Author Topic: Australian Investing Thread  (Read 479709 times)

misterhorsey

  • Bristles
  • ***
  • Posts: 259
Re: Australian Investing Thread
« Reply #2750 on: February 13, 2017, 04:53:47 AM »

Alright thanks for the in-depth response, got a few things to explain:

1. Stagnation is a missed opportunity, but it's not a risky one. I am happy with cash in the bank knowing that it might not be earning as much as stocks, or anything else, because it's still fundamentally cash. $10k is still 10K and it's still worth a lot (even if exactly what it buys changes slightly), baring massive changes what 10k can buy me today and next year is pretty similar, so I'm venturing nothing but an opportunity to risk the money. Which in my way of seeing the world, is less risky.

Yes, definitely, cash from one year to the next is pretty safe (banks can fail too, but hopefully unlikely).

However, once you factor in time, and the missed opportunity from many years of compounding returns offered by growth assets, then the difference in returns between asset classes increases.

Not sure if you've seen this graph but it's worth a look.

https://static.vgcontent.info/crp/intl/auw/docs/resources/index_chart.pdf?utm_source=IndexChart&utm_medium=LandingPage&utm_campaign=Ret2016&utm_content=Ret

Of course, if you are wanting to buy a house in 5-10 years, one key thing you may not have is time to smooth out the dips.

But you sound like you know what your doing and if having 50/50 defensive/growth is what helps you sleep at night, then you should do it. Preferably with scheduled rebalancing.


2. If I invested 10k and the price halved I wouldn't be happy. If I invested 10k and I got 5% return instead of 10% return because of a more conservative portfolio I'd be happy.


A broad based 50% decline is pretty rare, and dollar cost averaging would allow you to even profit from such an event, assuming you have additional funds at hand and ample time to recover.

But one thing to consider is the way the amount of time you are invested, and compounding returns over that period, can affect the way you think of your investments. Over time, the longer you are invested and the more time you've had for compounding to work, the more sanguine you become about falls in your portfolio value.  At least that's my relatively limited experience i.e.  What's to worry about a 5% decline in a day, if you're up over 50% from when you bought in?

Growth in your portfolio also reaches a point where the (paper) losses that you suffer in a day exceed how much you could have saved in a year. And then the real big falls, the ones that we all dread, the 50% decline like the GFC, are of course the ones that in hindsight turn out be once in a generation buying opportunities.

This somewhat laid back approach to volatility is predicated on having time to let your investments do their work.  If you have a specific timeframe where you want to shift your investments into a property, and that was non-negotiable, I'd be inclined to keep more of it as cash too.






LonerMatt

  • Bristles
  • ***
  • Posts: 261
Re: Australian Investing Thread
« Reply #2751 on: February 13, 2017, 12:28:43 PM »
A bond I own yields 5.75%, my high interest account yields 3.5%. Granted if rates increase then that won't be as good a deal any more, but it's not bad. Unless there's something I'm missing, which there often is.
Hi LonerMatt, which HISA is that one, or did you mean 3.05%? The best I can find these days is 3.00-3.05%

For the bond yielding 5.75% you may need to check if that's nominal yield or the current yield. Nominal yield means the bond interest divided by the face value, which could be a lot less than the current value (and therefore current yield might be much less). The other thing is the credit risk. If it's a government bond or corporate, and if corporate what is the risk of default. You can always find better interest rates but usually they come with more risk attached. Sometimes that can be worth taking too. But generally the cash/ fixed interest serves a defensive function in the portfolio, i.e. better to take risk with your shares.

You're right it's about 3%, I was making a guess and I should have been more clear with that, thank you.

I'm assuming, now, that it's nominal yield. This is exactly the information I came here to find :)


Alright thanks for the in-depth response, got a few things to explain:

1. Stagnation is a missed opportunity, but it's not a risky one. I am happy with cash in the bank knowing that it might not be earning as much as stocks, or anything else, because it's still fundamentally cash. $10k is still 10K and it's still worth a lot (even if exactly what it buys changes slightly), baring massive changes what 10k can buy me today and next year is pretty similar, so I'm venturing nothing but an opportunity to risk the money. Which in my way of seeing the world, is less risky.

Yes, definitely, cash from one year to the next is pretty safe (banks can fail too, but hopefully unlikely).

However, once you factor in time, and the missed opportunity from many years of compounding returns offered by growth assets, then the difference in returns between asset classes increases.

Not sure if you've seen this graph but it's worth a look.

https://static.vgcontent.info/crp/intl/auw/docs/resources/index_chart.pdf?utm_source=IndexChart&utm_medium=LandingPage&utm_campaign=Ret2016&utm_content=Ret

Of course, if you are wanting to buy a house in 5-10 years, one key thing you may not have is time to smooth out the dips.

