Josué's Journal

Where are you and where are you going?
MDFIRE2024
Posts: 350
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: Josué's Journal

Post by MDFIRE2024 » Sat Nov 11, 2017 3:57 am

Hi Josué. Do you intend to invest also in SmallCaps, in order to diversify even more? Over the long run (history) SmallCaps have done fine, higher return, but also with higher volatility.

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Josué
Posts: 44
Joined: Tue Aug 23, 2016 5:48 pm

Re: Josué's Journal

Post by Josué » Sat Nov 11, 2017 5:41 am

For the sake of simplicity, I wasn't thinking about adding small cap ETFs to the mix... Don't large indices, like SP500 and Stoxx600, already include some small cap?

MDFIRE2024
Posts: 350
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: Josué's Journal

Post by MDFIRE2024 » Sat Nov 11, 2017 9:27 am

I understand. It is easier to manage less portfolio positions than more. Large indices, like SP500, cover only Big and Mid Cap. You can research that very easily on morningstar when you look at "Holdings Style", e.g. SP500 Out of diversification reasons/benefits I mixed Big/Mid/Small-cap with about 1/3 each. Each capitalization has its own positive and negative aspects of course.

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Josué
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Re: Josué's Journal

Post by Josué » Sat Nov 11, 2017 11:28 am

I see, did you use ETFs for the Big/Medium/Small cap allocation? If so, which ones did you buy for each capitalization?

Thanks for the Morningstar tip!

MDFIRE2024
Posts: 350
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: Josué's Journal

Post by MDFIRE2024 » Sat Nov 11, 2017 3:05 pm

Here you can read more about the general principles of my Asset Allocation viewtopic.php?f=3&t=9309#p151915

Yes I use 12 ETFs. Of these 12 ETFs "only" 7 ETFs are for equities (if you don't count gold producers). Please consider that I am based in Germany and therefore try to use German listed ETFs only. With 12 ETFs I can apply my favoured Asset Allocation very good.

% ETF
5 ETFS Physical PM Basket ETC EUR
10 iShares Diversified Commodity Swap (DE)
2,5 iShares DJ Asia Pacific Sel Divi 30 (DE)
10 iShares Global Govt Bond ETF USD Dist...
5 iShares Gold Producers ETF USD Acc EUR
10 iShares JP Morgan $ EM Bond ETF USD D...
15 iShares MSCI EM Small Cap ETF USD Dis...
2,5 iShares MSCI Japan Small Cap ETF USD ...
15 UBS ETF MSCI Emerging Mkts USD A dis EUR
15 UBS ETF MSCI World USD A dis EUR
5 WisdomTree Europe SmallCap Div ETF EUR
5 WisdomTree US SmallCap Dividend ETF EUR

The huge benefit with morningstar is, that you can create your own portfolio and then you can do a "X-Ray". It shows you how many percentage of your portfolio is invested in Big/Mid/Small and Value/Blend/Growth.

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Josué
Posts: 44
Joined: Tue Aug 23, 2016 5:48 pm

Re: Josué's Journal

Post by Josué » Sun Nov 12, 2017 7:46 am

Thanks! What's your opinion about justETF.com ?

What do you mean by 'German-listed ETFs'? You mean traded in the German markets? I am not paying much attention to where the ETFs that I plan to buy are traded (mainly Netherlands and Germany, I don't live in any of those countries though).

An important question that I have for you: how often do you buy your ETFs? I suppose you don't buy all of them every month (in the proportions you defined), as you would be placing 12 buy orders, and would pay brokerage fees on all of them, no? Also, are you doing euro cost averaging? i.e., are you regularly investing the same amount in each ETF? I'm finding it hard to clearly define a strategy in this point.

This is my current idea for how to buy:
1) Accumulate 1.500€

2) If last ETF buy order was
  • more than 1 month ago:
    - invest 1.500€ in ETF according to the proportions
  • less than 1 month ago:
    - wait until time since last transaction is more than 1 month
    - invest 1.500€ in ETF according to the proportions
3) if portfolio value is
  • >= than retirement portfolio goal:
    - retire
  • < than retirement goal:
    - back to 1)
The idea of accumulating 1.500€ is that it allows me to buy at least 2x AMS:CSPX (S&P500 tracker) and it's high enough to make my transactions infrequent enough to minimize brokerage fees (3 orders per 1.500€ accumulation).

Also, it will be hard to accumulate 1.500€ every month, so my investing intervals will surely be larger than monthly, which is usually the recommended in most dollar cost averaging articles I've read. I don't think that's a big problem though, since my investing horizon is long.

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Josué
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Re: Josué's Journal

Post by Josué » Sun Nov 12, 2017 8:24 am

BTW, my current plan for stock-ETF allocation is:
  • 45% iShares Core EURO STOXX 50 UCITS ETF (Acc)
  • 40% iShares Core S&P 500 UCITS ETF (Acc)
  • 15% iShares Core MSCI Emerging Markets IMI UCITS ETF

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