portfolio question

[The Accountant]

I think whether South Korea is EM or DM doesnt really matter since it is only a very small percent of the ETF value right?

Yes, you right. I just find it really interesting how they decide which country should be class as developed market. So if you own a mix of FTSE and MSCI Emerging market and global stock market, what it means is that you can either miss out on S.korea or overweight on her. You certainty don't wanna miss out good company like Samsung.

I get what you mean, around a year ago, I was thinking, well interest rate should be rising soon, lets just wait for bond price to drop.... Then SYBL rose 33% over the past year(in GBP terms). Should we really "time" our purchases if we believe in passive investing?

You certainty have a point. I have a confession about this, when I make a tactical assets allocation from ABF etf to short term corp bonds, I actually missed out the bond bull during Q4 2014. So perhaps tactical assets allocation is a zero sum game but to me, I would like to think it as portfolio management. Here's why: I have another 30 years or so to go, interest rates can't be going down another 14% for the next 30 years.

Anyway, since you want the bond ETFs to help diversify, I feel you should make it as volatile against interest rate as possible. That's also the reason why LT bonds are used in the Permanent Portfolio.

I see where you are coming from now. I am thinking is the reward for taking on such volatility worth it? I guess I will be looking into it this year. (my homework)

Any particular source that recommends REIT etf? Would like to learn how REITs help diversify a portfolio as well... If there aint a suitable choice, maybe we can wait for one....

Well yes. Rick Ferri has a case for REITs. REITs And Your Portfolio

They are a great diversifier during the dot com bubble, tho not so in 08 GFC.
I spotted a few model passive investor taking on REITS due to its fundamentally different nature compare to equity and bonds.

Here's Mr Captain Cash from Canada
Cash Accumulators Investment Roster - Mr. Captain Cash

Monevator from UK
The Slow and Steady passive portfolio update: Q4 2014

Rick Ferri's Core four from US
Core Four portfolios | Bogleheads® Blog

Although their REITs in each of them are different, they have something in common. It has to be tax efficient. You either pick a REIT fund from your home country (no withholding taxes and company tax), or you pick a global REIT(diversity) .

Since we do not have a REIT etf in SG, the only choice is a global REIT. The tax efficient one I found are Ishare and HSBC (both listed on LSE with withholding tax of <15%). For some reason, spdr global REIT have very high withholding tax expense in the P&L(>15% which caught me dumbfounded. I thought they had DTA with US! ) . Until I find a way to own the ishare Reit etf that I can obtain with low cost, I would stay out.

 

[w1rbelw1nd]

Yes, you right. I just find it really interesting how they decide which country should be class as developed market. So if you own a mix of FTSE and MSCI Emerging market and global stock market, what it means is that you can either miss out on S.korea or overweight on her. You certainty don't wanna miss out good company like Samsung.

Not so sure about the late sentence you made you... Since we are passive investors we surely dont want to care about individual stocks performance right? Anyway I believe VWRD has a small (1.5%) exposure in Korea, which should include a stake in Samsung

Here's why: I have another 30 years or so to go, interest rates can't be going down another 14% for the next 30 years.

You are right about this, but as we get ready to "buy on a dip", we lose the opportunity to rebalance using that asset class. Moreover, this asset class that both of us is being cautious about buying, is the backbone of almost all recommended passive portfolios... On hindsight I would have brought everything according to my planned portfolio. Poor decision....

Until I find a way to own the ishare Reit etf that I can obtain with low cost, I would stay out.

Thanks for the links on REITs! Being a REIT investor myself, I understand its appeal and difference from stocks. I think both of us just have to wait for the right REIT exposure, domiciled in a country with favourable tax regime before we invest in it!