To be fair, the "36% SRI" should be interpreted to mean that the portfolio may experience drawdowns as large as 36%. Well within margins...?

On the one hand, I'm glad that they listen to the data. On the other hand, what took them so freaking long? Freddy sent letter dy, say secondary sanction risk worrrr... Bruh Jack Ma disappeared for a few months just for making comments. That should've triggered a reassessment of KWEB's place dy laaaa. But nope, increase allocation summore. Good job EERA.

"More conservative" can already be done now/all this while by adjusting your SRI lower.

It becomes very apparent once you learn about the basics of portfolio construction that SA's asset allocation was not suitable for newbie investors (even at low SRI). If you did not at least warn your friends about it before this, you're doing them a disservice. Not even talking about the active management that SA applies.

I put in feedback to add VT, VWRA and ISAC into the selection. If they can scale the management fee according to the number of ETFs I have, then I might consider doing this instead of DIY. A 1-fund portfolio with no rebalancing, no need charge management fees kot...

It's called EERA. The algorithmic parameters are a closely guarded secret like KFC 11 herbs and spices.

In the absence of VT, the following is how I would construct a 100% equities portfolio to emulate VT's regional allocation with the limited number of regional ETFs:

Description	Ticker	Allocation
S&P 500	IVV	55.00%
S&P Small cap	IJR	5.00%
Europe	VGK	19.00%
Asia ex-Japan	AAXJ	9.00%
Japan	EWJ	6.00%
Canada	EWC	3.00%
Australia	EWA	2.00%
Cash	$$$	1.00%

A 75/24 portfolio would be like this (bond portion could use more refinement):

Description	Ticker	Allocation
S&P 500	IVV	41.3%
S&P Small cap	IJR	3.8%
Europe	VGK	15.0%
Asia ex-Japan	AAXJ	6.8%
Japan	EWJ	4.5%
Canada	EWC	2.3%
Australia	EWA	1.5%
International gov bond ex-us	IGOV	6.0%
Ex-US corporate bond	BNDX	6.0%
US aggregate bond	AGG	12.0%
Cash	$$$	1.0%

This post has been edited by DJFoo000: Jun 25 2022, 05:47 PM

Relatively low allocation to Asia because Asia ex-Japan only accounts for about 10% of the global equities market by market cap. https://investor.vanguard.com/investment-pr...lio-composition
By making allocations differently from market-cap weightage, you're making a bet that certain regions will over/under-perform relative to the global market. Nothing wrong with that, you just need to know what you're getting yourself into. The ultimate passive investor has no opinion on the market and rides it instead of making bets.

Your equities portion (corrected to 100% for ease of visualisation) look like this:
US - 53%
Asia ex-Japan - 33%
Euro - 9%
Japan - 4%

It can be seen that you're underweighting US & Europe, and overweighting Asia ex-Japan (more than 3x compared to market cap). Asian markets are down beaten and is still developing, so it's understandable you are betting on a massive rebound there (esp as China is ending lockdowns very soon (again)). This is an allocation that you need to babysit because once it massively rebounds, you might want to adjust it back to market-cap weightage (unless you're bullish on Asia long term), because you're exposed to 3x the downside (as it does the upside) compared to global market cap. Putting it in numbers, if somehow Asian markets drop 10% (all else unchanged), a global market-cap equities portfolio will drop 1%. However your portfolio will drop 3% instead due to overexposure to the Asian region. The upside is captured similarly, of coz.

On gold, consider that some of gold's performance is already captured as part of equities holdings as mineral mining companies (a quick search shows IVV and AAXJ contain gold mining companies), in equities market-cap weightage. This makes your "gold" holdings a productive asset. Holding gold in its spot equivalent opens up exposure to it as a non-productive asset (i.e. you're holding it for speculative reasons), meaning to say aside from price increase due to speculation, there is no real expected return from gold as it has no revenue, no sales, no dividends. Gold is only a weak inflation hedge according to many literatures. As Ben Felix says, spot gold is a good store of value if you plan to live to 2000 years old (paraphrase). Anyway, many other portfolio construction theories (dragon portfolio, all-weather portfolio, etc) have incorporated spot gold in it, so it's not an outlandish idea to include it.

