Official Shiny Things thread—Part III

[chyn_no]

Anyone know who is the custodian for vanguard vwrd etf? Cant seems to find any info on that.

 

[hwckhs]

Anyone know who is the custodian for vanguard vwrd etf? Cant seems to find any info on that.

https://www.vanguardinvestor.co.uk/...n=equityglobal_ftseallworlducitsetf_fund_link
(VWRL is the same as VWRD, except that VWRL is quoted in GBP)

In the "Key Investor Information Document", I found:

Depositary: The Vanguard Funds plc ("VF") depositary is Brown Brothers Harriman Trustee Services (Ireland) Limited.

Is this what you are looking for?

 

[chyn_no]

https://www.vanguardinvestor.co.uk/...n=equityglobal_ftseallworlducitsetf_fund_link
(VWRL is the same as VWRD, except that VWRL is quoted in GBP)

In the "Key Investor Information Document", I found:


Is this what you are looking for?

Oh... Thanks a lot!

 

[viventa]

VWRA or LCWD are perfectly fine substitutes for IWDA.

What about the differences in expense ratio, AUM and liquidity? For instance, LCWD has the lowest expense ratio by far, but is also the least attractive in terms of fund size.

 

[Shiny Things]

Hi Shiny Things and Bbc watcher, i want to dca or lump sum investment (Sgd 477k) into Iwda but i keep thinking i can time the market cant bear to see losses in unrealiz3d profit or keep thinking yhe market can go lower or im dcaing into usd to buy IWDA should i just accept no one knows when the low or high is and i should go in lump sum or slowly dca knowing in the long term 28-40 years it will be significantly higher

Sent from Samsung SM-N960F using GAGT

Here are some full stops. Use them: ...................

Anyway. Being scared of the market going down after you buy in is totally natural. (It happened to me when I started investing!) A good solution is to scale in to your investment over a period of six months or so: that way, you can take advantage of equities being cheap now (so if they go up, at least you've bought some!); and if they go down, you'll be buying more at a cheaper price.

sorry just realized the english in my earlier reply is atrocious.


i would think fundamentally ST is coming from the angle that if one is likely to stay and incur bulk of living expenses in SG, being overly heavy into IWDA would also mean that the person would have to go through additional leg of usd/sgd fx exposure when unwinding

Nope. My point is that if you're going to retire in Singapore and spend the money you've been diligently investing, your cost of living is going to be pretty tightly correlated to how the Singaporean economy has performed. And the best hedge for that is Singaporean equities.

that is the reason why i was asking ST earlier regarding my intention to go full in into IWDA, skipping STI (reason also being STI under perform and mkt activity keep dropping yoy)

Yeah, to be honest it was pretty obvious that you were looking for an excuse not to buy Singaporean stocks and looking for some justification for it. We've had a lot of people coming in basically saying "but I don't want to own any Singaporean stocks, they're so boring, the STI never goes anywhere". As someone pointed out upthread, when stocks are dead and boring, that's exactly when you do want to be buying stocks.

Anyone else remember the "Death of Equities" Businessweek cover that basically marked a generational low in US equities back in the 70s?

Anyone know who is the custodian for vanguard vwrd etf? Cant seems to find any info on that.

It's BBH, but why does that matter?

 

[ranchfarm]

If the US dollar collapses, what will happen to stocks bought with USD like IWDA?

 

[BBCWatcher]

My point is that if you're going to retire in Singapore and spend the money you've been diligently investing, your cost of living is going to be pretty tightly correlated to how the Singaporean economy has performed. And the best hedge for that is Singaporean equities.

Well, that’s not true, sorry. But I think I know what you meant.

Retirement needs don’t depend on how much profit DBS makes over the next 25+ years. That doesn’t make sense. You’ve still got an electric bill to pay whether or not Singapore’s economy averages 1.5% or 1.8% growth over the next couple decades. (An electric bill is particularly interesting since it’s currently a close proxy for the price of natural gas, a globally traded commodity that doesn’t give a s*** about how much or little buying power the Singapore dollar has or how much demand comes from small Singapore. That’s just how it goes in a small, open economy. We could be overly worried about the wrong problem.)

However, you’ve got a desired retirement lifestyle to support (in a small, open economy), and gifts to make, all using Singapore dollars. So you’d really rather not be in the position of having the Singapore dollar steadily appreciate relative to most everything else. Not likely, but we cannot rule it out.

Now, it turns out the best available defense against that particular scenario (and others like it) is a rolling basket of 6 month Singapore government T-bills. (I’m only half joking.) MBH works, too. A Straits Times Index stock fund isn’t bad either in that role, BUT at best it’s only third best. There’s a reasonable argument that SGX-listed businesses would be harmed with a steadily appreciating Singapore dollar relative to most everything else because that’d make goods and services exported from Singapore less competitive.

