*Official* Shiny Things club - Part 2

[MrHighlander]

Hi guys - what’s a good ETF to buy the Japan stock market ?

 

[ftpofmpo]

it seems really difficult to buy into funds with large holdings of us stocks after its decade long boom, high valuations and shaky foundations. maybe a price after last december's correction is reasonable but prices now seem unreasonable.

how about the euro stoxx 50 instead? They are all good defensive large blue chip stocks with global reach. p/e is only about 17-18

 

[shortofrange]

Sorry for shamefully quoting myself to get some clarifications :x

@Shiny/BBC: many thanks for your thorough replies allow me to clarify my situation so that we can move forward:

My company has financed me fully to do a masters in the US so I get allowance from my company in the local SG office, with no salary from the US office. This would also mean that I can apply for either the F1 or J1 visa, but I'll probably be on the F1. From what I've been told by my US grad school, I won't be paying taxes since technically my allowance is from SG and not the US (and technically, it isn't a salary but an allowance).

In this case, will DBS G3B + SC IWDA be the best way out, or should I be re-looking at my strategy?

 

[Shiny Things]

it seems really difficult to buy into funds with large holdings of us stocks after its decade long boom, high valuations and shaky foundations.

I'm gonna reject the premise of your question a bit: what makes you think valuations of US stocks are unreasonably high? (And don't say "elevated PE ratios" - don't forget, those are a function of low yields.)

how about the euro stoxx 50 instead? They are all good defensive large blue chip stocks with global reach. p/e is only about 17-18

Firstly, I think your PE ratio numbers are a bit off? The SPX's forward PE is on a 17 handle, the SX5E's forward PE is on a 14 handle... or are you looking at TTM PEs?

But more importantly, there are two good reasons why the SX5E's PE is so low:
1) European growth is sclerotic; the European economy is growing a lot more slowly than the US economy, so it'd make sense that Eurozone PEs are lower. And, more importantly...
2) Banks. Ugh. European banks are a goddamn dumpster fire, and a full 10% of the SX5E is banky or insurancey things (Allianz, my old shop until the series of unfortunate events in '08; Intesa, part of the smoldering wreckage that is the Italian banking sector; BNP Paribas which nearly blew up in 2011 on the euro sovereign debt explosion... I guess at least it doesn't own Deutsche!).

Hi guys - what’s a good ETF to buy the Japan stock market ?

IJPA / IJPD, both in London.

Sorry for shamefully quoting myself to get some clarifications :x

Um. I suspect in your situation since you're not a US taxpayer you should be OK to hold G3B + MBH + IWDA, but I'll defer to BBCW (or to your company's tax lawyers).

 

[BBCWatcher]

I suspect in your situation since you're not a US taxpayer you should be OK to hold G3B + MBH + IWDA, but I'll defer to BBCW (or to your company's tax lawyers).

Wasn't that one answered?

Anyway, to answer it....

My company has financed me fully to do a masters in the US so I get allowance from my company in the local SG office, with no salary from the US office. This would also mean that I can apply for either the F1 or J1 visa, but I'll probably be on the F1. From what I've been told by my US grad school, I won't be paying taxes since technically my allowance is from SG and not the US (and technically, it isn't a salary but an allowance).

It doesn't usually matter what your company calls it or into which of your bank accounts it deposits it -- or even what the form of remuneration is. Your company could pay you in bars of chocolate, and that wouldn't matter either. Income is income, and tax authorities around the world generally don't tolerate such thinking. Your inclination, your bias, should be the opposite from what you've expressed.

However, in this case, you'll be on a F-1 visa (probably not J-1, although that's pretty similar in this respect), and so that status is what allows you to stay largely outside the U.S. tax system for a few years. U.S. source income (whether legal or illegal -- and don't do the latter) will still be U.S. taxable, such as income from employment at the university.

In this case, will DBS G3B + SC IWDA be the best way out, or should I be re-looking at my strategy?

Yes, as long as you leave the U.S. in timely fashion, that'll be fine. However, what sometimes happens is you fall in love, marry, settle, green card, etc. Whereupon G3B and IWDA are not U.S. tax appropriate at all, and you would really get whacked hard when you dispose of them. And the U.S. has a "step foot in our country" standard when it comes to determining the cost basis of immigrants' assets for purposes of capital gains taxes. (Capital gains tax is "supercharged" with offshore funds, called PFICs.)

If you're open to romance, then my suggestion would be to reorient your investments in a U.S. tax appropriate way a little before stepping foot in the U.S. That won't be particularly difficult or expensive.

 

[MrHighlander]

Thank you ST. Is there an ETF which tracks just the first section of the Tokyo Stock Exchange ?

