European Permanent Portfolio With A Twist!

[ILoveMoney]

I have been reading this forum almost daily for a year! I love the PP concept. The stocks, bonds, gold & cash, I like it all.

Anyway... after a lot of thought and trial and error I have come up with this portfolio. I work/live in Belgium. Please be brutally honest in your assessment of it.

Looking forward to hearing your opinions on it. I have posted my reasons for picking this mix below in case you were wondering why I did what I did.

Stocks.
Europe
1. Large
5% db x-trackers Stoxx® Europe 600 UCITS ETF (DR), ER: 0.20%, Reinvests Dividends, Physical ETF
(Giant 51.87, Large 31.96, Medium 15.72, Small 0.44, Micro 0.00)

3% db x-trackers DAX® UCITS ETF (DR), ER: 0.09%, Reinvests Dividends, Physical ETF
(Giant 65.03, Large 33.15, Medium 1.83, Small 0.00 Micro 0.00)

2. Small
7% SPDR® MSCI Europe Small Cap UCITS ETF, ER: 0.30%, Reinvests Dividends, Physical ETF
(Giant 0.00, Large 0.90, Medium 51.95, Small 44.12, Micro 3.03)

USA
3. Large
10% iShares S&P 500 EUR Hedged UCITS ETF, ER: 0.45%, Reinvests Dividends, Physical ETF
(Giant 51.05, Large 36.36, Medium 12.53, Small 0.06, Micro 0.00)

Long Bonds
25% ComStage iBoxx EUR Liq. Sov. Div. 25+ TR UCITS ETF I, ER: 0.12%, Reinvests Dividends, Synthetic ETF

Gold
25% Xetra-Gold, ER: 0.36%, Reinvests Dividends, Physical ETC

Cash
25% Bank at 1.20%

What are your motivations for having chosen this mix?
Stocks
1. Why Large & Small Cap?
I want to cover my bases and bet on both Large and Small cap, instead of only betting on one of them. I didn't want to favor Large or Small as this is a long term play.

Marc De Mesel had 5% Dax and 20% Stoxx 50 in his stocks part of the portfolio. Since I have less European stocks I also reduced the Dax weighting to 3%.

2. Why International?
Same answer as 1. I don't want to bet only on Europe. The ETF I have picked is Euro Hedged.

3. Why did you pick the Stoxx 600 and not the EURO STOXX (also 600 stocks) ETF?
I wanted a small portion to be invested in the UK, Swiss, Sweden... as well. This ETF is not currency hedged but has performed excellent over the past 10 years. I don't want to bet solely on the EMU countries.

Long Bonds
4. Why the ComStage Long Bond ETF?
I don't want to pay 25% on dividends. I'd rather go pure German Long Bonds as Marc recommended but such ETF that reinvests dividends is not known to me.

5. Why no US Long Bonds?
While I would like US Long Bonds in my portfolio, I am not comfortable with the currency risk. I may add these in later when I know a thing or two more about hedging with futures.

Gold
5. Why the Xetra Gold ETF?
I'd rather picked the Euwax Gold ETF since it has a 0% ER. I don't know to much about the ETF (if anyone knows if this ETF has a maximum spread, please let me know). I decided to go with Xetra Gold for now until I am more confident in the Euwax ETF.

[frugal]

I have been reading this forum almost daily for a year! I love the PP concept. The stocks, bonds, gold & cash, I like it all.

Anyway... after a lot of thought and trial and error I have come up with this portfolio. I work/live in Belgium. Please be brutally honest in your assessment of it.

Looking forward to hearing your opinions on it. I have posted my reasons for picking this mix below in case you were wondering why I did what I did.

Stocks.
Europe
1. Large
5% db x-trackers Stoxx® Europe 600 UCITS ETF (DR), ER: 0.20%, Reinvests Dividends, Physical ETF
(Giant 51.87, Large 31.96, Medium 15.72, Small 0.44, Micro 0.00)

3% db x-trackers DAX® UCITS ETF (DR), ER: 0.09%, Reinvests Dividends, Physical ETF
(Giant 65.03, Large 33.15, Medium 1.83, Small 0.00 Micro 0.00)

2. Small
7% SPDR® MSCI Europe Small Cap UCITS ETF, ER: 0.30%, Reinvests Dividends, Physical ETF
(Giant 0.00, Large 0.90, Medium 51.95, Small 44.12, Micro 3.03)

USA
3. Large
10% iShares S&P 500 EUR Hedged UCITS ETF, ER: 0.45%, Reinvests Dividends, Physical ETF
(Giant 51.05, Large 36.36, Medium 12.53, Small 0.06, Micro 0.00)

Long Bonds
25% ComStage iBoxx EUR Liq. Sov. Div. 25+ TR UCITS ETF I, ER: 0.12%, Reinvests Dividends, Synthetic ETF

Gold
25% Xetra-Gold, ER: 0.36%, Reinvests Dividends, Physical ETC

Cash
25% Bank at 1.20%

What are your motivations for having chosen this mix?
Stocks
1. Why Large & Small Cap?
I want to cover my bases and bet on both Large and Small cap, instead of only betting on one of them. I didn't want to favor Large or Small as this is a long term play.

