Australian Investing Thread

[GT]

Not surprised after what floated past me news wise over the weekend, there was expected to be a drop based on what happened on Friday in the US.

Interesting to see a 3yr low on Commbank.

[marty998]

Bought $10,000 of VAS at $67.32 today (148 shares). Thought I got the low for the day around lunch but it settled in the 67.20's for much of the afternoon.

I am satisfied enough though, and will purchase another $20 odd thousand at the end of the month.

[qwerty8675309]

Do you mean you have to manually rebalance in super?- does Sunsuper just divide all new super payments 50:50 with your allocation and you have to keep track of how the allocations go after that, or will Sunsuper allocate payments to keep overall amounts at 50:50?

When you set up your account for the first time, they'll allocate any funds you're switching over based on the allocation that you set out. New funds after the switch-over that are contributed (eg, from compulsory or voluntary super contributions) will be made using the 50/50 split too; however over time, either the Australian index or international index have a higher return than the other, so eventually the allocation will drift. You have to manage this drift yourself. You have two options:

1. Direct new funds to the lower allocation to prop up the poorly performing allocation. This involves logging in and changing the way new funds are deposited.
2. You could direct Sunsuper to sell an overweighted allocation to buy a underweighted allocation. From memory, there is a buy/sell spread involved in doing this.

[GT]

JB HiFi buying Good Guys will have an interesting effect on their share price.  They've been on a five day slide.

15 million shares are being issued to existing share holders and the market in general to raise a portion of the money required for the $870M buyout.

[faramund]

JB HiFi buying Good Guys will have an interesting effect on their share price.  They've been on a five day slide.

15 million shares are being issued to existing share holders and the market in general to raise a portion of the money required for the $870M buyout.

Seems fine to me: they seem to be buying good guys at a low multiple, and before this they really had very little debt. I hold JBH directly, and I'll be taking up my allocation.

[bigchrisb]

Ahh, JBH.  One of my great market timing regrets.  Bought JBH at about $8.50.  Sold two months later at a bit of $10.  17% profit in two months seemed like I had amazing talents.  They have since marched on to about $30, paying solid dividends along the way. Lessons for life!

[marty998]

Makes me wonder if JB Hi Fi will essentially try to kill off Harvey Norman.

All they need now is a bedding department... perhaps 40 Winks?

[faramund]

I don't mind talking about the quality of different Aus companies - but I'm not sure it belongs here. Should we/someone/I start another thread?

[Notch]

For the people asking about family trusts:

- You will have to sell your existing assets and repurchase them inside the trust, if you want to move them. Due to the change in ownership, this is a CGT event. So if you're thinking of starting one, don't put it off.

- I sold and rebought my shares the old-fashioned way, on the open market.  I waited about a month until the market fell and rebought the same number of shares at a lower price and used the leftover cash to pay the CGT bill.

- You don't need a lawyer to open a trust, just an accountant. I paid $700 to create it, and $660 each year for them to do the tax return.

[Aussiegirl]

If you're willing to do a bit of research, you can use some-one like Cleardoc's to create a company, trust or SMSF.   Heaps cheaper and to be honest, your accountant will either use this site, or another similar to create the doc's.

[Grogounet]

Bought $10,000 of VAS at $67.32 today (148 shares). Thought I got the low for the day around lunch but it settled in the 67.20's for much of the afternoon.

I am satisfied enough though, and will purchase another $20 odd thousand at the end of the month.

Isn't the market trading at all time high?

[superannuationfreak]

Some thoughts on complexity, the thesis: not every asset type is needed, and in particular not in every location (fully-taxed vs super).  What do I mean by this?