I personally have no strong opinion on bonds, because it being the Yin to equities' Yang has been shattered as of late. Plus usually bonds come in when you're starting to insulate your capital from market risks, i.e. counting down to retirement.

Weighing by market cap is directly representative of the market composition. Imagine you are a high roller and you go to a nasi lemak roadside stall and say "I want to buy literally everything in your stall". You don't pick a bit of each, you literally buy everything. If that day there's a lot of rice left, you'll get more rice. Weighing by market cap is like that. You naturally buy more of what's more of in the market. Most market indices are market-cap weighted. S&P 500, Nasdaq-100, DAX, KLCI, STI, etc. The weird one is Dow Jones, which is price-weighted (you buy more of what's expensive).

The impact of doing it like this, as you mentioned, is that price fluctuations are influenced by the biggest companies in the market. The S&P 500 hasn't "crashed" for the longest yet all because the largest companies hasn't crashed yet, when in fact the smaller companies have already entered bear market long time ago. The moment the contagion reaches the top companies, the S&P 500 drops like a rock.

So yes, that is why US stocks take up around 60% of most world ETFs, because it is literally 60% of the world's equity by market cap. If the world equity market is worth USD 100 Trillion, the US equity market is worth USD 60 Trillion. There is some fudging of numbers if you search online (I've calculated that US's market cap is actually 44% of global market), probably due to an "investiblility" filter that indices put. Remember that Russia was demoted to "uninvestable" by many index makers.

Another type of weighting is called "equal-weighted", where each constituent is given equal weightage in a portfolio/ETF. Examples are like the ETF RSP (S&P 500 equal weighted) and QQQE (Nasdaq-100 equal weighted). In this instance, the price fluctuations are equally impactful regardless of company size. I tend to use the equal-weighted indices as a leading indicator for the main index.

Japan usually gets a special place because it is too big and matured a market to be invested together with the rest of Asia. In terms of equity market, Japan is a developed market, while other "developed" countries like Korea and China is actually classified as Emerging Market by MSCI (one of the index makers). By market cap, Japan is almost 40% of the total Asian equity market. Some investors prefer to refine their allocation to Japan with respect to the rest of Asia, esp with Japan being famous for the "lost decade", hence products like AAXJ were created.

Most region-based ETFs that are sold in developed markets have an ex-Country ETF to control for home country overweight and tax treatment. It is common for US investors to buy VTI + VXUS instead of VT because they can better optimise for tax. In UK there're ex-UK ETFs for similar reasons.

The problem I see in weighting countries by GDP in an equities investment portfolio is that a country's equities market does not fully capture it's GDP drivers. Let's take the US for example, specifically the sector components in VTI (supposed to represent 100% of the total investable market in the US) and compare it to US's GDP drivers.

https://www.morningstar.com/etfs/xmex/vti/portfolio

https://www.statista.com/statistics/248004/...dp-by-industry/

(understand the GDP data is 2020, but the general proportions do not change that much over the short term)

Take the tech sector. Under VTI, the technology sector is almost 24%, while the "information" sector is only a measly 5.5% of US GDP (debatable whether they are comparable sectors, just an example anyway).
Or take the utilities sector. 3% in VTI, 1.6% by GDP.

Not to mention that there remains large companies that drive a country's GDP that are still privately held (i.e. not investable via the market): https://en.wikipedia.org/wiki/List_of_large...nies_by_revenue

So even if you weigh the countries by GDP, your portfolio (which consists of ETFs that use market-cap weighted indices as its reference) does not reflect the GDP drivers of the country anyway. It will be difficult to describe what your portfolio is trying to reflect, due to the mishmash of concepts that do not align with one another.