But you sound like you know what your doing and if having 50/50 defensive/growth is what helps you sleep at night, then you should do it. Preferably with scheduled rebalancing.


2. If I invested 10k and the price halved I wouldn't be happy. If I invested 10k and I got 5% return instead of 10% return because of a more conservative portfolio I'd be happy.


A broad based 50% decline is pretty rare, and dollar cost averaging would allow you to even profit from such an event, assuming you have additional funds at hand and ample time to recover.

But one thing to consider is the way the amount of time you are invested, and compounding returns over that period, can affect the way you think of your investments. Over time, the longer you are invested and the more time you've had for compounding to work, the more sanguine you become about falls in your portfolio value.  At least that's my relatively limited experience i.e.  What's to worry about a 5% decline in a day, if you're up over 50% from when you bought in?

Growth in your portfolio also reaches a point where the (paper) losses that you suffer in a day exceed how much you could have saved in a year. And then the real big falls, the ones that we all dread, the 50% decline like the GFC, are of course the ones that in hindsight turn out be once in a generation buying opportunities.

This somewhat laid back approach to volatility is predicated on having time to let your investments do their work.  If you have a specific timeframe where you want to shift your investments into a property, and that was non-negotiable, I'd be inclined to keep more of it as cash too.

Yes, I guess that is hard - knowing what time frame there is and what to do within that.

BUt this is all great food for though - I don't have a specific response, but I do think I need to spend a bit more time considering the time frame I'm working with, and then how that relates to asset volatility. At the moment I'm thinking maybe 65% stocks, 25% bonds 10% cash but we'll see, maybe the cash side is un-needed.
www.mattdunnephoto.com
IG: matt.dunne

When you get wealthier make the table bigger, not the wall higher.

FFA

  • Bristles
  • ***
  • Posts: 472
    • Financially Free Australia
Re: Australian Investing Thread
« Reply #2752 on: February 13, 2017, 02:41:51 PM »

http://australiangovernmentbonds.gov.au/etbs/coupon-interest-rate-and-yield/

http://www.asx.com.au/asx/markets/interestRateSecurityPrices.do?type=GOVERNMENT_BOND

check out these. The second one shows nominal (or coupon) versus current yields. e.g. GSBI21 due 15 May 2021 has a coupon yield of 5.75% but the current yield is 2.057% as of now....  (the bond price now 116.4 is much higher than it's face value of 100.0)

JourneyAnt

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: Australian Investing Thread
« Reply #2753 on: February 13, 2017, 04:46:39 PM »
Interest rates are on the way up, so bonds will be on the way down.  10 years as bond duration sounds too long to me under such conditions.  5 years max.

If you routinely purchase and keep your asset allocation, yields will be going up though?

* Using say VAF or a VGB Bond Index

mjr

  • 5 O'Clock Shadow
  • *
  • Posts: 28
  • Location: Brisbane, Qld
Re: Australian Investing Thread
« Reply #2754 on: February 13, 2017, 07:53:18 PM »
You can get term deposits now for 3% and the odds are that rates will go up from here, albeit slowly.  I wouldn't go anyway near a bond with 2% yield at this stage of the cycle.

iloveanimals

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Australian Investing Thread
« Reply #2755 on: February 13, 2017, 07:56:34 PM »
Sorry, I didn't explain myself well. I meant that if your fund was just in equities, there wouldn't be any maturity because of the way the underlying investments perform.
Ok - its half equities the rest cash/bonds...so this is where I thought the "maturity" would come into play - but Vanguard saying no, just growth of unit value of the fund, which is the part I don't get.  Cheers

lets talk through something odd that can happen when material new subscriptions and redemptions are made to a fund.

For vanguard funds (and any other ETF) the value of the units include the accrued income. Say for example a vanguard fund holds a bond or a stock worth $1,000, and the fund is made up of 1,000 units so the unit price is $1 on 1 January 2017, and you own all of it.

Lets say the stock or bond the fund is holding pays a coupon or dividend of $50 on February 15, and assume no other value changes.

The value of your units is now $1.05 each ($1,050). If someone else wants to buy into the fund they need to subscribe for units at $1.05 each. Lets say they subscribe for 1000 units too.

The fund now has $2,100 of value in it. Lets assume no other transactions until the end of the quarter.

The fund has income of $50 earned on Feb 15. It therefore pays a distribution of $0.025 per unit to each investor on 31 March. So you only get income of $25, but the value of your fund is $1,025.

Now here's the thing. There are some fund managers that will adjust for this by paying out $100 and then fix it up on the investors' annual tax statement (deem that you have the $50 as income and the other guy gets $50 of capital returns). It's administratively simple for the bean counters to do for a fund with few investors. It's not really possible for a fund with half a million investors going in and out at various times with hundred of stocks in the portfolio.

