European/German Permanent Portfolio on wikifolio - good/bad?

Discussion of funds that implement the Permanent Portfolio strategy

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fridolinfritz

European/German Permanent Portfolio on wikifolio - good/bad?

Post by fridolinfritz » Mon Jan 12, 2015 5:35 am

Hi everyone,

I am relatively new to the PP, just finished reading Craig's book, and am now looking at implementing it myself. I am also new to the financial investment world, so please bear with me if any questions or comments seem obvious.

Since I'm based in Germany, I did some Google research on good candidates for the 4 asset classes as a German, and I came across this:

http://www.wikifolio.com/de/HBPPORTF

Wikifolio seems to be a site where people can publish their portfolios and others can invest alongside them. The page is in German, but you should be able to Google Translate it.

My question is not regarding this site though, but more concerning the selection of assets:
  • 25% COMST. ETF IBOXX LIQI SOVGS DIVERSIF. 25+ TR - LU0444606619
  • 25% DB GOLD OEZT - DE000A0S9GB0
  • 1% EUWAX GOLD - DE000EWG0LD1
  • 24% ISHARES DJ STOXX 600 (DE) - DE0002635307
  • 25% Cash (not specified)
Reading the comments, it seems that the EUWAX GOLD is meant for long term holdings of gold. It has (so the guy on Wikifolio says) a higher spread but a lower cost (where can one find out about these costs? Could't find anything on Morningstar.). The DB GOLD OEZT has a lower spread and should be for rebalancing (still according to comments on wikifolio). Apparently, the perspective for this portfolio is to move to a 20% EUWAX Gold / 5% Xetra Gold split.

So, apart from the question regarding Gold (above), I guess I'd be interested in the general opinion on this portfolio by the people in this forum, especially from a European/German perspective.

More specifically:
  • Is ISHARES DJ STOXX 600 (DE) a good candidate for a stock index fund? It seems rather inexpensive 0.2%, but I could not find the % turnover which is an important criterion according to Craig.
  • Is the STOXX 600 a good index to track or would be DAX (and maybe mDAX) be better suited?
  • The ISHARES DJ STOXX 600 is distributing dividends (rather than reinvesting). Craig says reinvesting is not a good option for the PP, but he says so mostly because it makes tax reporting more difficult and it can "distort" the rebalancing bands. I am not sure the tax stuff applies to Germany since our brokerages deduct the tax automatically. Also, how are the rebalancing bands distorted? Isn't it the same thing if dividends just go into my cash allocation only that the cash bands would be "distorted" instead of the stock bands?
  • Is there an obvious advantage of using COMST. ETF IBOXX LIQI SOVGS DIVERSIF. 25+ TR over directly buying long running German govt bonds? I think they are regarded as being the "safest", is diversification (using the ETF) a good idea or just the "lazy" approach?
  • Since Germany stopped offering Tagesanleihen (our T-Bill equivalent), it seems that regular savings accounts ("Tagesgeld") seem to be the only option for cash. Am I correct or are there better options for cash?
Thank you everyone!

(I am not affiliated with wikifolio or the person running this portfolio...)
goodasgold
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by goodasgold » Mon Jan 12, 2015 8:02 am

fridolinfritz wrote: Reading the comments, it seems that the EUWAX GOLD is meant for long term holdings of gold. It has (so the guy on Wikifolio says) a higher spread but a lower cost
Willkomen to the list, fridolinfritz.

I can't comment on the German-based options you mentioned, but the PP book recommends the ownership of physical gold over ETFs and other non-physical resources, although a portion of gold in ETFs is helpful for rebalancing. Is it difficult to buy and hold physical gold in Germany?
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Harry.Browne » Mon Jan 12, 2015 11:33 am

Hello fridolinfritz,

I am surprised, that you found my Wikifolio and post it here. The World is realy small.

For your Questions a short reply:

The Stoxx Europe 600 is a very large ETF with over 600 Stocks and a very small TER. You can´t compare this one with the S&P 500.
You US Folks are very lucky with such a big  Index without any Currency Risk.

In Europe (exact Germany) you have Euro, but if you invest only in DAX30 or FAZ Index, you will miss a lot of good Shares, wich are dominated
in Great Britain, Swiss, Norway, Sweden, Danmark....

The Long Term Bonds are pure Euro. The advantage is, that this ETF is a swap ETF, that produce only exchange gains no interests.
Its easyer to transfer taxable income into the future.

The both Gold Zertifikate are physically covered and on demand you can get your Gold to your Bank.
Euwax with no additional Costs.

Cash is simply cash, nothing else.

The Wikifolio performed in 2014 very well.

You can build this portfolio with a much lower cost for yourself. For small money it could be a try with Wikifolio.

Any Question? By the Way, is to talk in german an option for you

Here is a link for further information to euwax gold https://www.euwax-gold.de/
an to xetra gold http://www.xetra-gold.com/xetragold/dis ... ation/gold
Last edited by Harry.Browne on Mon Jan 12, 2015 12:02 pm, edited 1 time in total.
fridolinfritz

Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by fridolinfritz » Mon Jan 12, 2015 10:24 pm

Hi Jörg,

thanks for your reply, I was secretly hoping the manager of that portfolio would also hang out in this forum and chime in :)

I am german, so we could talk in german, but I'm not sure that would be nice for the others on this forum.

