hazellend
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Post by hazellend on Dec 14, 2021 22:21:15 GMT
Perhaps anyone investing in P2P isn't entirely sane but that aside ..... 65% of my investment pot is in equities, this is invested in hands off low cost global trackers! I've had it suggested this isn't suitably diversified despite being global trackers. I'd appreciate some opinion on whether you'd be comfortable investing entirely in this form of investment. Equities split 50/50 purely for fund provider diversifcation, but both aiming to track broadly the same HSBC Global FTSE All World Vanguard FTSE Global All Cap Both are held in IWEB so no holding platform diversification. I have no interest in handpicking stocks and my aim was a worldwide broadly diversified, hands off long term investment with low holding cost. Completely sane. Apart from some leftover turds in P2P I’m 100% equities VWRL, 7 figures. I do have a DB pension and 50k in PBonds
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jester
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Post by jester on Dec 16, 2021 10:01:55 GMT
hazellend I knew you'd be along soon enough in support of the all in low cost global market approach! Likewise I have a DB Pension, although I'll probably get bought out of that before I retire. Can I ask though, do you ever question whether there is some wisdom in the thought that global funds are extremely heavy in US Tech and better diversification is actually achieved with additional UK/EU/Emerging Market exposure? I realise this sounds like trying to beat the market but it's more a view that global markets are actually skewed in one direction. They've certainly got me thinking, and remember only dictators don't at least consider that there might be a better approach  Who knows!! I certainly don't!!
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Post by Ace on Dec 16, 2021 10:11:00 GMT
I'm with hazellend on equities. Once you start trying to balance there is no end to it, you're on the slippery slope to thinking you can beat the markets then on to stock picking. |
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Post by Deleted on Dec 16, 2021 10:24:44 GMT
hazellend I knew you'd be along soon enough in support of the all in low cost global market approach! Likewise I have a DB Pension, although I'll probably get bought out of that before I retire. Can I ask though, do you ever question whether there is some wisdom in the thought that global funds are extremely heavy in US Tech and better diversification is actually achieved with additional UK/EU/Emerging Market exposure? I realise this sounds like trying to beat the market but it's more a view that global markets are actually skewed in one direction. They've certainly got me thinking, and remember only dictators don't at least consider that there might be a better approach Who knows!! I certainly don't!! Yes Global markets are heavily weighted to USA and USA Tech.
I don't believe in Long Term Holding
I do hold assets for a long time (10 years+) but I do set a sell figure for everything I own.
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tallsuk
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Post by tallsuk on Dec 16, 2021 11:35:07 GMT
The US market has done phenomenally well over the last 20 years and an element of this must be the huge amount of debt taken on by the US markets. This success means that global funds are very heavy in US stock and therefore do not actually offer the diversification that every sensible investor craves.
This is simply a mathematical anomaly that the global funds are not designed to consider. A global fund that has 60-65% of stock from one country can not be considered diversified.
There is a huge difference between choosing an ETF for each major region (N America, Europe, Asia Pac, Emerging Markets) and stock picking. By adding commodities and bonds you are able to diversify even further. A global fund currently means you are placing a big bet on the US economy.
There is a good argument that betting on the US is actually betting on the global economy, especially as the US tech sector is very much a global industry but that does mean you are reliant on a single country that elected Trump as president.
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hazellend
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Post by hazellend on Dec 16, 2021 11:50:26 GMT
hazellend I knew you'd be along soon enough in support of the all in low cost global market approach! Likewise I have a DB Pension, although I'll probably get bought out of that before I retire. Can I ask though, do you ever question whether there is some wisdom in the thought that global funds are extremely heavy in US Tech and better diversification is actually achieved with additional UK/EU/Emerging Market exposure? I realise this sounds like trying to beat the market but it's more a view that global markets are actually skewed in one direction. They've certainly got me thinking, and remember only dictators don't at least consider that there might be a better approach Who knows!! I certainly don't!! I don’t question those things. In my younger years I learned the hard way that I know nothing that the market doesn’t and I’m happy just accepting whatever returns it gives. The market is very good at making smart people seem dumb.