I see many messages asking things like "do I need international bonds?".  I tend to make more complex choices too, so I fully understand the instinct.  But its important to take a step back and think about:

What are my goals?
What allocation/decisions will help me achieve those goals? (and usually saving is the biggest decision for the mustache-inclined)

First, in terms of saving in Super vs. Non-Super:  As hopeful early-FI folks we need to save outside Super.  If very-low-spending then our tax rates outside Super after early-retirement may even be comparable or lower than inside Super.  However if likely to have a larger nest-egg then Super will probably still be lower tax rate after a point.  And importantly, if currently making a reasonable wage, salary sacrifice is very appealing so long as you're still able to save enough outside super to last you until preservation age.

In terms of what assets you need to hold and where you hold them, for an early retiree (we've discussed this before):
- Cash outside super, while not especially tax efficient, is important unless you have such a large nest-egg that you can afford a 50+% drop without impacting your ability to make it to preservation age.  Cash also has substantial liquidity advantages.
- Other fixed income (bonds) is much more efficient in Super.
- Indexed or low-turnover shares are pretty efficient both inside and outside super (some prefer their higher-dividend Australian shares inside super which can make sense at the margin).
- Higher-turnover share allocations (unless US-domiciled) are inefficient outside super, even in LICs.

What I'd like to highlight are the cost, tax and other advantages of holding any bond allocation or allocation to higher turnover shares (e.g. Australian Small Caps) inside super rather than outside.
- Higher-turnover Australian-domiciled ETFs and managed funds (or individual share portfolios if that is your thing) will produce capital gains (either for yourself, or in a LIC taxed within the corporate structure at ~30%).  This makes them less efficient to hold outside super than lower-turnover ETFs and funds which can defer capital gains taxes until in a lower tax bracket (such as broad index ETFs or buy-and-hold-forever portfolios).
- In addition if you're looking at an allocation to Australian small companies, industry funds have tended to be overweight these relative to the ASX300 but have negotiated much better fees for actively managed funds than we are able to.  Indexed small company funds (particularly those tracking the Small Ords) have tended to perform poorly over the long-term (check out the SPIVA scorecards from S&P every year) even if the last 12 months have been pretty good for these funds/ETFs so if you want to allocate to this space, and an industry fund can do it actively for you at low cost, then I'd avoid the passive allocation (which can also be pretty tax inefficient at times as a higher turnover strategy).
- Bonds and Cash tend to be higher-taxed outside Super.  In the case of cash, higher online savings account/term deposit rates outside super mitigate this, and having rapid access to liquidity either to spend if needed or to rebalance in a downturn can be valuable.  Neither of these compensating factors apply to bond ETFs: We tend to pay more to manage them than an institutional investor (such as a good super fund) would pay to manage bonds, and bond ETFs are not especially liquid and come with brokerage costs if we do want to buy and sell them.  Also in most cases rebalancing will be cheaper to do in Super (most funds don't charge for switching options not-too-often, and any capital gains taxes are pooled if not in an SMSF).

So what are my actionable take-aways?
- Keep any allocations to bonds and likely-higher-turnover shares (such as Australian Small Caps) in Super rather than outside Super.
(cash and lower-turnover shares such as broad index funds or LICs are OK inside or outside Super)
- Rebalance within Super if possible, rather than selling ETFs outside Super.

How can you implement them?
- Many Super funds have one or more low-cost bonds/fixed income option.
- If you want Australian Small Companies exposure I believe that will be most efficiently gained through using an Industry Super fund Australian Shares option instead of an ASX index fund/ETF.  Using Australian Super as a low-cost, well-know example (note: I work for an Industry Fund but not Australian Super) you'd pay about 0.3% p.a. for their Australian Shares option with substantially more small cap exposure than the market but still at reasonably low cost.  Some other industry funds Australian Shares options may still cost more than I'd want to pay.

And of course, if you want to keep things super-simple, there's nothing wrong with:
- Keeping your Super in a single low-cost diversified fund in-line with your willingness, ability and need to take risk
- Outside super just investing in VAS (or a low-cost LIC), VGS and an online savings account/term deposits
- Only rebalancing by adding new money to the lowest performing of VAS/VGS/Cash

[deborah]

Thanks for that SuperannuationFreak!!

