overthinking and over-trading (making too many changes/trades in and out). And probably incurring too much fees.

Would help to remind yourself again that the overall strategy suggested here is exactly to trade less, not be influenced by all these random noise/'news'/opinion, remain calm and pretty much do nothing most of the time.
Shiny Things likes this.
funkypunk is offline  
Old 13-03-2018, 07:43 PM   #9532
Supremacy Member
 
revhappy's Avatar
 
Join Date: Mar 2012
Posts: 5,471
Hey there, i think from your posts here you are definitely overthinking and over-trading (making too many changes/trades in and out). And probably incurring too much fees.

Would help to remind yourself again that the overall strategy suggested here is exactly to trade less, not be influenced by all these random noise/'news'/opinion, remain calm and pretty much do nothing most of the time.
Good advice. Thumbs up!

Sent from Xiaomi REDMI NOTE 4 using GAGT
revhappy is online now  
Old 13-03-2018, 10:16 PM   #9533
Master Member
 
EquinOoX's Avatar
 
Join Date: Jul 2003
Posts: 2,609
I would like to ask at current market, would you recommend me to do Reverse ELN? My PB is recommending me.
EquinOoX is offline  
Old 14-03-2018, 12:38 AM   #9534
Senior Member
 
peipei1's Avatar
 
Join Date: Aug 2017
Posts: 1,083
Hey there, i think from your posts here you are definitely overthinking and over-trading (making too many changes/trades in and out). And probably incurring too much fees.

Would help to remind yourself again that the overall strategy suggested here is exactly to trade less, not be influenced by all these random noise/'news'/opinion, remain calm and pretty much do nothing most of the time.
IB is so cheap i treat like shopping on a bargain with today's market buy in and out to fleece some shopping money!
If only IB can do contra sales so i no need wait for settlement. I considering to convert to margin account but because i cannot monitor daily, i scared market drop suddenly and IB randomly auto-cut my IWDA positions while my punting stocks stay!



Sounds logical..
In that case, what would be your allocation going forward?
I recalculate and i am at 60% IWDA/US, 25% Singapore, mostly SSB, and 15% EIMI. Think this is my allocation for a foreseeable future. I will shift my punting stocks into IWDA over time once the market cools down, now it takes up 30% of the 60% mentioned above.
peipei1 is offline  
Old 14-03-2018, 04:49 AM   #9535
Member
 
Join Date: Apr 2005
Posts: 104
Can someone tell me why shouldn't the allocation ratio of developed nations (IWDA) vs emerging countries (EIMI) a reflection of the combined economic output of their constituent countries?

I briefly looked at the top 11 countries in IWDA and top 14 countries in EIMI, accounting for ~95% of each ETF. They represent 50% and 28.5% of global economic output, respectively (based on World Bank 2016 data).

As such, shouldn't the allocation ratio be roughly 2:1?
Hippocrates is offline  
Old 14-03-2018, 07:29 AM   #9536
Master Member
 
Join Date: Dec 2010
Posts: 3,031
Does Google, a US firm, only produce in US?

Same idea for GE, and all other companies.

Can someone tell me why shouldn't the allocation ratio of developed nations (IWDA) vs emerging countries (EIMI) a reflection of the combined economic output of their constituent countries?

I briefly looked at the top 11 countries in IWDA and top 14 countries in EIMI, accounting for ~95% of each ETF. They represent 50% and 28.5% of global economic output, respectively (based on World Bank 2016 data).

As such, shouldn't the allocation ratio be roughly 2:1?
w1rbelw1nd is offline  
Old 14-03-2018, 08:03 AM   #9537
Supremacy Member
 
revhappy's Avatar
 
Join Date: Mar 2012
Posts: 5,471
Can someone tell me why shouldn't the allocation ratio of developed nations (IWDA) vs emerging countries (EIMI) a reflection of the combined economic output of their constituent countries?

I briefly looked at the top 11 countries in IWDA and top 14 countries in EIMI, accounting for ~95% of each ETF. They represent 50% and 28.5% of global economic output, respectively (based on World Bank 2016 data).

