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timpeterson 27.03.2020 00:53

Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Hi Fellow Europeans,

I'm trying to build the Ray Dalio Allweather fund on Degiro and as you probably know the ETF's recommended in american literature has some other variation in europe.

This is the recommended allocation. What would be a good European version of this that can preferably be made on Degiro? Maybe InteractiveBroker.

Also in regards to the new limitation of Europeans buying american ETFs. Do we have some EU version so we won't experience not being able to buy the ETF anymore as regulations tighten?

- So far 30% S&P500 should be an ok alternative to the 30% VTI.

- I'm located in Switzerland if it helps.



30% Vanguard Total Stock Market ETF (VTI) +7.21% YTD

40% iShares 20+ Year Treasury ETF (TLT) +15.96% YTD

15% iShares 7-10 Year Treasury ETF (IEF) +7.26% YTD

7.50% SPDR Gold Shares ETF (GLD) +25.71% YTD

7.50% PowerShares DB Commodity Index Tracking Fund (DBC) +9.81% YTD

Year-to-date total return through 9/26/16: +12.30%


___
So far this is my suggestion, please let me know if these are bad ETF's:

30% VANGUARD S&P500 $ IE00B3XXRP09
(0.07% p.a.Total expense ratio)

40% iShares USD Treasury Bond 20+yr UCITS ETF (Dist) $ IE00BSKRJZ44
(0.07% p.a.Total expense ratio)

15% BlackRock iShares USD Treasury Bond 7-10yr UCITS ETF (BlackRock Asset Management Ireland Limited) IE00B1FZS798
(0.07% p.a.Total expense ratio)

Can't find any for the last two.

Why are these naming conventions so convoluted and confusing? Makes me crazy trying to figure out what the hell i'm buying here.

Jim2007 27.03.2020 03:39

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
So you are living in Switzerland, you are from Europe and you are building a portfolio screwed towards the dollar and the US economy... why?

At a guess, I say press the pause button, toss that book in the bin and spend about 12 months learning about investing and in in particular asset allocation. That way you’ll know what you are doing and that is a big part of being a successful investor.

wantone 27.03.2020 10:13

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by timpeterson (Post 3163876)
Hi Fellow Europeans,

I'm trying to build the Ray Dalio Allweather fund on Degiro and as you probably know the ETF's recommended in american literature has some other variation in europe.

This is the recommended allocation. What would be a good European version of this that can preferably be made on Degiro? Maybe InteractiveBroker.

Also in regards to the new limitation of Europeans buying american ETFs. Do we have some EU version so we won't experience not being able to buy the ETF anymore as regulations tighten?

- So far 30% S&P500 should be an ok alternative to the 30% VTI.

- I'm located in Switzerland if it helps.



30% Vanguard Total Stock Market ETF (VTI) +7.21% YTD

40% iShares 20+ Year Treasury ETF (TLT) +15.96% YTD

15% iShares 7-10 Year Treasury ETF (IEF) +7.26% YTD

7.50% SPDR Gold Shares ETF (GLD) +25.71% YTD

7.50% PowerShares DB Commodity Index Tracking Fund (DBC) +9.81% YTD

Year-to-date total return through 9/26/16: +12.30%


___
So far this is my suggestion, please let me know if these are bad ETF's:

30% VANGUARD S&P500 $ IE00B3XXRP09
(0.07% p.a.Total expense ratio)

40% iShares USD Treasury Bond 20+yr UCITS ETF (Dist) $ IE00BSKRJZ44
(0.07% p.a.Total expense ratio)

15% BlackRock iShares USD Treasury Bond 7-10yr UCITS ETF (BlackRock Asset Management Ireland Limited) IE00B1FZS798
(0.07% p.a.Total expense ratio)

Can't find any for the last two.

Why are these naming conventions so convoluted and confusing? Makes me crazy trying to figure out what the hell i'm buying here.

I use Interactive Brokers and I am very happy with the low fees and very good trading software.

Not sure why you want to replicate this portfolio. I will look at the top holdings of the equity ETF and buy the stocks directly when there is a dip. With interactive brokers it is easy to do this. Depending on the size of your portfolio you can buy the commodity futures you need to get exposure in the sector. The rest of money you keep cash and buy at the dips.

If you live in CH then it is better to convert CHF to USD and invest in USD. USD is a world reserve currency. it ain't going anywhere.

timpeterson 27.03.2020 10:37

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by Jim2007 (Post 3163877)
So you are living in Switzerland, you are from Europe and you are building a portfolio screwed towards the dollar and the US economy... why?

At a guess, I say press the pause button, toss that book in the bin and spend about 12 months learning about investing and in in particular asset allocation. That way you’ll know what you are doing and that is a big part of being a successful investor.