[Wadiman]

Superannuationfreak -

Do you happen to know if CTN has much turnover in its portfolio?  I was attracted to this LIC due to the high dividend and some franking (50%).

[superannuationfreak]

Superannuationfreak -

Do you happen to know if CTN has much turnover in its portfolio?  I was attracted to this LIC due to the high dividend and some franking (50%).

I found a 2012 research report suggesting it had ~80% p.a. turnover.  Morningstar's website suggested even higher.  This is quite a lot compared to an ASX300 fund but it may well be in-line with other micro-cap funds, I don't know them that well.  But where capital gains occur CTN will either pay tax on capital gains at the corporate rate (which then gets turns into franking credits) or possibly be able to pass some through to the investor (which then gets taxed for the investor).  Note Legal Super and ING Living Super both offer it in their direct investing option if you wanted to hold it in Super without setting up an SMSF.  But these do come with other fees and constraints that may not be appealing.

Unless you're paying <30% marginal tax rate (i.e. in super or possibly outside post-retirement), high dividends (particularly unfranked, even at 15% tax in super) will be a tax drag on returns.  Whether the investment is appealing enough to hold it anyway is for you to determine.

[marty998]

I wonder if we will ever be told why the ASX had to close the market on Monday....

I don't buy the PR spin that they put out about hardware problems and such. Surely they have got a backup system?

[deborah]

I wonder if we will ever be told why the ASX had to close the market on Monday....

I don't buy the PR spin that they put out about hardware problems and such. Surely they have got a backup system?

I've seen that sort of thing happen - and worse.

[Grogounet]

I actually am not surprised at all and you would be surprised the number of outages out there.
I work in IT and I see this everyday, small and large business the same

They went back online actually pretty fast I found.

[marty998]

Has the VAS ETF dividend estimate been published yet? Maybe tomorrow?

[Primm]

Has the VAS ETF dividend estimate been published yet? Maybe tomorrow?

Entity name
VANGUARD AUSTRALIAN SHARES INDEX ETF
Security on which the Distribution will be paid
VAS - EXCHANGE TRADED FUND UNITS FULLY PAID
Announcement Type
New announcement
Date of this announcement
Tuesday September 27, 2016
Distribution Amount
AUD 1.01268959
Ex Date
Tuesday October 4, 2016
Record Date
Wednesday October 5, 2016
Payment Date
Wednesday October 19, 2016
DRP election date
Wednesday October 5, 2016 17:00:00

[FFA]

In terms of what assets you need to hold and where you hold them, for an early retiree (we've discussed this before):
- Cash outside super, while not especially tax efficient, is important unless you have such a large nest-egg that you can afford a 50+% drop without impacting your ability to make it to preservation age.  Cash also has substantial liquidity advantages.
- Other fixed income (bonds) is much more efficient in Super.
- Indexed or low-turnover shares are pretty efficient both inside and outside super (some prefer their higher-dividend Australian shares inside super which can make sense at the margin).
- Higher-turnover share allocations (unless US-domiciled) are inefficient outside super, even in LICs.

...

And of course, if you want to keep things super-simple, there's nothing wrong with:
- Keeping your Super in a single low-cost diversified fund in-line with your willingness, ability and need to take risk
- Outside super just investing in VAS (or a low-cost LIC), VGS and an online savings account/term deposits
- Only rebalancing by adding new money to the lowest performing of VAS/VGS/Cash

hi superannuationfreak, hope you are well, excellent posting above!
regarding asset placement, you didn't mention oz vs global shares. I've been thinking about it lately as I think I may have set-up the wrong way with a skew to oz shares ex super, and more global shares in super. Also considering I've taken on some part-time work which was not part of the original plan, pushing us both into the 37c marginal tax bracket (not that it really matters that much).
All our shares ex super are in wife's name and the oz share franking credits really push up the taxable income. And since I now still have some active income there is less need for all the dividend income ex Super which is probably the reason I lent towards having more oz shares.
So I'm looking at moving the other way, switching some VAS into VGS ex super, and the reverse inside Super. No change to overall asset allocation. In addition to the franking credit effect on taxable income (which is progressive ex Super but flat rate in Super), there is also probably the more basic point that Oz shares have a much higher yield vs global. As I vaguely recall posting upthread, I wouldn't skew it too extremely (i.e. all VGS ex Super and all VAS in Super) as I think you need to keep some diversification in each bucket. e.g. if there is some weird event that means hurts VAS badly vs VGS, as still need assets/income ex Super to be FIRE.