Thanks that makes so much sense!

iloveanimals

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Australian Investing Thread
« Reply #2756 on: February 13, 2017, 07:57:59 PM »
@iloveanimals
this article came out just in time for you:
https://www.vanguardinvestments.com.au/retail/ret/articles/insights/research-commentary/portfolio-construction/planning-a-holiday.jsp

Quote:
Investors may set unrealistic desired returns based on a variety of influences including their own investment experiences (good and bad), historic returns over various periods, lists of the latest highest-performing managed funds, media reports and investment advertising.

Unsurprisingly, [...] an investor's desired return is often much higher than their required return. In turn, this can lead to investor taking excessive risks in the pursuit of achieving those higher, unrealistic returns.


Thanks No friends - this was a very good read!

LonerMatt

  • Bristles
  • ***
  • Posts: 261
Re: Australian Investing Thread
« Reply #2757 on: February 14, 2017, 02:17:42 AM »
You can get term deposits now for 3% and the odds are that rates will go up from here, albeit slowly.  I wouldn't go anyway near a bond with 2% yield at this stage of the cycle.

Easy - I'll use TDs instead. Pretty easy to find 3%ers

Now the harder question, my investments currently are not in the funds I want (though not by any means bad funds or inappropriate ones). Sell and swap, or just keep and not bother?
www.mattdunnephoto.com
IG: matt.dunne

When you get wealthier make the table bigger, not the wall higher.

JourneyAnt

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: Australian Investing Thread
« Reply #2758 on: February 14, 2017, 03:33:03 AM »
Hoping to glean some info

If you had a choice of Exchange Traded Funds or Listed Investment Companies for long term investing, which would you rather and why?

deborah

  • Magnum Stache
  • ******
  • Posts: 4681
Re: Australian Investing Thread
« Reply #2759 on: February 14, 2017, 03:41:16 AM »
You can get term deposits now for 3% and the odds are that rates will go up from here, albeit slowly.  I wouldn't go anyway near a bond with 2% yield at this stage of the cycle.

Easy - I'll use TDs instead. Pretty easy to find 3%ers

Now the harder question, my investments currently are not in the funds I want (though not by any means bad funds or inappropriate ones). Sell and swap, or just keep and not bother?
I wouldn't sell anything that you had for less than a year, because CGT halves as soon as you've had something for a year and a day. Are you still in a low earning year - when you will earn less than is needed for a superannuation $500 from the government if you put $1000 into super? If so, I would make sure you did that this financial year. If you're going to buy a house in a few years, you could sell them at that stage to fund your deposit - it's an ideal time to change things around, by selling the things you don't want.

misterhorsey

  • Bristles
  • ***
  • Posts: 259
Re: Australian Investing Thread
« Reply #2760 on: February 14, 2017, 06:34:41 PM »
3 factors to consider when thinking about swap and sell, or not bothering.

1) CGT events if you sell (as Deborah mentioned)
2) Cost of ongoing fees if you stay
3) Market timing - either by selling out of one fund, or even just by staying.

If the funds aren't too bad, or inappropriate, and fees are okay, I'd be inclined to stay with the funds and build the overall portfolio around them.  You may not have your desired asset allocation but it's probably close enough.  Then wait for a low income year to sell. Or offset any gains from any accrued capital losses you have from previous dumb investments.

I envy those who had the knowledge and foresight and werewithal to go straight into index funds from the get go (although I dont think they were quite as accessible when I started earning and saving).


LonerMatt

  • Bristles
  • ***
  • Posts: 261
Re: Australian Investing Thread
« Reply #2761 on: February 14, 2017, 09:21:24 PM »
They are index funds - IOZ, and another global one I forget, which I think is a Vanguard one.

Thanks for the advice, will hold and chill.
www.mattdunnephoto.com
IG: matt.dunne

When you get wealthier make the table bigger, not the wall higher.

marty998

  • Magnum Stache
  • ******
  • Posts: 4177
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #2762 on: February 15, 2017, 12:54:46 AM »
Solid result from CBA today plus comments from Janet Yellen lifted the major indices higher.

$4.9 billion for the six months with a $1.99 dividend. Happy days.

kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2763 on: February 15, 2017, 05:07:42 PM »
I'll be moving my super from AMP to SunSuper and I'd like to get some thoughts about my new AA. I'm 41yo so I have time to ride out the bumps and get some growth.

I'm currently thinking:
  • 40% Australian shares (index)
  • 20% International shares - hedged (index)
  • 20% International shares - unhedged (index)
  • 20% Australian property (index)
I'm not so sure about the International shares - considering the time until my preservation age, should I bother with hedging at all and simply have 40% International unhedged? Or perhaps a different ratio?

