Would you have any reading tips for those considering adding factor ETFs to their ETF portfolio? I'm thinking in particular of quality and momentum. After reading your profile, you pretty much live by it
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@SchlaubiSchlumpf Start with Ben Felix:
https://youtu.be/jKWbW7Wgm0w
In his Rational Reminder Podcast you will find a lot about this:
https://rationalreminder.ca/podcast-directory
This podcast is a real goldmine when it comes to finance.
I also just remembered that Gerd Kommer has written a whole chapter on this topic in the latest edition of Souverän investieren mit Indexfonds und ETFs.
https://youtu.be/jKWbW7Wgm0w
In his Rational Reminder Podcast you will find a lot about this:
https://rationalreminder.ca/podcast-directory
This podcast is a real goldmine when it comes to finance.
I also just remembered that Gerd Kommer has written a whole chapter on this topic in the latest edition of Souverän investieren mit Indexfonds und ETFs.
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•@PowerWordChill Thank you very much!
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•@SchlaubiSchlumpf okay the video is incredibly well researched. It motivates me to delve deeper. In particular, you really need to think about the weighting. There's a weighting in your pinned post that I might like. (Even though I don't know if I'd bother with a 1% Japan small cap). But you can't just write things off, so I'll have to see on what basis I get weights and which factors I add. The aim would be to keep my MSCI World and not sell anything from it. That would be rather unfavorable from a tax perspective.
I will probably also keep gold and Bitcoin shares. The equity component is for the gambling instinct and because it motivates me more to invest and get to grips with it. However, I want to reduce the proportion (by buying ETFs, not necessarily selling shares).
I will probably also keep gold and Bitcoin shares. The equity component is for the gambling instinct and because it motivates me more to invest and get to grips with it. However, I want to reduce the proportion (by buying ETFs, not necessarily selling shares).
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•@SchlaubiSchlumpf The 1% Japan SmallCaps are also just a gimmick. Besides, the ETF is damn expensive and distributing... but I really want my Japanese small caps! 😅
I would also prefer there to be an "Asia Pacific SmallCaps Value Weighted ETF".
At some point Stat Street will launch one... for sure... hopefully... oh who am I kidding. 😓
And as far as the weighting is concerned, the factors tend to perform similarly to the overall market.
To make sure you get something out of them, the weighting should not be less than 10% of your equity component.
Of course, you can also make it easy for yourself and simply start saving at $GERD. 😘
I would also prefer there to be an "Asia Pacific SmallCaps Value Weighted ETF".
At some point Stat Street will launch one... for sure... hopefully... oh who am I kidding. 😓
And as far as the weighting is concerned, the factors tend to perform similarly to the overall market.
To make sure you get something out of them, the weighting should not be less than 10% of your equity component.
Of course, you can also make it easy for yourself and simply start saving at $GERD. 😘
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•@PowerWordChill yup. If I save for about 2 years, I should end up with roughly 50\50 Factor / MSCI World. Sounds like a smart allocation to me. I think selling to reallocate would do more harm (tax) than good 😁
You also have to play a bit. I could even imagine hammering the EM completely into non-size factor. I'll definitely let you know what my target image looks like.
You also have to play a bit. I could even imagine hammering the EM completely into non-size factor. I'll definitely let you know what my target image looks like.
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@PowerWordChill Is there actually a value-weighted small cap ETF for the emerging markets? I don't know of a UCITS ETF, but it would make sense if there was one.
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@Index-Investor MSCI has an index on it:
https://www.msci.com/documents/10199/8c37272a-0e7b-4ec2-827b-e34f5c484fb4
But there is no product that I know of that could be bought by a European private investor... 😥
https://www.msci.com/documents/10199/8c37272a-0e7b-4ec2-827b-e34f5c484fb4
But there is no product that I know of that could be bought by a European private investor... 😥
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•@PowerWordChill Soo I've put together a little something. Can I throw my target allocation in your face (with my thoughts behind it)? I'd be interested to hear what you think.
I have to admit though that a major flaw of it is that if I don't feel like selling anything, I would have to add about 100k to the portfolio, which could take about 3-5 years (depending on portfolio performance) at my current pace.
The alternative would be to reallocate, but given the +16% in my msci world, that wouldn't taste so good.
I have to admit though that a major flaw of it is that if I don't feel like selling anything, I would have to add about 100k to the portfolio, which could take about 3-5 years (depending on portfolio performance) at my current pace.