Yes, because they have the best ETF's with lowest expense ratio. I see there might be currency risk i'm not sure how to handle this though. I have my income in CHF (live in CH). The yearly profit/loss rate is my main interest so whatever currency is safest i would go with. Hedging against a currency is likely going to reduce return significantly. What do you suggest? Thanks!

timpeterson 27.03.2020 10:49

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by wantone (Post 3163932)
#1...Not sure why you want to replicate this portfolio...
#2..If you live in CH then it is better to convert CHF to USD and invest in USD. USD is a world reserve currency. it ain't going anywhere...

#1 The allocation has much stronger performance than S&P500 over the longterm due to compounding effect. The S&P's volatility is poison for the compounding effect (-50% is fatal). In this blogpost i have made an Excel that compares the performance of S&P500 and RayDalioAllweather with 10k over 90 years. S&P500 end with 2.8mill and Ray with 4.6mill. + Ray has very little volatility, so you could pull out at any time of the 90years.
Direct link to excel: https://drive.google.com/file/d/1GrI...ZgwUQdBfv/view
Link to blog:https://www.reddit.com/r/eupersonalf...rs_old_in_the/

#2 I agree with the USD currency. EUR or CHF won't be safer or better than USD. Only a small currency risk issue, but you just need to make sure you don't convert you money in a time where the currency conversion is bad. I go longterm so i always plan to have +-5 years to wait for better markets.

Let me know if i'm delusional or if i'm on the right track? I'm no pro investor. ;)

wantone 27.03.2020 10:50

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Imo CHF is way too strong and it is better to change to USD now. It can go stronger but I doubt the SNB will allow this.

Phil_MCR 27.03.2020 10:59

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by wantone (Post 3163953)
Imo CHF is way too strong and it is better to change to USD now. It can go stronger but I doubt the SNB will allow this.

yup buying USD at 1.08 was perhaps the only timing i got right in the last couple of months :D

wantone 27.03.2020 11:57

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by timpeterson (Post 3163952)
#1 The allocation has much stronger performance than S&P500 over the longterm due to compounding effect. The S&P's volatility is poison for the compounding effect (-50% is fatal). In this blogpost i have made an Excel that compares the performance of S&P500 and RayDalioAllweather with 10k over 90 years. S&P500 end with 2.8mill and Ray with 4.6mill. + Ray has very little volatility, so you could pull out at any time of the 90years.
Direct link to excel: https://drive.google.com/file/d/1GrI...ZgwUQdBfv/view
Link to blog:https://www.reddit.com/r/eupersonalf...rs_old_in_the/

#2 I agree with the USD currency. EUR or CHF won't be safer or better than USD. Only a small currency risk issue, but you just need to make sure you don't convert you money in a time where the currency conversion is bad. I go longterm so i always plan to have +-5 years to wait for better markets.

Let me know if i'm delusional or if i'm on the right track? I'm no pro investor. ;)

Ok I admit I didn't spend much time looking at the details posted (didn't open the links either) but Ray Dalio is just an investor. It is risky to follow what other people do. Especially because in reality no one will ever tell you what he does.

Where you get the compounding effect?

Like I said you can easily create a stock and commodities portfolio using the weights from Ray Dalio's strategy and spent less fees and have more control on your investments.

It is not a bad idea to copy him but I know for a fact no serious investor will ever reveal his positions to others.

If my income was in CHF I would change the money to a mix of USD and EUR keeping CHF only for expenses. USD for investments and EUR for buying property and holidaying in the Eurozone.

Jim2007 27.03.2020 12:10

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by timpeterson (Post 3163945)
Yes, because they have the best ETF's with lowest expense ratio. I see there might be currency risk i'm not sure how to handle this though. I have my income in CHF (live in CH). The yearly profit/loss rate is my main interest so whatever currency is safest i would go with. Hedging against a currency is likely going to reduce return significantly. What do you suggest? Thanks!

I gave you my suggestion... not that I expect for a minute that you would follow it. You are missing the critical point, it is asset allocation that accounts for the major part of the return not the picking of the instruments. That is why I suggested you bone up on asset allocation.

GlobetrotterPL 03.04.2020 12:03

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by timpeterson (Post 3163876)
Hi Fellow Europeans,

I'm trying to build the Ray Dalio Allweather fund on Degiro and as you probably know the ETF's recommended in american literature has some other variation in europe.

This is the recommended allocation. What would be a good European version of this that can preferably be made on Degiro? Maybe InteractiveBroker.

Also in regards to the new limitation of Europeans buying american ETFs. Do we have some EU version so we won't experience not being able to buy the ETF anymore as regulations tighten?

- So far 30% S&P500 should be an ok alternative to the 30% VTI.

- I'm located in Switzerland if it helps.



