A multi-asset portfolio in Euros

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tarentola
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A multi-asset portfolio in Euros

Post by tarentola » Wed Jan 10, 2018 11:48 am

Following on from the discussion started by Sophie ( viewtopic.php?f=1&t=9289&start=24), I thought I would start a new topic here as the subject is variable portfolios. I wrote:
PS It seems to me that there are relatively few sane investing strategies that can be considered by a retired or retiring person - a non-gambler. The following come to mind:
The PP and variants - unbeatable in its historic low drawdown, and as good as many other portfolios in terms of return
Stocks and bonds 60/40 or similarly simple as championed by the Bogleheads
Stocks and bonds with other additions such as REITs (but little or no gold), such as Ivy, Larry and so on
Multiasset portfolios such as Merriman and 7-Twelve
Dividend stocks such as the Dividend Aristocrats, living off income from dividends, ignoring capital value, popular on Seeking Alpha.
The above could be managed actively or simply rebalanced.

I am considering multiassets for a complementary portfolio along with my dividend stocks. The other strategies in my view do not provide enough return or variation to make the increased drawdown risk worthwhile: they are not different enough from a PP. With dividend stocks, the drawdown is less important: dividend payouts hold up pretty well even during stock price crashes, and dividend-paying large-cap prices do recover eventually, as shown by the recovery since 2008-9.
So here goes with a multiasset portfolio in Euros. I already had small holdings of ETFs for China, Latin America and Japan, as well as two sectors, Health and Tech, so I added a few more ETFs and transferred some from my PP to generate a portfolio as follows:

EPA:RS2K AMUNDI RUSSEL 2K USA small cap

EPA:CEU AMUNDI ETF MS EUR EU big cap
EPA:MMS LYXOR SMALL CAP EU small cap
EPA:CV9 AMUNDI ETF EU VALU EU Value

EPA:TPXH AMUNDI TOPIX HDG x2 Japan

ETR:SPYX EM SMALL CAP
EPA:ALAT AMUNDI ETF EM LATAM
EPA:CC1 AMUNDI ETF MS CHN x0.5

EPA:TNO LYXOR ETF SX6 TECH
EPA:HLTW LYXOR ETF MSC WHC x2 Health

EPA:MTF LYXOR EUROMTS 15PY Long govt bond

EPA:GBS Gold Bullion Securities Limited
EPA:OILB ETFS OIL SECURITIES LIMITED ETFS BRENT 1MTH

EPA:C33 Lyxor3-5 Govt bonds x4

In summary, there is EU large cap, EU small cap, EU Value, USA small cap (I have USA large cap in a dividend portfolio), Emerging Markets (EM small cap, China and Latin America), sectors Tech and Health, long bonds, gold, oil and short bonds.

In Googlese, EPA is Paris Stock Exchange. Each ETF is about 5% of the total, with the exception of Japan, Health (x2=10%; I had these already) and short bonds (x4=20%) which are there to draw on when stocks everything else is down. I already had a small holding of a China ETF (2%).

This is an experiment as it is only a small percentage of my investments. I wanted to try it as a complement to the PP, especially as the Euro PP in recent years is not performing well. I intend to rebalance once a year, maintaining about 20% in short or relatively short bonds. I am not sure how to rebalance. Use 15-35% bands like the PP? Should I trim Japan and the Health sector ETFs, or just let them ride?

It is similar to the approach of Paul Merriman and Craig Israelsen (7Twelve). Eric@Servo (https://seekingalpha.com/article/401209 ... retirement) on Seeking Alpha goes into some detail on taking an income from a multiasset portfolio.
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Re: A multi-asset portfolio in Euros

Post by frugal » Sat Jan 13, 2018 5:12 am

tarentola wrote:Following on from the discussion started by Sophie ( viewtopic.php?f=1&t=9289&start=24), I thought I would start a new topic here as the subject is variable portfolios. I wrote:
PS It seems to me that there are relatively few sane investing strategies that can be considered by a retired or retiring person - a non-gambler. The following come to mind:
The PP and variants - unbeatable in its historic low drawdown, and as good as many other portfolios in terms of return
Stocks and bonds 60/40 or similarly simple as championed by the Bogleheads
Stocks and bonds with other additions such as REITs (but little or no gold), such as Ivy, Larry and so on
Multiasset portfolios such as Merriman and 7-Twelve
Dividend stocks such as the Dividend Aristocrats, living off income from dividends, ignoring capital value, popular on Seeking Alpha.
The above could be managed actively or simply rebalanced.