The available literature on it does suggest doing a GDP-weighted portfolio has potential outperformance (which is all that matters). However, I suspect this theoretical performance was not able to be replicated in real life, hence the relative less-popularity of such indices and absence of such ETFs. The main deviation that I can see between market-cap and GDP weightage is US and China, where US is overweight and China is underweight. My interpretation of this is that China has big companies that are still private (Huawei being one of it, who woulda thought?!). You would not be able to capture those companies' performance anyway even if you increase China's weightage to match GDP. You're just investing more in companies already in the market. As far as compensating for market risks go, the available literature suggests that doing GDP-weightage represents a tilt towards Emerging Markets, and hence higher exposure to the value factor.

Maximum is 97% cash. Maybe 3% allocate to short duration US bonds.

But why you wanna do that though? You're basically giving SA free money. You still have to pay SA management fee on that amount. Switching portfolio funds are not eligible for the free promo. Need to determine if the forex protection outweighs the management fee.

Which Dimensional funds are those? Generally in market downturn, outperformance is achieved by having less drawdown then the general market. If the S&P 500 is down 20% but your portfolio only down 15%, it's considered a win.

Lollll looks like EERA has been retired entirely from new General Investing portfolios. RIP EERA.

The Blackrock portfolios are made up of some deliberately complicated products. Mish mash of thematic ETFs, factor investing, ESG, and regional ETFs. Thematic and ESG have not shown to compensate risk appropriately. GI is shown to be predatory against investing beginners once again. At least it's regionally diversified? Kek.

Also SA once again walked back on their previous hardline statement, this time on not going with UCITS ETFs. Now their GI portfolios are almost entirely comprised of UCITS ETFs. Who knew Blackrock themselves thought UCITS made more sense for non-US investors.

Whoops haha y'all are right. Old GI still there. Blinded by the shiny new thing.

Latest webinar: https://drive.google.com/file/d/1lHE3K77xo_...fta-sF-6lJ/view

Q&A starts at 45mins.

In short, they are leveraging on Aladdin.

Didn't notice an announcement for new additions to the Flexible Portfolio ETF selection, but I noticed VT is finally included among the selection under "International Stock Market". It's less ideal than the accumulating ETFs of VWRA, ISAC and the likes, but it's adequate for now. Will be shifting my entire GI portfolio into this.

My ISAC holdings in IBKR is many times my SA portfolio haha. Just lazy to take money out from SA considering the waiting time. Maybe the day will come someday.

The VT addition is good for anyone wanting to go boglehead without opening IBKR and want to DCA in MYR. Maybe can transfer to IBKR from time to time after accumulate a certain amount. Forming the habit is crucial


Probably added within the last 2 weeks as that was the last time I checked and still don't have VT yet that time. I've been doing my little part in advocating StashAway to add VT, VWRA and ISAC, submitting the request multiple times, even asking them point blank during their webminar.

Yet another thing Stashaway have walked back on. Glad common sense finally got to them.

Their previous opinion on UCITS vs US-listed ETF: https://www.stashaway.sg/r/etf-taxes-return...tracking-errors

If they still believed in it, they would've used VT instead of ISAC (which is the iShares version of VWRA, which is Vanguard's watered down UCITS version of it's US-listed ETF VT).

Wonder if they will pass on the savings from using accumulating funds back to investors in the form of lower management fees? Or they will pocket it senyap senyap?

Didn't manage to listen in on tonight's live chat where they discuss the most recent reoptimisation. Any tl;dw or key highlights?

If you're willing to pay the management fees, just use SA as an ETF buying proxy using SA Flexible. Nothing stopping you from making 1-fund portfolios.

Just announced/teased on the Stashaway Flexible webinar: one-fund portfolios in Flexible will incur a flat 0.3% p.a management fees (instead of the 0.8% - 0.2% ladder structure), applicable for each one-fund Flexible portfolios. I'm cautiously optimistic about this announcement, pending final confirmation in black & white once the no-fee promotion ends in June.

This post has been edited by DJFoo000: May 30 2023, 07:41 PM