What to do?

Well, I think everyone agrees a Singapore dollar bond fund works pretty well for Singapore dollar “basing.” The overall best available, realistic, long-term one (after bond-like CPF 4% accounts) is MBH. OK, tick.

Then I think there’s a reasonable argument if you want to hold “a little” ES3 or G3B. We should be honest and say that particular argument has been tough to make, with the Straits Times Index getting hammered across 1, 3, 5, and even 10 year intervals going back from now. What a drag, ugh. Having half your stock portfolio in the STI over an entire investing career is not looking brilliant at the moment. I still don’t think it’s brilliant, but I do like cheaper stocks when I’m a buyer. So if you want a “dollop” of ES3 or G3B — not as much as half of your stock holdings, but some — that seems like a reasonable idea. Provided you’re retiring in Singapore, of course.

Yeah, to be honest it was pretty obvious that you were looking for an excuse not to buy Singaporean stocks and looking for some justification for it. We've had a lot of people coming in basically saying "but I don't want to own any Singaporean stocks, they're so boring, the STI never goes anywhere". As someone pointed out upthread, when stocks are dead and boring, that's exactly when you do want to be buying stocks.

Well, there is the problem that the SGX is a problem, not Singapore’s real economy necessarily. Conventional (U.S. centric, and historical) wisdom is predicated on the stock market being at least decently functioning. With high confidence we can predict the SGX will never get a decent IPO. Indeed, it’ll see further delistings. Sorry to say, it sucks. It’s MySpace in a Facebook/Instagram world, metaphorically speaking. We know this, and it’s all but guaranteed. So are we holding “buggy whip” stocks in the STI? Maybe. I’m not brave enough to bet half my stock holdings on being wrong about this detail.

One of the magical aspects of passive stock index investing is the constant refreshing of the index components...when there’s a healthy market where up and coming companies (and yes some duds, too) go to raise capital. Well, we’ve got a few duds listing on the SGX, but no business with bright prospects is going to the SGX to list and to raise capital. I cannot fix this problem, and I don’t think anybody can, so I punt and suggest not overdoing it on the STI fund, that’s all.

If we could have a better retail instrument to bet on Singapore’s real economy (which is much more dynamic and creative than the dying stock market that happens to be located on or somewhere near Robinson Road), that’d be great. But sadly we don’t have one, and we probably never will. And I think it’s prudent to take the quality of the instruments into account, just as we do in recommending against instruments with high costs (high management fees, loads and sales charges, etc.)

 

[Torenoo]

Thanks BBC and all for writing at length to share your views and thoughts ,i certainly learned a lot from you guys. Very much appreciated.

ST - Yes agree, i make no excuses for trying to deviate away and is thinking out loud to better understand the underlying reasons and rationale for allocations into the 3 portfolio plan. (i was one of the early buyers of your first book)

I do feel that the end goal, retirement location and expenditure needs in terms of currency, phases of retirement (could have planned phase 1 and phase 2 with different location and expenditure needs) could differ vastly for everyone.

While the 110-age + 3 portfolio plan with the suggested adjustments over phases of life is a great plan for most following the mainstream path (start work, get married, buy house ,1-2 kids, accumulate retirements assets, retire 62, start draw down).

Another person not following the above may need to do some high-level adjustments to fit his plan as deem appropriate right ?

 

[celtosaxon]

Global stock funds are not currencies, but they have some correlation to currencies (plural). For example, if the euro moves in a certain direction, and if that movement has a clear effect in some direction on the real businesses that do business in and with the Eurozone, then that could affect the value of the global stock index fund.

Agree, and if you look at Singapore’s GDP it is impacted more by international companies doing business in the city state than by local companies listed here. This makes applying a home country bias here more risky than for someone retiring in Europe or the US.

Consider too, that few local companies listed here have the same level of global reach compared to top listed companies in the US or Europe. This means that investors with home country bias in the US or Europe have a greater level of international diversity, whether they realize it or not.

Singapore is an international business hub that is heavily dependent on overseas trade, overseas investments, overseas goods, and even the S$ is managed against a trade weighted band of overseas currencies.

Like it or not, retiring here makes you more exposed to global risks than you may realize and the best way to hedge that risk is a globally diversified portfolio.

 

[limster]

If the US dollar collapses, what will happen to stocks bought with USD like IWDA?

Buy gold if you want to hedge against US$ collapse.

Don't be left with a zero hedge when it happens!

 

[kurtgoh]

how come BBC and Shiny, knows so much about our singapore ?

are you guys residing in here too?