I am considering multiassets for a complementary portfolio along with my dividend stocks. The other strategies in my view do not provide enough return or variation to make the increased drawdown risk worthwhile: they are not different enough from a PP. With dividend stocks, the drawdown is less important: dividend payouts hold up pretty well even during stock price crashes, and dividend-paying large-cap prices do recover eventually, as shown by the recovery since 2008-9.
So here goes with a multiasset portfolio in Euros. I already had small holdings of ETFs for China, Latin America and Japan, as well as two sectors, Health and Tech, so I added a few more ETFs and transferred some from my PP to generate a portfolio as follows:

EPA:RS2K AMUNDI RUSSEL 2K USA small cap

EPA:CEU AMUNDI ETF MS EUR EU big cap
EPA:MMS LYXOR SMALL CAP EU small cap
EPA:CV9 AMUNDI ETF EU VALU EU Value

EPA:TPXH AMUNDI TOPIX HDG x2 Japan

ETR:SPYX EM SMALL CAP
EPA:ALAT AMUNDI ETF EM LATAM
EPA:CC1 AMUNDI ETF MS CHN x0.5

EPA:TNO LYXOR ETF SX6 TECH
EPA:HLTW LYXOR ETF MSC WHC x2 Health

EPA:MTF LYXOR EUROMTS 15PY Long govt bond

EPA:GBS Gold Bullion Securities Limited
EPA:OILB ETFS OIL SECURITIES LIMITED ETFS BRENT 1MTH

EPA:C33 Lyxor3-5 Govt bonds x4

In summary, there is EU large cap, EU small cap, EU Value, USA small cap (I have USA large cap in a dividend portfolio), Emerging Markets (EM small cap, China and Latin America), sectors Tech and Health, long bonds, gold, oil and short bonds.

In Googlese, EPA is Paris Stock Exchange. Each ETF is about 5% of the total, with the exception of Japan, Health (x2=10%; I had these already) and short bonds (x4=20%) which are there to draw on when stocks everything else is down. I already had a small holding of a China ETF (2%).

This is an experiment as it is only a small percentage of my investments. I wanted to try it as a complement to the PP, especially as the Euro PP in recent years is not performing well. I intend to rebalance once a year, maintaining about 20% in short or relatively short bonds. I am not sure how to rebalance. Use 15-35% bands like the PP? Should I trim Japan and the Health sector ETFs, or just let them ride?

It is similar to the approach of Paul Merriman and Craig Israelsen (7Twelve). Eric@Servo (https://seekingalpha.com/article/401209 ... retirement) on Seeking Alpha goes into some detail on taking an income from a multiasset portfolio.
hello

Interesting.

1.How much the EU-PP is behind the USPP annually in %?

2.You have more stocks from other regions, keeping gold and euro-bonds?

3. You ignore the exchange rate?

4. It seems to be a varation of PP. No?

5. For a VP isn't it better "Dividend stocks such as the Dividend Aristocrats, living off income from dividends, ignoring capital value, popular on Seeking Alpha."?

Regards

:)
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Re: A multi-asset portfolio in Euros

Post by tarentola » Tue Jan 16, 2018 2:21 pm

Frugal
To answer the questions:
1.Relative performance of Eu and US PPs. You can look this up yourself by comparing simple 4 -ETF portfolios, or comparing published results such as Marc de Mesel's EU results with US results. Portfoliocharts.com has similar average performances for US and German PPs since 1970.