 

[Investnewbie82]

Hi all,

I like to find out more about Japan's meltdown in 1990s, any good readings on it?

How likely is it that US or Sg markets suffer similar problems?

 

[FrostWurm]

Thank you ST. Is there an ETF which tracks just the first section of the Tokyo Stock Exchange ?

Whichever you get, just continue to pay attention to:

1) Expense ratio
2) Dividend witholding tax rate
3) Currency/Hedging
4) The index being tracked

There may even be ETFs domiciled in HK or Japan itself that offer better value, based on a combination of these four factors, for your desired risk exposure.

 

[flowerpalms]

ES3:
Li Ka-shing's Hutchison Port Holdings Trust to exit STI amid trade tensions
Mapletree Commercial Trust will be added to Straits Times Index

More news here:
https://www.businesstimes.com.sg/co...oldings-trust-to-exit-sti-amid-trade-tensions

 

[Visa4550]

Hi Shiny may I ask can you summarize a tldr summary of what to do if I want to buy iwda, irish domiciled s n p 500 etfs and buy in a crash and hold for the long term, ie a john bogle 3 fund portfolio without the bond fund, I tried to read the shiny things threads from part 1 22 pages but gave up after being to busy at work

Sent from Samsung SM-N960F using GAGT

 

[Visa4550]

Hi Shiny may I ask can you summarize a tldr summary of what to do if I want to buy iwda, irish domiciled s n p 500 etfs and buy in a crash and hold for the long term, ie a john bogle 3 fund portfolio without the bond fund, I tried to read the shiny things threads from part 1 22 pages but gave up after being to busy at work

Sent from Samsung SM-N960F using GAGT

I will be using interactive brokers

Sent from Samsung SM-N960F using GAGT

 

[hwckhs]

Hi Shiny may I ask can you summarize a tldr summary of what to do if I want to buy iwda, irish domiciled s n p 500 etfs and buy in a crash and hold for the long term, ie a john bogle 3 fund portfolio without the bond fund, I tried to read the shiny things threads from part 1 22 pages but gave up after being to busy at work

Have you read his book?

 

[ftpofmpo]

because some people don't believe in diversification and scared of 'currency risk'?

apart from diversification, having a passive income flow of US$ is useful to me. I'm using the passive income from LQDE, VDCP, and US$ Fixed Deposits to fund my online US$ transactions using my SCB US$ High Account debit mastercard.

Why is it that for bond etfs such as LQDE (investment grade corporate bonds), they had a sharp fall in price in 2008 when the interest rate drops? in theory when the interest rate falls, bond prices should rise instead

If it is due to fear of defaults on the bond, then it seems to be counterintuitive to buy bonds which are supposed to act as a hedge during the troughs where interest rate drops

 

[confusedsuitguy]

Hi all,

Out of curiosity: do more 'ethical' ETFs exist? Those that track index funds of companies that are environmentally friendly and actively avoid unethical business practices?

Thanks!

 

[BBCWatcher]

Why is it that for bond etfs such as LQDE (investment grade corporate bonds), they had a sharp fall in price in 2008 when the interest rate drops? in theory when the interest rate falls, bond prices should rise instead....

Except when there’s a major “black swan” event, such as the Global Financial Crisis, when practically everything that wasn’t cash or near cash equivalents (high quality government bonds) was suddenly less desirable.

High quality government bonds moved in the opposite direction (prices up, yields down), and really we’re still feeling GFC reverberations especially in places like Europe.

 

[kehyi4]

Hi all,

Out of curiosity: do more 'ethical' ETFs exist? Those that track index funds of companies that are environmentally friendly and actively avoid unethical business practices?

Thanks!

Yes, they do. In fact, there are whole families of them:

SRI (Socially Responsible Investing) Range:
SUSW: iShares MSCI World SRI UCITS ETF
SUAS: iShares MSCI USA SRI UCITS ETF
SUSM: iShares MSCI EM SRI UCITS ETF
SUJP: iShares MSCI Japan SRI UCITS ETF
IESE: iShares MSCI Europe SRI UCITS ETF

ESG (Environment, Social, and Governance) Screened Range (ie avoids the "bad" stuff):
SAWD: iShares MSCI World ESG Screened UCITS ETF
SASU: iShares MSCI USA ESG Screened UCITS ETF
SAEM: iShares MSCI EM IMI ESG Screened UCITS ETF
SAJP: iShares MSCI Japan ESG Screened UCITS ETF
SAUM: iShares MSCI EMU ESG Screened UCITS ETF
SAEU: iShares MSCI Europe ESG Screened UCITS ETF