 

[ranchfarm]

Buy gold if you want to hedge against US$ collapse.

Don't be left with a zero hedge when it happens!

Will gold ETF like GLDM cut it?

And there's so many conflicting things that experts are saying about holding gold, like Warren Buffett who says don't buy gold, and Peter Schiff who says buy gold.

 

[celtosaxon]

Buy gold if you want to hedge against US$ collapse.

Don't be left with a zero hedge when it happens!

I’m not sure if you are serious, but assuming you are...

What % do you recommend in a portfolio? Most planners suggest 5% max.

Any risks around gold market liquidity during a collapse? If you can’t sell during a collapse, the hedge won’t be effective and has little value.

How about other metals that are currently less inflated than gold? It has been suggested that gold is in bubble territory.

 

[ranchfarm]

I just caught up on the last few pages and would like to post the hypothetical situation as a question, after BBCWatcher said that assets like IWDA are not related to the currency we buy it in:

1. Suppose I went on NYSE and bought ex-US world etf using USD at $50 per unit.
2. In a year, the US dollar collapses and devalued to half against the other currencies.

What will happen to the price of the ex-US world etf that I bought? Will it naturally double in price to $100?
Suppose it doesn't double in price and I sold it at $50 USD per unit and convert back to sgd, I would have lost half of my savings.

 

[leoch037]

I just caught up on the last few pages and would like to post the hypothetical situation as a question, after BBCWatcher said that assets like IWDA are not related to the currency we buy it in:

1. Suppose I went on NYSE and bought ex-US world etf using USD at $50 per unit.
2. In a year, the US dollar collapses and devalued to half against the other currencies.

What will happen to the price of the ex-US world etf that I bought? Will it naturally double in price to $100?
Suppose it doesn't double in price and I sold it at $50 USD per unit and convert back to sgd, I would have lost half of my savings.

if the ex-US world etf that u bought retained its value, it should be worth USD100 now, supposing only the USD is devalued to half and the rest remain status quo

an apple that's worth 1USD should be worth 2USD if USD devalues by half
if that apple becomes more or less than 2USD, it's because that apple gained or lost value, and not related to reason that i decided to sell the apple in USD or any other currency

 

[ranchfarm]

if the ex-US world etf that u bought retained its value, it should be worth USD100 now, supposing only the USD is devalued to half and the rest remain status quo

an apple that's worth 1USD should be worth 2USD if USD devalues by half
if that apple becomes more or less than 2USD, it's because that apple gained or lost value, and not related to reason that i decided to sell the apple in USD or any other currency

Thanks. That means even though I did not get any gain in value, I'd see the stock price of my ex-US world etf shoot up from $50 to $100 USD. That's the part I was trying to clarify.

 

[BBCWatcher]

Yes, I agree. There should be no first order real effects on non-currency assets when a currency devalues. The apple example is a good one.

However, there will be second order effects. If the U.S. dollar falls relative to other major currencies by half, U.S. goods and services exporters would be even more competitive, and real U.S. consumer import purchasing power would be impaired, presumably. All that would have real effects on businesses around the world, including here in our small, open economy named Singapore. The Monetary Authority of Singapore wouldn’t actually allow a 2:1 devaluation relative to major currencies to be fully reflected in the Singapore dollar. MAS would manage our currency so that it’d incorporate some of that hypothetical devaluation (not all). That is, the Singapore dollar would be pulled in the same direction, albeit not all the way. So maybe relative to the Singapore dollar it’d be a 1.8:1 devaluation — something like that.

Also, why is this hypothetical devaluation happening? Probably for some real reason(s) that affect real businesses. Thus real business valuations could be impacted up or down.

 

[s0crates]

Because many guys worship amdk la. There are other obvious sg sexperts here but don't spend all their time answering basic questions repeated 9999999 times.

Shiny doesn't know much about Singapore. He assumes that that 30 companies is a good representation of singspore, when it's obviously not.

Your shampoo and toiletries is by who ? Unilever and P&G.
Eat fast food Macdonald's and KFC (yum food) also not sg company
Every time we go online we are hit by Facebook/google ads, using Microsoft software etc.

Just look at your daily routine and see how much GLOBAL companies contribute to the GOODS AND SERVICES you consume rather than STI 30 ikan Bilis companies.

Where is sg companies in all this?

SPH with its paltry and dying offline and online revenue???
The local banks facing the digital bank competition which got the telcos decimated???
Where is the tech exposure? Consumer goods exposure??

STI is a super terrible index in all sense.

Sometimes going seedly also better. At least they got variety there. :/

how come BBC and Shiny, knows so much about our singapore ?

are you guys residing in here too?