Property seems to do ok, however that is based on future returns from past performance and all that. Perhaps I should drop property and have a 50/50, or perhaps a 40/60, or a 60/40 Aus/Intl mix.

It would be great to get some thoughts.

Thanks

misterhorsey

  • Bristles
  • ***
  • Posts: 259
Re: Australian Investing Thread
« Reply #2764 on: February 15, 2017, 06:32:33 PM »
I've been curious about the Sun Super option for a while, but the idea of manually balancing allocations put me off as I am prone to analysisparalysis.  My current super (Index Growth Option offered by Plum does automatic balancing, at a 0.37% fee per annum).

Have you got a strategy in mind for rebalancing?  Is it as simple as choosing an arbitrary date once a year and adjusting your allocation?

It's a pretty basic question I realise - but sometimes these practical issues are hard to get the head around, and ultimately inform the wider strategic objectives.

iloveanimals

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Australian Investing Thread
« Reply #2765 on: February 15, 2017, 06:39:17 PM »
Super..yes have read that Sun Super is good but what about Hesta? I am currently with Asgard and need to make the move as it has been chewing up funds with silly fee's and charges.

misterhorsey

  • Bristles
  • ***
  • Posts: 259
Re: Australian Investing Thread
« Reply #2766 on: February 15, 2017, 06:59:07 PM »
Oh gawd, I'm answering my own questions now.

I just called Sunsuper and it's simply a matter of logging in and changing your % allocations.  Some issues spring to mind:
- ensuring the discipline to rebalance once a year, or more. Or on the flipside, stopping yourself from rebalancing everytime the market suffers some fall, rise, indigestion or Trump signs an Executive Disorder.
- cost of buy/sell spread (probably negligible, if you only do it once a year)

However, apparently the pre-set options effectively rebalance daily based on unit prices (though your gains or losses aren't crystalised as all your dealing with is the unit price.)


kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2767 on: February 15, 2017, 07:03:08 PM »
From what I read on this forum, SunSuper gets a good rap. The fees are certainly cheaper than AMP. The Aus / Intl index funds are 100% Vanguard at about 0.09% IIRC, vs the 1.8+% that AMP is taking!

SunSuper have a Balanced Index fund at about 0.17% and they automatically rebalance. I guess that is always an option.

For my particular selection of index funds I could always rebalance every 12-18 months. Can easily be done on their website.

deborah

  • Magnum Stache
  • ******
  • Posts: 4681
Re: Australian Investing Thread
« Reply #2768 on: February 15, 2017, 07:17:06 PM »
Anything is better than AMP

steveo

  • Handlebar Stache
  • *****
  • Posts: 1347
Re: Australian Investing Thread
« Reply #2769 on: February 15, 2017, 07:23:05 PM »
kivex - I think your allocation is fine but I would personally do a 50/50 split within your growth assets between Australian and International or even higher within your International exposure. I also wouldn't hedge it.

If you own your property I wouldn't allocate a cent to property. You could add some bonds if you want too. I suppose that is your choice.

kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2770 on: February 15, 2017, 07:48:04 PM »
kivex - I think your allocation is fine but I would personally do a 50/50 split within your growth assets between Australian and International or even higher within your International exposure. I also wouldn't hedge it.

If you own your property I wouldn't allocate a cent to property. You could add some bonds if you want too. I suppose that is your choice.

Thanks steveo. What are your reasons for not hedging? I'm new to this so still learning. Also could you explain your reasons about property allocation (or lack of).

deborah

  • Magnum Stache
  • ******
  • Posts: 4681
Re: Australian Investing Thread
« Reply #2771 on: February 15, 2017, 08:07:37 PM »
My own personal take: Without hedging you get currency movement in your portfolio. Also, hedging adds to the management fees.

steveo

  • Handlebar Stache
  • *****
  • Posts: 1347
Re: Australian Investing Thread
« Reply #2772 on: February 15, 2017, 08:10:51 PM »
kivex - I think your allocation is fine but I would personally do a 50/50 split within your growth assets between Australian and International or even higher within your International exposure. I also wouldn't hedge it.

If you own your property I wouldn't allocate a cent to property. You could add some bonds if you want too. I suppose that is your choice.

Thanks steveo. What are your reasons for not hedging? I'm new to this so still learning. Also could you explain your reasons about property allocation (or lack of).

My opinion for not hedging is that the currency fluctuations over time should even themselves out. You are though probably taking a hit in fees in relation to the hedging. If you own your own property in Australia you more than likely have a massive allocation to property. I don't believe in adding more property to your portfolio because you have enough exposure.