ESG Enhanced Range (ie buys the "good" stuff):
EDMW (lol!) : iShares MSCI World ESG Enhanced UCITS ETF
EDMU: iShares MSCI USA ESG Enhanced UCITS ETF
EDMJ: iShares MSCI Japan ESG Enhanced UCITS ETF
EDM6: iShares MSCI Europe ESG Enhanced UCITS ETF
EDM4: iShares MSCI EMU ESG Enhanced UCITS ETF

 

[confusedsuitguy]

Yes, they do. In fact, there are whole families of them:

SRI (Socially Responsible Investing) Range:
SUSW: iShares MSCI World SRI UCITS ETF
SUAS: iShares MSCI USA SRI UCITS ETF
SUSM: iShares MSCI EM SRI UCITS ETF
SUJP: iShares MSCI Japan SRI UCITS ETF
IESE: iShares MSCI Europe SRI UCITS ETF

ESG (Environment, Social, and Governance) Screened Range (ie avoids the "bad" stuff):
SAWD: iShares MSCI World ESG Screened UCITS ETF
SASU: iShares MSCI USA ESG Screened UCITS ETF
SAEM: iShares MSCI EM IMI ESG Screened UCITS ETF
SAJP: iShares MSCI Japan ESG Screened UCITS ETF
SAUM: iShares MSCI EMU ESG Screened UCITS ETF
SAEU: iShares MSCI Europe ESG Screened UCITS ETF

ESG Enhanced Range (ie buys the "good" stuff):
EDMW (lol!) : iShares MSCI World ESG Enhanced UCITS ETF
EDMU: iShares MSCI USA ESG Enhanced UCITS ETF
EDMJ: iShares MSCI Japan ESG Enhanced UCITS ETF
EDM6: iShares MSCI Europe ESG Enhanced UCITS ETF
EDM4: iShares MSCI EMU ESG Enhanced UCITS ETF

Thank you so much, this is so helpful! JUST as I was about to pull the trigger after months of reading and research, seems like I have a lot more to do now hahaha.

ST/BBC I would love and greatly appreciate some advice on ethical investing if you have any. My priority is only environmental consciousness (don't really care about social responsibility/humans). Also I'd rather pick a 'screened' ETF that filters out the companies that do bad things (instead of investing in actively green companies). Happy to pay a higher TER, but absolutely against actively managed funds.

 

[Rknight]

I am getting a little confused now about which platform to use:

110- 30 = 80

40% IWDA
40% ES3
20% MBH

Investing 1k SGD per month

POSB IS = ES3 and MBH
Stanchart = IWDA

Is that correct ? in what situation does one need to look at using IBKR (beside investing more than 1k per month) ?
And why are others using Stanchart for ES3 and MBH ?

 

[swordsly]

I am getting a little confused now about which platform to use:

110- 30 = 80

40% IWDA
40% ES3
20% MBH

Investing 1k SGD per month

POSB IS = ES3 and MBH
Stanchart = IWDA

Is that correct ? in what situation does one need to look at using IBKR (beside investing more than 1k per month) ?
And why are others using Stanchart for ES3 and MBH ?

You are indeed confused.
POSB IS has neither ES3 nor MBH; it has G3B (the equivalent of ES3) and A35 (which is not an equivalent of MBH).

Some folks might prefer ES3 and/or MBH and thus use SCB instead, together with their IWDA pick and cycle their purchases.

If you do intend to use POSB IS, then your monthly investable for IWDA is going to be <1000SGD. In that case, bunching it up and buying every few months might be more cost efficient (through SCB).

Go run through some simulations for yourself to find out what works for you.

 

[flowerpalms]

To add on,

IB charges lower fees and even lower exchange rate spreads for larger investors as compared to SCB

I would say that since you have decided to invest 1k per month, you save you the hassle of choosing which RSP for the alternatives to MBKE MIP, and also having to choose G3B and A35 over ES3 and MBH.

With your 1k per month investment, no changes to the local stock and bond component. Follow the book:

ES3 and MBH - SCB
IWDA - IB

A significant change in shinys last edition of the book is the discontinuation of MBKE MIP. But unless you invest less than 1k per month, the alternatives we discuss shouldnt affect you. For 1k per month or more, the brokers and component to use remain status quo as above. Allocations to apply are the same as well. You wont go wrong here.

I am getting a little confused now about which platform to use:

110- 30 = 80

40% IWDA
40% ES3
20% MBH

Investing 1k SGD per month

POSB IS = ES3 and MBH
Stanchart = IWDA

Is that correct ? in what situation does one need to look at using IBKR (beside investing more than 1k per month) ?
And why are others using Stanchart for ES3 and MBH ?