The other thought I'm having is insurance/investment bonds. Depends on whether I keep up the part-time work. But if we are both paying 37% plus medicare levy they look an interesting option. Super is better still, but as I'm still 39 and with young kids, the 10 year time frame on investment bonds is interesting as I can access in my 50's (and kids mid teens) and it will be capital gains free from that point. I'm loathe to add the complexity to our affairs, so will not jump into this, but seems an interesting option to consider in my circumstances...

[misterhorsey]

I'm in the same situation as FFA above.  Would love to swap my ex Super VAS for VGS, but a) currency makes it scary, b) CGT on current gains in VAS makes it exxy.  May need to wait until I take a sabbatical and do the swap over in a non active income earning year, whenever/if that ever happens.

[marty998]

Has the VAS ETF dividend estimate been published yet? Maybe tomorrow?

Entity name
VANGUARD AUSTRALIAN SHARES INDEX ETF
Security on which the Distribution will be paid
VAS - EXCHANGE TRADED FUND UNITS FULLY PAID
Announcement Type
New announcement
Date of this announcement
Tuesday September 27, 2016
Distribution Amount
AUD 1.01268959
Ex Date
Tuesday October 4, 2016
Record Date
Wednesday October 5, 2016
Payment Date
Wednesday October 19, 2016
DRP election date
Wednesday October 5, 2016 17:00:00

A buck a share? Woo! $1000 for me :)

Reinvested at $70 each = 14 more VAS units...

[superannuationfreak]

regarding asset placement, you didn't mention oz vs global shares. I've been thinking about it lately as I think I may have set-up the wrong way with a skew to oz shares ex super, and more global shares in super. Also considering I've taken on some part-time work which was not part of the original plan, pushing us both into the 37c marginal tax bracket (not that it really matters that much).
All our shares ex super are in wife's name and the oz share franking credits really push up the taxable income. And since I now still have some active income there is less need for all the dividend income ex Super which is probably the reason I lent towards having more oz shares.
So I'm looking at moving the other way, switching some VAS into VGS ex super, and the reverse inside Super. No change to overall asset allocation. In addition to the franking credit effect on taxable income (which is progressive ex Super but flat rate in Super), there is also probably the more basic point that Oz shares have a much higher yield vs global. As I vaguely recall posting upthread, I wouldn't skew it too extremely (i.e. all VGS ex Super and all VAS in Super) as I think you need to keep some diversification in each bucket. e.g. if there is some weird event that means hurts VAS badly vs VGS, as still need assets/income ex Super to be FIRE.

The other thought I'm having is insurance/investment bonds. Depends on whether I keep up the part-time work. But if we are both paying 37% plus medicare levy they look an interesting option. Super is better still, but as I'm still 39 and with young kids, the 10 year time frame on investment bonds is interesting as I can access in my 50's (and kids mid teens) and it will be capital gains free from that point. I'm loathe to add the complexity to our affairs, so will not jump into this, but seems an interesting option to consider in my circumstances...

After franking VAS is probably being taxed at ~10% while international dividends after offsets are probably well over 20% (although there tend to be less of them to tax).  I don't have an issue holding VAS outside Super (in fact, I do it myself).  I was more talking about people specifically targeting high dividend shares (which I don't).