Eucalyptus

  • Stubble
  • **
  • Posts: 140
  • Location: South Australia
Re: Australian Investing Thread
« Reply #2773 on: February 15, 2017, 08:18:14 PM »
kivex - I think your allocation is fine but I would personally do a 50/50 split within your growth assets between Australian and International or even higher within your International exposure. I also wouldn't hedge it.

If you own your property I wouldn't allocate a cent to property. You could add some bonds if you want too. I suppose that is your choice.

Thanks steveo. What are your reasons for not hedging? I'm new to this so still learning. Also could you explain your reasons about property allocation (or lack of).

My opinion for not hedging is that the currency fluctuations over time should even themselves out. You are though probably taking a hit in fees in relation to the hedging. If you own your own property in Australia you more than likely have a massive allocation to property. I don't believe in adding more property to your portfolio because you have enough exposure.

I am of this mind as well with the property to some extent. I think investing in individual properties is probably not ideal in Australia (outside of your PPOR), because of diversification (like owning individual shares). As well as your own property, many people end up inheriting property, or parts of property from parents, etc. Or move in a few years (that you can't predict now) and you might end up with another one. REITs are a bit different of course as they are by their nature diversified as an Index. But again, with relatively high investment into your PPOR, it doesn't make that much sense to have a lot invested in them. Few percent or so is probably good.

Everyone has their own take, of course

kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2774 on: February 15, 2017, 08:29:18 PM »
My opinion for not hedging is that the currency fluctuations over time should even themselves out. You are though probably taking a hit in fees in relation to the hedging. If you own your own property in Australia you more than likely have a massive allocation to property. I don't believe in adding more property to your portfolio because you have enough exposure.

Thanks for the explanation. SunSuper use Vanguard for 100% of their International Index fund and the costs are the same for both hedged and unhedged at 0.09% so no difference either way. Would it then make sense to have both hedged/unhedged to cover both scenarios of the AUD rising or falling?

The property index has fees of 0.11% and contains Scentre, Westfield, Goodman, Stockland, Mirvac etc. Would that change your perspective of investing in property outside of your PPOR?

deborah

  • Magnum Stache
  • ******
  • Posts: 4681
Re: Australian Investing Thread
« Reply #2775 on: February 15, 2017, 08:50:16 PM »
The point is that it's YOU who has to be comfortable with your investments - not any of us. Like Steveo, I feel that my house is enough property investment. But BigChrisB, Marty998... all seem to be comfortable with a lot more property. People who don't want more property aren't likely to have looked into the detail, so aren't likely to give you reasonable guidance. That said, those things are certainly a different form of property investment, and so give you diversity in that sector - whether it is good or bad diversity I don't know.

iloveanimals

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Australian Investing Thread
« Reply #2776 on: February 15, 2017, 09:14:12 PM »
ok with some basic research it has come down to Sun Super and Australian Super. Any advise from this forum about for or against? Cheers

kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2777 on: February 15, 2017, 09:18:33 PM »
The point is that it's YOU who has to be comfortable with your investments - not any of us. Like Steveo, I feel that my house is enough property investment. But BigChrisB, Marty998... all seem to be comfortable with a lot more property. People who don't want more property aren't likely to have looked into the detail, so aren't likely to give you reasonable guidance. That said, those things are certainly a different form of property investment, and so give you diversity in that sector - whether it is good or bad diversity I don't know.

Thanks Deborah, yes a lightbulb moment for me as everyone has their own biases. I guess what I was trying to ask all along, though I might not have expressed it well, was that if my proposed AA looked reasonable or completely insane ;)

I have seen other super funds charge more for hedged vs unhedged funds due to additional overheads in the hedging, however since SunSuper charge the same for both hedged and unhedged, it would be great to have some feedback on whether it makes sense to have both hedged and unhedged funds.

FFA

  • Bristles
  • ***
  • Posts: 472
    • Financially Free Australia
Re: Australian Investing Thread
« Reply #2778 on: February 15, 2017, 09:28:59 PM »
hi kivex, I use sunsuper also. Your AA looks reasonable to me. I use the following options
Australia (index), international (index) hedged and unhedged, emerging markets, Australia FI, cash

I generally lean against hedging, but still keep a small percentage. Some suggest hedging will increase your volatility as there is a natural hedge between the FX and relative performance of global shares. Not sure about this, but it definitely incurs some transactional costs.

I'm not keen on property, and I have investment properties outside of super. The ASX already has a reasonable exposure to it so I don't add extra, so that might be something for you to consider depending on your situation and view.....

kivex

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: Australian Investing Thread
« Reply #2779 on: February 15, 2017, 10:10:30 PM »
Thanks FFA for some great information.

steveo

  • Handlebar Stache
  • *****
  • Posts: 1347
Re: Australian Investing Thread
« Reply #2780 on: February 15, 2017, 11:07:57 PM »
The point is that it's YOU who has to be comfortable with your investments - not any of us. Like Steveo, I feel that my house is enough property investment. But BigChrisB, Marty998... all seem to be comfortable with a lot more property. People who don't want more property aren't likely to have looked into the detail, so aren't likely to give you reasonable guidance. That said, those things are certainly a different form of property investment, and so give you diversity in that sector - whether it is good or bad diversity I don't know.

