There's speculation that s&p 500 might be overhauled? what are the implications for retail investors?
I haven't heard anything about this, so I'd be happy to take a look if you have a particular article you've seen. That said, my reflex is that no, this will not make any difference to anyone. The value you get for your 5bps or 20bps or whatever in ETF fees is that the fund manager takes care of all this index-realignment malarkey for you.
I was reading the product highlight of MBH and found this:
[…] The Fund can invest up to 20% of its total net
asset value in such non-Index Securities. The Fund will generally not hold all
the securities that are included in the Index.
Doesn't that means that I wouldn't be getting the index return. And kinda subject to the manager bond picking ability?
This is something that’s not unique to MBH—it’s something that all bond ETF managers have to deal with. (And this, again, is another example of the useful things you get for your 20bps a year.) This is going WAY too deep for most people, but let’s dive in anyway; the short answer is that ETF managers will try to track the index using whatever tools they have at hand, to get you as close as possible to the index return.
Index ETF managers always try to track the index as closely as possible. They’re not paid to outperform; tracking error in an index ETF is bad for their job security no matter which direction it’s in.
The tricky thing with bond ETFs is that there may be a bond in the index that’s very closely held, or had a very small issue size, so you literally
can’t buy it in the right proportion to track the index. In that case, a good bond ETF manager will say “OK, which of the bonds that I
can buy will have a nice tight correlation to the bond that I can’t buy?”. And instead of buying Illiquid Bond X, they’ll buy a little more of Liquid Bond Y That Tracks Closely To The Illiquid Bond.
(This, incidentally, is a genuine problem in junk bond ETFs! The big high-yield indices tend to have a few underlyings that are very illiquid, which makes them hard to buy, and this is why junk-bond ETFs tend to have larger tracking error than IG or equity ETFs. As a side-effect, it also makes those individual issues trade a bit richer than issues that aren’t included in the index.)
Hi,
I saw something in the news about a MSCI reweighing, but can't find much information online. Was wondering how this would impact an index like IWDA which tracks the MSCI World?
Cheers!
Also, a third thing that ETF managers do so you don’t have to worry about it. Basically what happens is that under the hood, the fund manager sells the stocks that are leaving the index, and buys the stocks that are coming in. You don’t have to worry about any of it.
Any books to recommend?
So far I've read these
-"Rich by Retirement" by ST
-"Random Walk down Wall Street" by Burton Malkiel
-"Way of the Wolf" by Jordon Belfort
Firstly, Jordan Belfort is a jackass. He was a penny-stock pump-and-dumper, not someone you want to emulate. You can ignore him. (As far as pop-finance writing goes, Michael Lewis’
Liar’s Poker is the classic of the genre.)
It’s very dated now, and value investing has been absolutely crushed over the last decade, but The Intelligent Investor might be a good next read for you. Don’t get over-excited and go out looking for “stocks trading below book value!” (They’re all banks) or “margins of safety!”, but the principles are still valid.
On that note, Seth Klarman’s Margin of Safety is also a classic of the equity-valuation genre; it’s out of print and horrifically expensive (currently $1,050 on Amazon, and no that is not a typo), but—and you didn’t get this from me—the google search results for “margin of safety klarman +filetype
df” are truly enlightening.
taps nose
Tried to get SWRD but I had to do CAR and I got this. Any way to get it? Already transferred SGD to USD account.
If you tell them you’ve done six trades or whatever, they don’t check. I’m just saying.
H[…]what is the cap on how much should we invest in overseas markets? (IWDA) I mean, like is there a certain amount whereby it becomes taxable to a point where the rate of returns are getting lesser till there is no point in investing in overseas market anymore?
Erm. This question doesn’t make a lot of sense, if I’m being honest. The constraint on how much you invest overseas is not tax (you’re a Singaporean resident, the only tax you pay is on dividends), it’s your
what are the 3 ETF fund portfolio again?
ES3 (local stocks); MBH (local bonds); IWDA (global stocks).
Is FSMOne the best broker for me... a new investor looking to invest maybe $200-400 per month?
Yes it is.
Btw, I have a CDP account on SGX... and there's this thing about Custodian and CDP...
That “thing about custodians and CDP” is, as we like to say in Australia, a furphy
https://en.wikipedia.org/wiki/Furphy . Your shares are just as safe with a custodian like Stanchart or FSM as they are at the CDP.
why are ETFs that are tracking MSCI World Index recommended over those that are tracking S&P 500 Index? thought that S&P 500 would have better performance.