30% Vanguard Total Stock Market ETF (VTI) +7.21% YTD

40% iShares 20+ Year Treasury ETF (TLT) +15.96% YTD

15% iShares 7-10 Year Treasury ETF (IEF) +7.26% YTD

7.50% SPDR Gold Shares ETF (GLD) +25.71% YTD

7.50% PowerShares DB Commodity Index Tracking Fund (DBC) +9.81% YTD

Year-to-date total return through 9/26/16: +12.30%


___
So far this is my suggestion, please let me know if these are bad ETF's:

30% VANGUARD S&P500 $ IE00B3XXRP09
(0.07% p.a.Total expense ratio)

40% iShares USD Treasury Bond 20+yr UCITS ETF (Dist) $ IE00BSKRJZ44
(0.07% p.a.Total expense ratio)

15% BlackRock iShares USD Treasury Bond 7-10yr UCITS ETF (BlackRock Asset Management Ireland Limited) IE00B1FZS798
(0.07% p.a.Total expense ratio)

Can't find any for the last two.

Why are these naming conventions so convoluted and confusing? Makes me crazy trying to figure out what the hell i'm buying here.

Where are you taking these YTD figures from? Either out of thin air or you have no understanding of what YTD means...

As an example: how is YTD return for VTI +7.21%, when 3/26 close was 131.11 and 12/31 adj. close was 162.81? :confused::confused:

spark 03.04.2020 12:34

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Buying ETF's in Euro
Trading currency of ETF shares doesn't matter. If you can't comprehend this simple fact, you shouldn't be investing.

Quote:

This is the recommended allocation. What would be a good European version of this that can preferably be made on Degiro? Maybe InteractiveBroker.

Also in regards to the new limitation of Europeans buying american ETFs. Do we have some EU version so we won't experience not being able to buy the ETF anymore as regulations tighten?
Interactive Brokers has no restrictions on buying US ETFs for swiss residents and offers very cheap fx conversion, you can't go wrong with picking it.

Quote:

40% iShares 20+ Year Treasury ETF (TLT) +15.96% YTD
Very limited upside as now IMHO and risky bet should the dollar depreciate. Understand what exactly you're stepping into with it: you're locking a massive amount of capital into 20 year treasuries yielding just 1% per year now, for 20 years! If interests drop to 0%, you get another +20% and that's it, end of the line. I doubt we'll see the greenback hitting negative in foreseeable future, but even then it's another +10-20% tops. In dollar terms, who knows how its value will evolve with massive money printing that's going on right now.

Quote:

So you are living in Switzerland, you are from Europe and you are building a portfolio screwed towards the dollar and the US economy... why?
Frankly I don't see a big problem with that. US stock market is the greatest market you can invest in today and for good reasons. What's the alternative you're proposing? Put everything into SMI a.k.a Nestle Roche Novartis?

The_Love_Doctor 03.04.2020 13:08

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by Jim2007 (Post 3164001)
I gave you my suggestion... not that I expect for a minute that you would follow it. You are missing the critical point, it is asset allocation that accounts for the major part of the return not the picking of the instruments. That is why I suggested you bone up on asset allocation.

It’s a good point not very well made.

You should “bone up” on being friendly and giving constructive feedback. ;)

wantone 03.04.2020 13:44

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by spark (Post 3167007)
Trading currency of ETF shares doesn't matter. If you can't comprehend this simple fact, you shouldn't be investing.


Interactive Brokers has no restrictions on buying US ETFs for swiss residents and offers very cheap fx conversion, you can't go wrong with picking it.


Very limited upside as now IMHO and risky bet should the dollar depreciate. Understand what exactly you're stepping into with it: you're locking a massive amount of capital into 20 year treasuries yielding just 1% per year now, for 20 years! If interests drop to 0%, you get another +20% and that's it, end of the line. I doubt we'll see the greenback hitting negative in foreseeable future, but even then it's another +10-20% tops. In dollar terms, who knows how its value will evolve with massive money printing that's going on right now.


Frankly I don't see a big problem with that. US stock market is the greatest market you can invest in today and for good reasons. What's the alternative you're proposing? Put everything into SMI a.k.a Nestle Roche Novartis?

+1

other than if it is a EUR ETF investing in US and other Euro markets obviously your returns are driven by the EUR Fx rate vs ccys in trading instruments included in ETF in addition to the performance of the investments. Only case if the money manager is hedging FX risk via currency swaps or other means but I doubt if this makes sense to do. Personally, I would prefer to manage the FX risk unless I know I have specific outflows in the future that need to lock the rate for safe of mind.

gipfelisturmer 03.04.2020 15:56

Re: Buying ETF's in Euro to create Ray Dalios Allweather fund allocation
 
Quote:

Originally Posted by timpeterson (Post 3163876)
...

Don't forget your 2nd pillar when you look at your overall portfolio allocation.

I am considering that as "bond-like" and therefore don't invest into any bonds outside of my 2nd pillar so far.
And their expected returns* long term are anyway crap - I consider myself young enough to not care for their "stability" for the current period.

* Or should I say, non-returns as for CH :) http://www.worldgovernmentbonds.com/...y/switzerland/


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