When I provide some advice I always feel like stressing it's my opinion and you need to come up with an AA that works for you. No one can predict the future.

cakie

  • Stubble
  • **
  • Posts: 121
  • Age: 26
  • Location: Australia
Re: Australian Investing Thread
« Reply #2781 on: February 16, 2017, 12:08:31 AM »
Kivex, we are the same! I'm also with amp - employer discounts made it cheap, but switching jobs right now. I'm moving to sunsuper, sticking to a basic allocation of 40% International, 40% Australian shares and 20% FI (Aussie i think?).

I also wasn't sure about hedging - I'm usually a fan of unhedged but the same fee makes hedging look appealing. In the end I stuck with unhedged.

Your AA looks perfectly sane to me!

marty998

  • Magnum Stache
  • ******
  • Posts: 4177
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #2782 on: February 16, 2017, 12:24:22 AM »

Telstra shares got hammered today following their profit announcement. All those SMSF's buying in for their expected 15.5c dividend have just seen 30c of capital wiped away in a day.


Anything is better than AMP


AMP has to be the biggest rubbish stock ever to list on the ASX. I wish the VAS fund would buy the ASX 300 index and specifically exclude AMP. I can't believe they are still standing.

The point is that it's YOU who has to be comfortable with your investments - not any of us. Like Steveo, I feel that my house is enough property investment. But BigChrisB, Marty998... all seem to be comfortable with a lot more property. People who don't want more property aren't likely to have looked into the detail, so aren't likely to give you reasonable guidance. That said, those things are certainly a different form of property investment, and so give you diversity in that sector - whether it is good or bad diversity I don't know.

Thanks Deborah, yes a lightbulb moment for me as everyone has their own biases. I guess what I was trying to ask all along, though I might not have expressed it well, was that if my proposed AA looked reasonable or completely insane ;)

I have seen other super funds charge more for hedged vs unhedged funds due to additional overheads in the hedging, however since SunSuper charge the same for both hedged and unhedged, it would be great to have some feedback on whether it makes sense to have both hedged and unhedged funds.


I have enough residential property, but not enough commercial property. I am a bit gun shy about commercial because a lot of them are debt funded by instruments known as "Commercial Mortgage Backed Securities" (CMBS). These went to shit so badly during 2009/2010 that even good solid REITs fell over.


Basically find it hard to trust any manager with significant exposure to that type of financing. When the markets seize up there's nowhere to hide.




FFA

  • Bristles
  • ***
  • Posts: 472
    • Financially Free Australia
Re: Australian Investing Thread
« Reply #2783 on: February 17, 2017, 03:50:45 AM »
Kivex, we are the same! I'm also with amp - employer discounts made it cheap, but switching jobs right now. I'm moving to sunsuper, sticking to a basic allocation of 40% International, 40% Australian shares and 20% FI (Aussie i think?).

I also wasn't sure about hedging - I'm usually a fan of unhedged but the same fee makes hedging look appealing. In the end I stuck with unhedged.

Your AA looks perfectly sane to me!
hi cakie, with that kind of AA you might also consider Hostplus indexed balanced option. It is 37.5% international, 37.5% Australia shares, 15% FI, 10% cash and the MER is 0.02% by far the lowest I have seen. If you like this AA and want to set and forget, then it is a great option I suggest. The admin fees are also lower.  Maybe one for you also kivex if you reconsider the 20% property.

My wife is in the hostplus and I am in sunsuper. I use sunsuper to have a bit more flexibility. When I re-balance my AA it is on the overall portfolio (inside and outside super), so sunsuper has better options for that, i.e. the international (index) and emerging markets options.

cakie

  • Stubble
  • **
  • Posts: 121
  • Age: 26
  • Location: Australia
Re: Australian Investing Thread
« Reply #2784 on: February 17, 2017, 04:47:42 AM »
Kivex, we are the same! I'm also with amp - employer discounts made it cheap, but switching jobs right now. I'm moving to sunsuper, sticking to a basic allocation of 40% International, 40% Australian shares and 20% FI (Aussie i think?).

I also wasn't sure about hedging - I'm usually a fan of unhedged but the same fee makes hedging look appealing. In the end I stuck with unhedged.

Your AA looks perfectly sane to me!
hi cakie, with that kind of AA you might also consider Hostplus indexed balanced option. It is 37.5% international, 37.5% Australia shares, 15% FI, 10% cash and the MER is 0.02% by far the lowest I have seen. If you like this AA and want to set and forget, then it is a great option I suggest. The admin fees are also lower.  Maybe one for you also kivex if you reconsider the 20% property.