 

[Shiny Things]

how come BBC and Shiny, knows so much about our singapore ?

are you guys residing in here too?

I lived in the little red dot for five years, 2007-2012.

Because many guys worship amdk la. There are other obvious sg sexperts here but don't spend all their time answering basic questions repeated 9999999 times.

Shiny doesn't know much about Singapore.

You know I can see this, right? Don’t be rude.

That said, your point about “your toiletries come from Unilever, your cars come from overseas, etc etc etc” is well taken. That’s why I encourage people to have an allocation to overseas stocks, and why I point out a very easy way to get broad-based exposure to those overseas stocks.

If your complaint is that you think there should be a bigger allocation to overseas stocks, that’s fine, but be civil about it.

Thanks BBC and all for writing at length to share your views and thoughts ,i certainly learned a lot from you guys. Very much appreciated.

I do feel that the end goal, retirement location and expenditure needs in terms of currency, phases of retirement (could have planned phase 1 and phase 2 with different location and expenditure needs) could differ vastly for everyone.

This is absolutely true. The ES3 + MBH + IWDA strategy is appropriate for most Singaporean investors. That said, I have a pretty steady stream of people reaching out for tailored advice because they have a particular situation—they’re retiring in another country, have large asset bases overseas, need to hedge a particular exposure, are already wealthy and need a more conservative allocation, etc etc etc.

However, you’ve got a desired retirement lifestyle to support (in a small, open economy), and gifts to make, all using Singapore dollars. So you’d really rather not be in the position of having the Singapore dollar steadily appreciate relative to most everything else. Not likely, but we cannot rule it out.
[...]
Now, it turns out the best available defense against that particular scenario (and others like it) is a rolling basket of 6 month Singapore government T-bills. (I’m only half joking.) MBH works, too. A Straits Times Index stock fund isn’t bad either in that role, BUT at best it’s only third best. There’s a reasonable argument that SGX-listed businesses would be harmed with a steadily appreciating Singapore dollar relative to most everything else because that’d make goods and services exported from Singapore less competitive.

BBCW, this is why I like debating with you. I don’t think we’re ever going to persuade each other about the local/global equity mix, but you have good points and you always make me think.

I haven’t looked at this closely enough to be certain, but a couple of thoughts:

1) I don’t know yet if there’s been a secular change in the direction of the SGD, but it was pretty steadily appreciating until about 2012 when I pulled the ripcord (I remember it was about 1.22 when I moved my cash from DBS to Chase). I wouldn’t bet against continued secular appreciation of the SGD; the MAS seems to like that, for reasons that are unclear to me.

2) I’m not 100% sure I agree with you that Singaporean equities are a third-best hedge for cost of living. My instinct is that real interest rates in the little red dot are pretty consistently negative, so buying bills would land you with a hedge that’s directionally right but also that consistently underperforms.

I do get your point that the Singaporean stock market is pretty sclerotic, but also, I grew up in Australia where the top 20 stocks by market cap consists of stodgy retail banks, rusted-on mining companies, the world’s worst telco (now that Sprint has collapsed into the arms of Big Magenta), and, inexplicably, the world’s only wooden pallet monopoly?

Aside from CSL, which I’ll absolutely give you, Australia doesn’t have a particularly exciting stock market either and they do fine. A banktacular stock market that nevertheless throws off 4% dividends won’t be exciting, but it’s certainly not bad.

If the US dollar collapses, what will happen to stocks bought with USD like IWDA?

I’ll defer to BBCW here, he explained it better than I could (especially because it’s like 7am here and I haven’t even finished my first cup). I’d even go further and say “the US dollar is not the Thai baht or Indonesian rupiah, it’s not going to do that, this is not something you need to worry about”.

Will gold ETF like GLDM cut it?

Yes. If you really must own gold, GLDM is the right way to do it.

And there's so many conflicting things that experts are saying about holding gold, like Warren Buffett who says don't buy gold, and Peter Schiff who says buy gold.

Well, Peter Schiff is an absolute certifiable loon, so there’s one point on the “don’t buy the yellow rock” side of the ledger.

 

[BBCWatcher]

BBCW, this is why I like debating with you. I don’t think we’re ever going to persuade each other about the local/global equity mix, but you have good points and you always make me think.

I'm with you to first principles, but I'm not with you to a 1:1 "local":"global" stock ratio dragged along the whole way. I wouldn't go that far that long.

However, at least we can say that ES3 and G3B are currently cheaper than they've been in quite a while.

Yes. If you really must own gold, GLDM is the right way to do it.

I think SGLN (London-listed) is better for non-U.S. persons who have concerns about U.S. estate tax.