If you prefer to answer in german, please do so and I'll translate if anyone is interested in the responses besides me :)

Thanks for the clarifications regarding stocks, bonds, gold and cash. I have two follow ups:

1. Your stock etf is distributing ("ausschüttend"). Is there a particular reason for this choice? Why is that better than reinvesting ("thesaurierend"). Is that a personal preference or for tax reasons (if so, which?)? For your bond etf (see below), you say that no interests are an advantage. Woulnt that mean a stock etf with no dividends would be better as well?

2. Your bond etf is swap based. Being a newbie to the investing world, I still see the risks of swaps above the benefits they may have. Above all, the default risk of one of the swap partners that comes into play. I have read that DB xtrackers are moving away from swap based etfs for instance. How real are these risks in your opinion? Do you think your portfolio would perform as well if I used regular German bonds?

Thanks for your advice. It is highly appreciated!

Jan
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Harry.Browne » Mon Jan 12, 2015 11:42 pm

Hi Jan,

Stock ETF: My shoice for that distributing Fonds is, that Wikifolio ist not free of fees. In the ammount Status, you can see, that every day, their is a debit for fees.

The distribution is used to fill up the cash. It generate Cash 4 times a year. All other etf do not generate Cash.

Out of Wikifolio you could use it for reballancing.

SWAP: First reason for bonds with this etf was, that Lang & Schwarz do not offer Bonds. The only option was an etf.
I selected the one with the longest Bonds in Euro inside.

For Wikifolio it makes no matter, if swap or not. Wikifolio is legaly a unsecure bond.

If you prefer replicating ETF, remember, this etf are lending Positions to other. For me, not realy a safer possibility.

The Wikifolio was first for tracking a HBPP for a longer time for me to get a feeling for Harrys advice.

The track record is now near one year. Start was the 18. of January 2014

Currently, their are many people, who are interested in this Wiki, so I decided to offer this Folio for real money soon.

For the pure HBPP I would not make a setup with Wikifolio, i prefer long Bonds from Germany. No Swap no lending.
In a small Portfolio, you have a higher risk with one ISIN for the whole Position of Bonds. It takes a time to build a Bond Ladder.

In my personelly HBPP the Bond Position is the: iShares eb.rexx® Government Germany 10.5+yr UCITS ETF (DE) DE000A0D8Q31, its also distributing 4 times a year, not realy the original long Bond a la Harry ( 20,39 Years ) but the longest one with a german ISIN

Reballancing actual with fresh money and distributions.


Gruß Jörg
Last edited by Harry.Browne on Tue Jan 13, 2015 6:01 am, edited 1 time in total.
Pfanni
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Pfanni » Tue Jan 13, 2015 3:32 am

Tax-discussions for German only :)


iShares ausschüttend mit deutscher ISIN...also sollte der steuerlich einfach sein, oder?
Last edited by Pfanni on Tue Jan 13, 2015 3:35 am, edited 1 time in total.
Harry.Browne
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Harry.Browne » Tue Jan 13, 2015 5:59 am

Pfanni wrote: Tax-discussions for German only :)
in english  ;D
iShares ausschüttend mit deutscher ISIN...also sollte der steuerlich einfach sein, oder?
Ja ist er, Domizil ist Deutschland, gehört zu den EX Fonds von Indexchange
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by frugal » Tue Jan 13, 2015 8:56 am

Hello German friends  :)

I am looking for the most solid broker or institution in EUROPE.

What is your top list?

Regards.
Live healthy, live actively and live life!
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Harry.Browne » Tue Jan 13, 2015 11:37 am

frugal wrote: Hello German friends  :)

I am looking for the most solid broker or institution in EUROPE.

What is your top list?

Regards.
What ist your Preferences?

Low costs, AAA+ Rating, 24/7 reachable or all of that? You can not answer This Question seriously.
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frugal
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by frugal » Tue Jan 13, 2015 1:38 pm

Hello,

if you can tell me a list of the best one on each feature it would be excellent.

Warmest regards.
Live healthy, live actively and live life!
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by ILoveMoney » Wed Jan 14, 2015 12:10 am

Harry.Browne wrote:
Here is a link for further information to euwax gold https://www.euwax-gold.de/
I was Googling Euwax gold and came back here! What a coincidence this thread was only started 2 days ago.

Unfortunately I don't speak German but am curious as to why - from what I have found - Euwax Gold has a 0% Expense Ratio.

How is this possible? Are there special terms and conditions? What should I be fully aware of when considering this ETF?

Also, since Euwax Gold is for long term holding... what should that minimum term be before breaking even with the higher spread costs? 5 years? 10 years?

@fridolinfritz. Here is a little bit more information about the etf. Apparently as you may have just read, it has a 0% ER.
https://www.justetf.com/en/etf-profile. ... rom=search
Last edited by ILoveMoney on Wed Jan 14, 2015 12:22 am, edited 1 time in total.
Harry.Browne
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Re: European/German Permanent Portfolio on wikifolio - good/bad?

Post by Harry.Browne » Wed Jan 14, 2015 5:16 am

current Price at Stock Stuttgart for EUWAX Gold

Bid = 33,63
Ask = 34,05

Spread = 1,25%

compare with xetra Gold for Example

Bid = 33,60
Ask = 33,64

Spread = 0,12%

cost p.A. = 0,36%

Break even = (1,25% - 0,12%) / 0,36% = 3,14 Years
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