My wife is in the hostplus and I am in sunsuper. I use sunsuper to have a bit more flexibility. When I re-balance my AA it is on the overall portfolio (inside and outside super), so sunsuper has better options for that, i.e. the international (index) and emerging markets options.
Thanks for the suggestion FFA. I hadn't looked at any balanced options as I didn't realise any of them would be 70%+ stocks. That may be perfect for my SO's fund! I would prefer us to be with different funds anyway just in case... He's still with a (heavily discounted) for-profit.

FFA

  • Bristles
  • ***
  • Posts: 472
    • Financially Free Australia
Re: Australian Investing Thread
« Reply #2785 on: February 17, 2017, 01:59:21 PM »
Yeah the growth allocation at 75% is certainly high for a "balanced" fund, it could also be considered in the growth category. They also have a low cost Australian index option, so if you wanted to tweak it up slightly you could do that (i.e. 90-95% indexed balanced (0.02%) / 5-10% IFM Australia shares (0.04% MER) ). The international options are poor at Hostplus though.

sirdeets

  • 5 O'Clock Shadow
  • *
  • Posts: 65
Re: Australian Investing Thread
« Reply #2786 on: February 18, 2017, 02:13:21 AM »
Another happy SunSuper user here on the low fee Australia index and Intl unhedged index options (50 - 50)

limeandpepper

  • Magnum Stache
  • ******
  • Posts: 3364
  • Location: Anywhere/Perth.
Re: Australian Investing Thread
« Reply #2787 on: February 18, 2017, 07:24:34 AM »
ok with some basic research it has come down to Sun Super and Australian Super. Any advise from this forum about for or against? Cheers

I am with Australian Super and I am satisfied with it. I went with one of their pre-mixed investment options, Sustainable Balanced: https://www.australiansuper.com/SustainableBalanced

According to my needs/preferences, I also reduced or eliminated some of the insurance (life, disability, income protection) to lower the fees.

nofriends

  • 5 O'Clock Shadow
  • *
  • Posts: 9
  • Location: Queensland
Re: Australian Investing Thread
« Reply #2788 on: February 18, 2017, 03:04:46 PM »
I am with Australian Super and I am satisfied with it. I went with one of their pre-mixed investment options, Sustainable Balanced: https://www.australiansuper.com/SustainableBalanced

According to my needs/preferences, I also reduced or eliminated some of the insurance (life, disability, income protection) to lower the fees.

Same here, with AustralianSuper, high growth option (~75% equities). Their fees are higher, but when i compared performance it was superior to hostplus and sunsuper, so decided to stay put and re-evaluate every 6-12 months.

mjr

  • 5 O'Clock Shadow
  • *
  • Posts: 28
  • Location: Brisbane, Qld
Re: Australian Investing Thread
« Reply #2789 on: February 18, 2017, 05:04:55 PM »
I set up an SMSF last year and continue to get real satisfaction that I have no financial leeches hanging off my portfolio. 0.1% + the vanguard ETF admin fees

GT

  • Pencil Stache
  • ****
  • Posts: 699
  • Location: Brisbane, Australia
Re: Australian Investing Thread
« Reply #2790 on: February 18, 2017, 11:29:49 PM »
I set up an SMSF last year and continue to get real satisfaction that I have no financial leeches hanging off my portfolio. 0.1% + the vanguard ETF admin fees

No additional costs for managing the fund on an annual basis for tax purposes?

mjr

  • 5 O'Clock Shadow
  • *
  • Posts: 28
  • Location: Brisbane, Qld
Re: Australian Investing Thread
« Reply #2791 on: February 18, 2017, 11:42:51 PM »
I set up an SMSF last year and continue to get real satisfaction that I have no financial leeches hanging off my portfolio. 0.1% + the vanguard ETF admin fees

No additional costs for managing the fund on an annual basis for tax purposes?

Tax return + audit is the 0.1 %

GT

  • Pencil Stache
  • ****
  • Posts: 699
  • Location: Brisbane, Australia
Re: Australian Investing Thread
« Reply #2792 on: February 19, 2017, 02:53:40 AM »
I set up an SMSF last year and continue to get real satisfaction that I have no financial leeches hanging off my portfolio. 0.1% + the vanguard ETF admin fees

No additional costs for managing the fund on an annual basis for tax purposes?

Tax return + audit is the 0.1 %

Ahh OK, so that 0.1% would drop over time.

iloveanimals

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Australian Investing Thread
« Reply #2793 on: February 19, 2017, 01:08:52 PM »
I am with Australian Super and I am satisfied with it. I went with one of their pre-mixed investment options, Sustainable Balanced: https://www.australiansuper.com/SustainableBalanced

According to my needs/preferences, I also reduced or eliminated some of the insurance (life, disability, income protection) to lower the fees.