Marc De Mesel had 5% Dax and 20% Stoxx 50 in his stocks part of the portfolio. Since I have less European stocks I also reduced the Dax weighting to 3%.

2. Why International?
Same answer as 1. I don't want to bet only on Europe. The ETF I have picked is Euro Hedged.

3. Why did you pick the Stoxx 600 and not the EURO STOXX (also 600 stocks) ETF?
I wanted a small portion to be invested in the UK, Swiss, Sweden... as well. This ETF is not currency hedged but has performed excellent over the past 10 years. I don't want to bet solely on the EMU countries.

Long Bonds
4. Why the ComStage Long Bond ETF?
I don't want to pay 25% on dividends. I'd rather go pure German Long Bonds as Marc recommended but such ETF that reinvests dividends is not known to me.

5. Why no US Long Bonds?
While I would like US Long Bonds in my portfolio, I am not comfortable with the currency risk. I may add these in later when I know a thing or two more about hedging with futures.

Gold
5. Why the Xetra Gold ETF?
I'd rather picked the Euwax Gold ETF since it has a 0% ER. I don't know to much about the ETF (if anyone knows if this ETF has a maximum spread, please let me know). I decided to go with Xetra Gold for now until I am more confident in the Euwax ETF.

Hi,

how are you?

Nice resume.

1- What is the difference between DX2X and EXSI? Dividends only? Which one is synthetic?

2-  SPDR® MSCI Europe Small Cap : why you include 7% small caps?

3- iShares S&P 500 EUR Hedged UCITS ETF, ER: 0.45% - is more expensive and has no VOLUME. It is a new ETF. IUSE right? Why you included it?

4- ComStage iBoxx EUR Liq. Sov. Div. 25+ TR UCITS ETF : what is the TICKER? Does it have bonds from Spain, Greece...?
    you have EXX6 for more secure bonds

5- Gold etf- why not thar one without TER? Maybe divide from 2.

6- Cash: which bank? In your country?

Now that I wrote this 6 points I am reading your FAQ... but continue to comment my points.

Have a nice weekend!

Regards

[ILoveMoney]

Frugal, I like your enthusiasm and am happy to reply to your questions however please realize I have put a lot of time in putting this portfolio together. Just like I put a decent amount of time in creating the post here on the forum. It really annoyed me (so it appears) you didn't even take the time to read the entire post before firing of questions. Maybe I am making a big fuss over nothing, I don't know. Just wanted to let you know.

1- What is the difference between DX2X and EXSI? Dividends only? Which one is synthetic?

I picked db x-trackers Stoxx® Europe 600 UCITS ETF because it doesn't turn out any dividends. It uses direct replication, however the portfolio structure is optimized sampling.  iShares EURO STOXX UCITS ETF uses direct replication and the portfolio structure is full replication.

2-  SPDR® MSCI Europe Small Cap : why you include 7% small caps?

I already explained this in point 1.

3- iShares S&P 500 EUR Hedged UCITS ETF, ER: 0.45% - is more expensive and has no VOLUME. It is a new ETF. IUSE right? Why you included it?

Yes, the ticker is IUSE. The inception date was 30 september 2010 and has over $900 Million in assets under management. I would be surprised if this ETF doesn't have any volume. I think the spread today was 0.03% although I didn't check that during the trading hours.

4- ComStage iBoxx EUR Liq. Sov. Div. 25+ TR UCITS ETF : what is the TICKER? Does it have bonds from Spain, Greece...?
    you have EXX6 for more secure bonds

Thanks! I really like that the comstage ETF is 25+ years and it doesn't turn out a dividend.

Download the fact sheet here. It has a nice chart of all it's holding. The ISIN for this ETF is LU0444606619 not sure about the ticker.
https://www.justetf.com/en/etf-profile. ... rom=search

5- Gold etf- why not thar one without TER? Maybe divide from 2.

Already answered this one, in point 5 under the header gold.

6- Cash: which bank? In your country?

Yes, cash in my country. Would rather not share what bank. If you must know, send me a PM.

[frugal]

Sorry I started to write answer while still reading...

I read it all.

I prefer to keep base idea of HB.

Regards

[LazyInvestor]

Some opinions:

Stocks: I don't see the point of international diversification if you hedge it. Big european companies are already exposed to international markets the same way S&P 500 companies are. However, you should have international IMO exactly because of currency diversification. EUR is at best a weak currency. European economy is not shining either. Just go with Total World. If you want small/value read TrevH's thread at Bogleheads forum on simplification of Merriman's portfolio.

Bonds: Try to own them directly. You should be able to get German bonds or whatever else is a stable economy/country in EU.

Gold: Buy and store coins in one of the EU countries that makes it easy to do so: UK, Switzerland, Austria... If not possible, consider ZGLD. It's highly recommended in the PP book.

Cash: 1.2% interest is really high for Europe so whatever bank you are holding money in is really in need for money :-) Be careful :-)