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jester
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Post by jester on Dec 16, 2021 21:32:09 GMT
Thanks everyone for your input, it's been great to hear the two lines of thought for passive investing. Invest in global tracker, anything else is trying to beat the market versus global markets are skewed towards the US and their tech giants, regional trackers are needed for true diversification! I can see this both ways and before this chat was originally very much with hazellend that anything other than Global Trackers is looking for an edge. However as tallsuk and others have eloquently described this does leave you very exposed to one nation and their tech, 55% US in my case! Personally I'm adjusting my holdings, adding an ETF from each major region .. the only question now is how much of each!!!! .. Ace I feel like I'm on the slippery slope already    |
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hazellend
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Post by hazellend on Dec 16, 2021 21:53:00 GMT
Thanks everyone for your input, it's been great to hear the two lines of thought for passive investing. Invest in global tracker, anything else is trying to beat the market versus global markets are skewed towards the US and their tech giants, regional trackers are needed for true diversification! I can see this both ways and before this chat was originally very much with hazellend that anything other than Global Trackers is looking for an edge. However as tallsuk and others have eloquently described this does leave you very exposed to one nation and their tech, 55% US in my case! Personally I'm adjusting my holdings, adding an ETF from each major region .. the only question now is how much of each!!!! .. Ace I feel like I'm on the slippery slope already I think the main thing is to chose an allocation that you will stick to and is easy to rebalance. Something like: 40% US, 30% Europe, 10% FTSE 250, 10% emerging markets
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daveb
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Post by daveb on Dec 16, 2021 22:06:18 GMT
China Japan and Hong Kong are a bit bigger than Europe surely?
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Post by Ace on Dec 16, 2021 22:19:24 GMT
... and thus the slippery slope gets greased...
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tallsuk
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Post by tallsuk on Dec 16, 2021 22:51:42 GMT
I totally agree with Hazellend about trying to build something very simple that is easy to balance on an annual basis. As there are 4 global regions N America, Europe, Asia Pac and Emerging Markets it is reasonable to assign each 25%.
However, giving some credit to the US and accepting that EM is more of a gamble you could change that to N America 40%, Europe and Asia Pac 25% and then EM 10%. Personally, I would also have a wide basket of commodities purely for increased diversification and yes this means tinkering with the numbers to suit your own tastes but it is still very simple.
You can get ETFs that follow these markets as cheaply as you would a global tracker and they are very simple to balance. Anything more detailed and you really are going down the slippery slope that Ace talks about.
On a scale of 1-10, where 1 is a global tracker and 10 is individual stock picking, I would score this method a 2. A bit more complex but still very basic.
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agent69
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Post by agent69 on Dec 16, 2021 22:54:49 GMT
Covid tsunami appearing over the horizon, but the markets are all up today.
As the great Jimmy Greaves use to say - 'it's a funny old game'
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hazellend
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Post by hazellend on Dec 16, 2021 23:35:48 GMT
China Japan and Hong Kong are a bit bigger than Europe surely? Much smaller
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tallsuk
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Post by tallsuk on Dec 17, 2021 0:01:01 GMT
China Japan and Hong Kong are a bit bigger than Europe surely? Thats where the slippery slope really starts as Asia Pac is bigger by market cap but more European markets are considered developed. The Japanese market is bigger than every European country but China is still classed as an Emerging Market and therefore seperate. To make things even more confusing, MSCI considered S Korea (home of Samsung) as an Emerging Market but FTSE considers it to be developed. This means that your EM tracker should follow the same index as your Developed Asia Pac tracker. I think Vanguard are the only major name to use the FTSE index but please dont quote me on that.
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daveb
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Post by daveb on Dec 17, 2021 16:32:31 GMT
China Japan and Hong Kong are a bit bigger than Europe surely? Much smaller USA 55.9% Japan 7.4% China 5.4% UK 4.1% France 2.9% Switzerland 2.6% Germany 2.6% of the total world equity value.
wikipedia has something else again, but still USA/China/Japan/HK/UK with France and Germany down at 9 and 10.
What is your reference Hazellend?
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