Same here, with AustralianSuper, high growth option (~75% equities). Their fees are higher, but when i compared performance it was superior to hostplus and sunsuper, so decided to stay put and re-evaluate every 6-12 months.
Thanks LimePepper and No Friends for providing your experiences with Australian Super. I just opened our accounts with them. Cheers

MrThatsDifferent

  • 5 O'Clock Shadow
  • *
  • Posts: 24
Re: Australian Investing Thread
« Reply #2794 on: February 20, 2017, 12:40:43 AM »
I combined all my supers into Australian Super last month. I really like the app and easily watching the money grow.

MajorTom

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Australian Investing Thread
« Reply #2795 on: February 20, 2017, 02:01:47 AM »
I see Vanguard are now offering 3 actively managed equity funds in Australia: all 0.45% expense ratios, all wholesale funds, all Australian domiciled.
(They currently only seem to be listed in the institutional investor part of their website, but I read an article which indicated that they would be available to individual/SMSF investors too)

Vanguard Global Minimum Volatility Fund
https://www.vanguardinvestments.com.au/institutional/inst/investments/product.html#/fundDetail/wholesale/portId=8154/?overview
(0.17% buy/sell spread)
(Hedged into Australian dollar)

Vanguard Global Quantitive Equity Fund
https://www.vanguardinvestments.com.au/institutional/inst/investments/product.html#/fundDetail/wholesale/portId=8156/?overview
(0.11% buy/sell spread)
(Ex-Australia)

Vanguard Global Value Equity Fund
https://www.vanguardinvestments.com.au/institutional/inst/investments/product.html#/fundDetail/wholesale/portId=8157/?overview
(0.15% buy/sell spread)
(All world, including Australia)

emdeex

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Australian Investing Thread
« Reply #2796 on: February 21, 2017, 01:14:35 AM »
Hi All...I'm a long time MMM lurker, first time poster....

About a year ago, I started to look seriously at what was going on with my Super , and although I'm wiser, I certainly don't feel I fully understand all the ins and outs.

I opened an ING Living Super account, attracted by the low-fees, and more switched-on UI/data available.  I've been putting 100% of my new allocations into the High Growth option while I tried to work out what all the options meant, so far that's all worked out fine.

From my analysis, of downloading the historical unit prices back to the ING funds inception in 2012, and charting it against various exchange traded funds in Oz and the US, I came up with this chart (hopefully you can open).

https://docs.google.com/spreadsheets/d/1C2xxoEEXrMtE_rq34TDoE9kfdgJc30VDHO88Dg81tr0/pubchart?oid=1357093838&format=interactive


Which appears to show a very strong correlation between the US-traded Vanguard 500 (VOO) fund, and the ING Living Super High Growth option.

Am I right to think that investing in the ING High Growth option, is functionally equivalent to investing in the VOO?

If I'm getting the VOO performance... is the ING Super fee structure a good deal for this?  Management fee is 0.25%, and Admin fee is 0.5% (capped at $1k per annum).  No entry, switching or exit fees.

misterhorsey

  • Bristles
  • ***
  • Posts: 259
Re: Australian Investing Thread
« Reply #2797 on: February 21, 2017, 03:50:06 PM »
Maybe this could qualify for it's own thread, but I thought I'd post it up here. 

http://www.macrobusiness.com.au/2017/02/fundies-have-a-shocker/

It's kind of a weird article.  Frank and honest account of data - followed by ignoring the data!

Ozlady

  • Pencil Stache
  • ****
  • Posts: 561
Re: Australian Investing Thread
« Reply #2798 on: February 22, 2017, 05:46:41 PM »
I combined all my supers into Australian Super last month. I really like the app and easily watching the money grow.

Me too! Happy with the returns on Balanced choice so far:)

marty998

  • Magnum Stache
  • ******
  • Posts: 4177
  • Location: Sydney, Oz
Re: Australian Investing Thread
« Reply #2799 on: February 23, 2017, 12:33:48 AM »
Didn't want to bury this in off topic... this thread is likely to get a few more views

NAB Chairman and former Treasury head Ken Henry has delivered a spray to the current political class.

He laments the inability for anything more than infantile insults to be hurled from one side to the other. Honestly it's about time someone yells over the top of Turnbull and Shorten and Abbott etc, for far too long this country has been led by imbeciles because no one has been willing to do anything about it.

Hopefully the business community will act constructively to back up the words now.

http://www.abc.net.au/news/2017-02-23/former-treasury-head-ken-henry-attacks-political-system/8296692?section=business