As such, shouldn't the allocation ratio be roughly 2:1?
You must take volatility also into account and maturity of the markets. Do you remember how Shanghai composite went upto 6k like a bitcoin and then crashed to 2k in 2015? In that kind of market, you don't want to have more than 10% allocation.

Majority of rich Chinese and Indians, given a chance would like to take money out of their country and keep it in safe jurisdictions. So that is a hint of where you should keep your money.

Sent from Xiaomi REDMI NOTE 4 using GAGT

Last edited by revhappy; 14-03-2018 at 08:06 AM..
revhappy is online now  
Old 14-03-2018, 09:34 AM   #9538
Supremacy Member
 
Maeda_Toshiie's Avatar
 
Join Date: May 2007
Posts: 6,277
Can someone tell me why shouldn't the allocation ratio of developed nations (IWDA) vs emerging countries (EIMI) a reflection of the combined economic output of their constituent countries?

I briefly looked at the top 11 countries in IWDA and top 14 countries in EIMI, accounting for ~95% of each ETF. They represent 50% and 28.5% of global economic output, respectively (based on World Bank 2016 data).

As such, shouldn't the allocation ratio be roughly 2:1?
Country output =/= company output =/= company market cap.

Most market indices are market cap weighted. If you think of an ETF as a portfolio in its own right, many of them will simply be market cap weighted. By the same token, some will weight their portfolio component ETFs by the same way.
Shiny Things likes this.
__________________
イエッタイガー
Maeda_Toshiie is offline  
Old 14-03-2018, 09:40 AM   #9539
Supremacy Member
 
Maeda_Toshiie's Avatar
 
Join Date: May 2007
Posts: 6,277
Anyone used a site called Macroaxis before?
__________________
イエッタイガー
Maeda_Toshiie is offline  
Old 14-03-2018, 11:02 AM   #9540
Supremacy Member
 
Join Date: Dec 2009
Posts: 8,568
Can someone tell me why shouldn't the allocation ratio of developed nations (IWDA) vs emerging countries (EIMI) a reflection of the combined economic output of their constituent countries?

I briefly looked at the top 11 countries in IWDA and top 14 countries in EIMI, accounting for ~95% of each ETF. They represent 50% and 28.5% of global economic output, respectively (based on World Bank 2016 data).

As such, shouldn't the allocation ratio be roughly 2:1?
Nah. You can have GDP-weighted indices, but most indices don’t work that way; as Maeda mentioned, the standard is to weight indices by market capitalization. Emerging economies tend to have smaller stock markets, so they have less weighting in global indices.

And like someone said, just because a company is listed in {the USA|Europe|wherever} doesn’t mean that’s where they do 100% of their business. ExxonMobil is a great example; they’re listed in the US, and they’re a big component of US equity indices, but they do business all over the world and their performance is dependent on economies all around the world.

Anyone used a site called Macroaxis before?
Never heard of them, but I had a quick look and their Twitter feed is lolzy. This might be the most useless tweet ever.


IB is so cheap i treat like shopping on a bargain with today's market buy in and out to fleece some shopping money!
If only IB can do contra sales so i no need wait for settlement. I considering to convert to margin account but because i cannot monitor daily, i scared market drop suddenly and IB randomly auto-cut my IWDA positions while my punting stocks stay!
Then I will politely suggest that you’re in the wrong thread, and you should take your day-trading discussions to SSI. Not that it’s not interesting, but you’ll get a more useful reception there. The focus here is on much longer-term investing than the sort of day trading that you seem to be focusing on.

I would like to ask at current market, would you recommend me to do Reverse ELN? My PB is recommending me.
No. The right time to do a “reverse ELN”, or any other structured note that your PB might offer you, is “never”. Those things are just a gigantic fee machine for private banks. Don’t let them do that to you.
Shiny Things is offline  
Closed Thread
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Terms of Service for more information.


Thread Tools

Posting Rules

Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are On