If I wanted to migrate more towards international without CGT after re-starting earning wage income I'd probably just invest my dividends into international and let the transition happen naturally over time (adjusting my Super allocation every year or two also to be roughly on target in aggregate).  Long-term it depends also how long I expect to be taxed at 37+% - if there's a chance I or my wife would end up below the tax-free threshold for a decent period of time I'd definitely prefer to hold Australian shares as the foreign tax offset of international shares isn't refundable if you wouldn't otherwise pay tax.

TL;DR I personally don't see holding VAS outside Super and more international in Super as a big deal.  A higher-turnover or high dividend focused strategy outside super was my main concern.

[potm]

The franking is just prepaid tax and fully refundable if your tax rate is below 30%.
It's not really correct to consider the tax rate as lower because of franking credits. If anything you should consider the higher gross yield including franking credits.

[marty998]

Lazy day.... I'm mucking around on Australian Super's website in the member investments section :)

They are now publishing their full investment portfolio as at 30 June and 31 December each year. Some insights:

Australian shares option

Total portfolio size is $19.6billion (369 holdings)

Top 20 are CBA 7.70% through WBC, TLS, ANZ, NAB, CSL (3.36%), BHP, WES, HSO (2.12%), MQG, SUN, TCL, SYD, RIO, WOW, AMP, CTX, JHX, TTS and IAG (0.97%)

Total top 20 are 52.35% and top 5 are 25.07% (yikes).

International shares option

Total portfolio size is $1.0 billion (~2000 holdings)

Top 20 are Amazon (1.38%), TenCent Holdings, Facebook, Baidu, Accenture (1.00%), VISA, TimeWarner, Oracle, Nestle, Illumina, Tesla, Microsoft, Reckitt Benckiser, Thermo Fisher Scientific, Medtronic, Honeywell, Alphabet (Google) (0.75%), Qualcomm, Samsung, British American Tobacco (0.71%)

Apple is down in 37th place at 0.5% of the portfolio

The actual largest holding is cash at 16.95% of the portfolio ($170 million).

Diversified Fixed Interest option

Total portfolio size is $1.284 billion in bonds/treasuries

Commonwealth of Australia (9.62%)
Commonwealth Bank of Australia (6.60%)
Queensland Treasury Corporation (3.74%)
Westpac Banking Corporation (3.65%)
Treasury, United States Department of (2.82%)
New South Wales Treasury Corporation (2.60%)
Australia and New Zealand Banking Group Limited (2.08%)
AGL Energy Limited
National Australia Bank Limited
KfW Bankengruppe
Gobierno Federal de los Estados Unidos Mexicanos
International Bank for Reconstruction & Development
Inter-American Development Bank
Treasury Corporation of Victoria
Apple Inc.
Bridgewater Pure Alpha Fund II Ltd
Western Australian Treasury Corporation
Dexus Finance Pty Limited
Ministerio da Fazenda
International Finance Corporation (0.72%)

[marty998]

I might add the pre-mixed default investment options are a little bigger in size and that the holdings come out to be slightly different.

For example, CBA shares make up just under 2% of the balanced portfolio - as you would expect because of allocations to every other asset class in the portfolio, and the fixed interest portfolio includes allocations to the Governments of Malaysia, Indonesia, New Zealand and Korea.

I need to do some research now on this Bridgewater Pure Alpha Fund they have in the FIC portfolio....

[superannuationfreak]

I need to do some research now on this Bridgewater Pure Alpha Fund they have in the FIC portfolio....

I would estimate it is the biggest hedge fund in the world.

[marty998]

Hmm...Related to Bridgewater - the Connecticut based asset manager and join the dots to Bell Group (Bell Potter, Southern Cross Equities etc) as the Australian based related party vehicle. Not sure I like this.

Also learned something else today.....Aus Super's indexed diversified option is simply a collection of Vanguard index funds - Aus, International, International Hedged, Fixed Interest and Property.

[stripey]

I'm surprised they have so much in British American Tobacco.

[marty998]

Yes... I'm a little annoyed at that. BAT isn't exactly focused on aspiring to assist in the betterment of humanity lol

Also a little annoyed at the allocation to both James Hardie and Tatts Group....