The S&P 500
had better performance. That’s not a guarantee that it
will have better performance.
If one were to invest in S&P 500 index, which one should we go for?
SPY, IVV, Cspx?
We’ve been over this a fair bit, I think. You don’t need or want to overweight US stocks; if anything, you’re buying them after they’ve gone up, which is not the right time to buy them. Buy IWDA instead. But if you must, CSPX is the best way to buy the S&P 500.
Shiny Things, can I get some advice on what China etfs are most attractive from a volume/share class exposure/tax efficient pov?
I have a 100% iwda equity portfolio (will still continue to dca regularly) and some money in SSB. I am thinking of weighting 5% on a china etf just as a side bet for the long term.
Oof, “how do I China?” Is one question that pops up occasionally where there really are no good answers, and search is busted so I can’t find my previous answers. The problem is that the Chinese share market is difficult to invest in directly, so you have to go around.
My question would be, do you want China + HK + Taiwan, or specifically China?
Has anyone looked at the Ray Dalio All Weather Portfolio?
It seems interesting. The unusual part is the commodities which I have no idea of its behaviour in different market conditions.
All Weather pops up a lot here too, and the person who pointed out that it’s designed for billionaires is right.
The general principles are pretty sensible—broad asset allocation, rebalance regularly, etc etc etc. It’s not a million miles away from what I recommend. The thing that makes All Weather inappropriate for most investors is the
huge allocation to cash and commodities—nearly 50% of the portfolio, in most variants of All Weather.
That’s appropriate for a squillionaire like Ray Dalio, who should care about conserving his wealth more than he cares about growing it. But for the rest of us, who aren’t squillionaires and don’t run our own hedge fund slash corporate cult, you want a lot less allocation to conservative assets and a much bigger focus on growth. All Weather, for most of us, is a waste of money.
mortgage loans for banks seems to be extremely safe, since property prices are stabilised by government. In this case, pegging loan interest to sibor rates seems like free money for banks.
Any defaults banks can just repossess. plus loan value is not 100% of property value
Noooooope. That was the mentality that caused gargantuan losses for mortgage lenders and investors in 2008. Mortgage lending isn’t a slam dunk.
Y can't individuals/groups or crowdsourced platforms offer similar mortgage loans? maybe at even more competitive interest rates to snatch businesses from banks
Couple of reasons, completely leaving aside the legality of it:
- Individual investors can’t borrow at Sibor. You’ll pay more than that to borrow, which makes investing in mortgages less compelling.
- Even if you have an 80% or 70% LTV, you’re still going to be on the hook for the residual if property prices drop 20-30%;
- Repossessing a house and reselling it costs money. You’re going to incur another 5-6% in fees and charges and costs if you have to resell.
I mean, it could work, but all crowd-lending platforms tend to have very shaky histories for various reasons.
Are ETFs the most safe? Would you recommend investing into individual stocks?
Yes they are, and no I wouldn’t. Here’s the thing: when you invest in an individual stock, you’re betting that you are smarter than all of the professional traders and investors who think about nothing but stocks, 24/7, and have been doing it for years. And you might get lucky and pick one or two good stocks—but on average, you’ll spend a lot of time picking individual stocks, and you’ll probably do worse than the people who just bought an index ETF. Don’t waste your time or your money.
Hello everyone,
With the introduction of IBKR Lite, is it currently a better option than the IBKR Pro / SChart Online?
IBKR Lite isn’t available to Singaporean residents yet, and we don’t know if or when it ever will be.
Hello,
Just wanted to check, what base currency should you use for your IBKR account? Is it SGD or USD?
SGD is the easiest.
And do I have to open another currency account with another bank?
No you don’t. You can deposit and withdraw SGD to IBKR, and then convert it inside IBKR.
I agree that I can buy local stocks and bond ETFs in TWD such as the famous 0050 in Taiwan to build my own 3 fund portfolio. However, to trade IWDA, the best broker for someone in Taiwan would be IB, but the minimum commission will be a pain for someone that does not trade frequently and just buy and hold.
Oh come on, no. You’re talking about spending hundreds of bucks on a plane ticket, and then hundreds a year in FX conversion costs, just to save ten bucks a month? Just open an account with Interactive Brokers.
take your pick