The alternative would be to reallocate, but given the +16% in my msci world, that wouldn't taste so good.
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@SchlaubiSchlumpf Of course 😘
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•@PowerWordChill Supi 😁
First of all, as I said, I don't like selling ETFs for which I then have to pay taxes, even though they fit into the picture in principle. So I'll probably manage it by buying more, even if it takes longer.
I'm still struggling a bit with the exact weighting. The framework conditions are as follows:
General allocation: currently almost exclusively equities and ETFs. Gold and crypto have been added this year on a small scale. My individual stocks are gimmicks that I want to keep but not increase in size for the time being.
Therefore I come from:
68% ETF
32% individual shares
3% gold
0.7% crypto
Target picture would be
60% ETF
15% gold
15% crypto
10% individual stocks
Being gold and crypto, I'm still not sure whether I should take more gold and less crypto. That may also depend on whether there are any bargains to be had. But both will be built up.
I'm not a huge fan of emerging markets, but I'm taking them along for the sake of completeness. I'm toying with the idea of slightly overweighting the momentum factor compared to others, as it seems to be performing well so far. Of course, it could go wrong. Value has been weaker than Quality (in msci World) over the last few years, but I'll still take both as value has tended to be a bit stronger when bear markets have been going on.
The allocation within the ETFs is as follows:
40% $LCUW (MSCI World)
15% $XDEM (World Momentum)
10% $IS3Q (World Quality)
10% $XDEV (World Value)
5% $ZPRV (Small cap US Value weight)
5% $ZPRX (Small cap EU Value Weight)
7.5% $AE5A (Emerging Markets)
3.75% $PEH (EM Quality)
3.75% $5MVL (EM Value)
I left out smallcaps in EM in favor of lower EM participation. Especially as I have not found any EM Smallcap Value.
What do you think? Too cerebral to now build up the factors and small caps over 4 years, only to possibly outperform the MSCI World by 0.1% with a little less variance with luck?
I like the idea itself. As I said, crypto is a bit expensive for me right now. I can imagine that we will see lower prices here again. Until then, I've been stocking up in small tranches. However, this actually speaks against the principle of a fixed strategy.
I also wanted to have the momentum at 20%. But then I was happy with the other factors.
So far so good. What do you think? Do you have any suggestions for improvement, comments or objections?
First of all, as I said, I don't like selling ETFs for which I then have to pay taxes, even though they fit into the picture in principle. So I'll probably manage it by buying more, even if it takes longer.
I'm still struggling a bit with the exact weighting. The framework conditions are as follows:
General allocation: currently almost exclusively equities and ETFs. Gold and crypto have been added this year on a small scale. My individual stocks are gimmicks that I want to keep but not increase in size for the time being.
Therefore I come from:
68% ETF
32% individual shares
3% gold
0.7% crypto
Target picture would be
60% ETF
15% gold
15% crypto
10% individual stocks
Being gold and crypto, I'm still not sure whether I should take more gold and less crypto. That may also depend on whether there are any bargains to be had. But both will be built up.
I'm not a huge fan of emerging markets, but I'm taking them along for the sake of completeness. I'm toying with the idea of slightly overweighting the momentum factor compared to others, as it seems to be performing well so far. Of course, it could go wrong. Value has been weaker than Quality (in msci World) over the last few years, but I'll still take both as value has tended to be a bit stronger when bear markets have been going on.
The allocation within the ETFs is as follows:
40% $LCUW (MSCI World)
15% $XDEM (World Momentum)
10% $IS3Q (World Quality)
10% $XDEV (World Value)
5% $ZPRV (Small cap US Value weight)
5% $ZPRX (Small cap EU Value Weight)
7.5% $AE5A (Emerging Markets)
3.75% $PEH (EM Quality)
3.75% $5MVL (EM Value)
I left out smallcaps in EM in favor of lower EM participation. Especially as I have not found any EM Smallcap Value.
What do you think? Too cerebral to now build up the factors and small caps over 4 years, only to possibly outperform the MSCI World by 0.1% with a little less variance with luck?
I like the idea itself. As I said, crypto is a bit expensive for me right now. I can imagine that we will see lower prices here again. Until then, I've been stocking up in small tranches. However, this actually speaks against the principle of a fixed strategy.
I also wanted to have the momentum at 20%. But then I was happy with the other factors.
So far so good. What do you think? Do you have any suggestions for improvement, comments or objections?
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