[Wadiman]

Is anyone aware of alternatives to Sharesight for automated portfolio and dividend tracking?

Love the functionality but now have more than 10 equities so the free version doesn't give me the full picture and i'm not sure of the value of the $25/month investor plan.

What i really like is the way it provides total returns including dividends. 

I do know that i could do this all manually with a bit of effort and discipline but thought i would check in with you fine folk first!

[marty998]

Vanguard have just dropped their fee rates on a couple of ETFs effective 1 October 2016.

VAS changed from 0.15% to 0.14%
VAP from 0.25% to 0.23%

Every basis point counts :)

[steveo]

Vanguard have just dropped their fee rates on a couple of ETFs effective 1 October 2016.

VAS changed from 0.15% to 0.14%
VAP from 0.25% to 0.23%

Every basis point counts :)

That is good to hear. You are correct in that every basis point counts.

[rasics82]

hi guys, just a quick question, I've noticed something strange (...for me, but maybe very normal) on my CMC account few days ago:
I'm holding some JBH stocks, not many and I kind of love them at the moment.
Just before dividend time (10 days ago) I checked my account and I found that I was also holding some extra stocks called JBHX, valued $3/$4 each roughly.
They were there for few days and suddenly they were gone again.
Can anyone explain me what those stocks were?
There was something I should have done with them?

[misterhorsey]

Vanguard have just dropped their fee rates on a couple of ETFs effective 1 October 2016.

VAS changed from 0.15% to 0.14%
VAP from 0.25% to 0.23%

Every basis point counts :)

I love how they do it with very little/no fanfare.  Just a simple email. No spin or self congratulatory pat on the back. My kind of people

[PDM]

hi guys, just a quick question, I've noticed something strange (...for me, but maybe very normal) on my CMC account few days ago:
I'm holding some JBH stocks, not many and I kind of love them at the moment.
Just before dividend time (10 days ago) I checked my account and I found that I was also holding some extra stocks called JBHX, valued $3/$4 each roughly.
They were there for few days and suddenly they were gone again.
Can anyone explain me what those stocks were?
There was something I should have done with them?

Hey,
I've seen something similar before in a stock I hold. It looks like JB Hi Fi did a share issue, based on 1 : 6.6 for existing holders.
http://www.asx.com.au/asxpdf/20160916/pdf/43b793y93jwyfw.pdf

As a part of this, as an existing holder you get the opportunity to buy more shares. I believe what you saw was the opportunity to sell that entitlement. It is gone now as the shares have listed. You could have sold it or excercised it (bought the shares you were entitled to).

[potm]

JBH did a renounceable rights issue as PDM mentioned. As you have not sold or exercised your rights, they will now be auctioned and you will receive the proceeds above the exercise price.

[FFA]

Vanguard have just dropped their fee rates on a couple of ETFs effective 1 October 2016.

VAS changed from 0.15% to 0.14%
VAP from 0.25% to 0.23%

Every basis point counts :)

I love how they do it with very little/no fanfare.  Just a simple email. No spin or self congratulatory pat on the back. My kind of people

but equally I'm sure it's marketing driven to keep their nose in front of IOZ who had matched 0.15%. Vanguard by it's brand has to be the cheapest!

[rasics82]

hi guys, just a quick question, I've noticed something strange (...for me, but maybe very normal) on my CMC account few days ago:
I'm holding some JBH stocks, not many and I kind of love them at the moment.
Just before dividend time (10 days ago) I checked my account and I found that I was also holding some extra stocks called JBHX, valued $3/$4 each roughly.
They were there for few days and suddenly they were gone again.
Can anyone explain me what those stocks were?
There was something I should have done with them?

Hey,
I've seen something similar before in a stock I hold. It looks like JB Hi Fi did a share issue, based on 1 : 6.6 for existing holders.
http://www.asx.com.au/asxpdf/20160916/pdf/43b793y93jwyfw.pdf

As a part of this, as an existing holder you get the opportunity to buy more shares. I believe what you saw was the opportunity to sell that entitlement. It is gone now as the shares have listed. You could have sold it or excercised it (bought the shares you were entitled to).