2.More stocks from other regions... Multi-asset portfolios try to include assets which are relatively uncorrelated - like the PP, but a higher number of assets. Hence different geographical regions, and gold, and bonds. See the links in my post.

3.ignore the exchange rate? Yes, and hope it all evens out in the long term.

4. It is like a PP in that it aims for low correlations, but the percentage of each asset is nothing like the PP.

5. Dividend portfolio - isn't it better? Could well be, and I have a dividend portfolio, as I mentioned earlier. Larry Swedroe and others argue that dividend portfolios are less efficient in terms of total return, but I can see that if the markets drop, ignoring the capital and just taking the dividends would be a more psychologically sustainable strategy. Dividend portfolios share that characteristic with the PP.
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Re: A multi-asset portfolio in Euros

Post by frugal » Sat Jan 20, 2018 11:19 am

tarentola wrote:Frugal
To answer the questions:
1.Relative performance of Eu and US PPs. You can look this up yourself by comparing simple 4 -ETF portfolios, or comparing published results such as Marc de Mesel's EU results with US results. Portfoliocharts.com has similar average performances for US and German PPs since 1970.

2.More stocks from other regions... Multi-asset portfolios try to include assets which are relatively uncorrelated - like the PP, but a higher number of assets. Hence different geographical regions, and gold, and bonds. See the links in my post.

3.ignore the exchange rate? Yes, and hope it all evens out in the long term.

4. It is like a PP in that it aims for low correlations, but the percentage of each asset is nothing like the PP.

5. Dividend portfolio - isn't it better? Could well be, and I have a dividend portfolio, as I mentioned earlier. Larry Swedroe and others argue that dividend portfolios are less efficient in terms of total return, but I can see that if the markets drop, ignoring the capital and just taking the dividends would be a more psychologically sustainable strategy. Dividend portfolios share that characteristic with the PP.
Hi!

Can you suggest some DIVIDEND PORTFOLIOS please ?

Thank you!
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Re: A multi-asset portfolio in Euros

Post by tarentola » Sun Jan 21, 2018 4:12 am

Frugal - There is a lot of information available on the construction of dividend portfolios and I don't claim to be an expert. One thing I would say is that it is much easier to construct a dividend portfolio of US shares than of Euro shares, as there is a far better choice of dividend-paying shares.

One could set up a PP with 25% blue chip dividend shares instead of an ETF. The trouble is that sooner or later a conflict would arise between the dividend investors' approach of "never sell, just keep taking the dividends" and the PP investors' requirement to sell when rebalancing. But one could have a rebalancing rule that assumes reversion to the mean: "when selling shares to rebalance, sell the stock that has performed best" for example.
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Re: A multi-asset portfolio in Euros

Post by frugal » Sun Jan 21, 2018 10:59 am

tarentola wrote:Frugal - There is a lot of information available on the construction of dividend portfolios and I don't claim to be an expert. One thing I would say is that it is much easier to construct a dividend portfolio of US shares than of Euro shares, as there is a far better choice of dividend-paying shares.

One could set up a PP with 25% blue chip dividend shares instead of an ETF. The trouble is that sooner or later a conflict would arise between the dividend investors' approach of "never sell, just keep taking the dividends" and the PP investors' requirement to sell when rebalancing. But one could have a rebalancing rule that assumes reversion to the mean: "when selling shares to rebalance, sell the stock that has performed best" for example.
tarentola

hi

I understand well the USPP

Now I would like to know some real DIVIDEND portfolios.

Can you link a solid one?

How much dividend per year?

+- 10% average?

Regards!
tarentola
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Re: A multi-asset portfolio in Euros

Post by tarentola » Mon Jan 22, 2018 1:14 am

Frugal there are numerous authors on the internet running real dividend portfolios, and I have already given you a pointer to some of them:
There is no official dividend portfolion on Seeking Alpha, look for articles by David Van Knapp, David Crosetti, Chuck Carnevale. A good introduction here: https://seekingalpha.com/article/254416 ... -portfolio
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