JBH did a renounceable rights issue as PDM mentioned. As you have not sold or exercised your rights, they will now be auctioned and you will receive the proceeds above the exercise price.

Thanks guys, I was at work and I saw all the documentation just yesterday

[Daniel S]

Hi, I'm new to MMM and glad to see there is an Australian thread going.

Is there any way to search just within this thread? Reading all 46 pages seems a bit daunting.

[Daniel S]

Hi, I'm new to MMM and glad to see there is an Australian thread going.

Is there any way to search just within this thread? Reading all 46 pages seems a bit daunting.

I've found the answer to my own question. You can use Google and after your keywords, add a space and then:
site:forum.mrmoneymustache.com/investor-alley/australian-investing-thread

Here's an example if you were looking for all posts containing "telstra":

https://www.google.com.au/search?num=30&newwindow=1&q=telstra+site%3Aforum.mrmoneymustache.com%2Finvestor-alley%2Faustralian-investing-thread&oq=telstra+site%3Aforum.mrmoneymustache.com%2Finvestor-alley%2Faustralian-investing-thread&gs_l=serp.12..0i71k1l8.0.0.0.40444.0.0.0.0.0.0.0.0..0.0....0...1c..64.serp..0.0.0.NCnd510rD5E

Hope this helps!

Forget everything. I've realised that the search box on the upper right is context-sensitive, meaning that if you are viewing this thread when you use it, it automatically searches only this thread.

[chasingthegoodlife]

Great to know, thank you!

I read the entire thread during a particularly memorable sick day. To distract myself from a ahem... gastric upset I started reading up on portfolio allocation and got inspired to run my numbers for FI. Working in the community sector I hadn't thought this would be a realistic option for me, and I was surprised and inspired. Good luck with your goals, there is lots of useful information here.

[dndln]

Hi! I'm making my entry into the sharemarket (early twenties), and would appreciate any feedback on my plan:

Currently, my portfolio looks like this:

50% US stock - VTS
30% International Stock - VGS
20% bonds - VAF

However, I'd also like to invest in VAS (Australian Shares). How should I restructure my percentages? Or should I just leave it as three funds? Also slightly worried about the extra commission from four funds.

Thanks in advance!

[GT]

Hi dndln.

If you're in your 20's you should be growing your stache as fast as you can.  20% of your asset allocation in bonds won't do that for you.

VGS includes US stocks, so you'll be double dipping if you have both VGS and VTS (would need to nut out the purchases within each fund to see how much).

Where is your super located?  Some on here prefer to keep their Australian stocks within their super.

[marty998]

Yes GT is right - you need VEU (not VGS) if you already have VTS.

VEU is all world ex US.

So swap VGS for VEU, swap VAF for VAS, and keep your spare cash in an online saver.

[dndln]

Right, thanks for the help Marty and GT!

Portfolio v2:

30% VTS (US)
30% VEU (International) - replaces VGS
30% VAS (Aus)
10% VAP (Property)
0% bonds (VAF)

Super is with ING, I put my allocation as 100% shares (unhedged). Not really sure what's going on there, I'll have to take a look.

I'm not a big fan of relying on my super, as 60 seems a very long time away.

Any thoughts?

[englyn]

Interesting snippet from Barefoot Investor on Argo/AFIC vs VAS:

Hi Scott
Last week, you advised Dennis that he would be better off investing in AFI. However, he would have done even better with Vanguard’s ASX 200 index fund (VAS). I punched the numbers and the total return over 10 years for AFIC was 6.4 per cent versus VAS at 9.12 per cent. I know you like AFIC, but LICs can be tricky and you still can’t beat low-cost, broad-based, index-tracking ETFs.
Regards,
Ben

Hi Ben,

I’m a huge fan of international index funds -- not only have I promoted them heavily in the past decade, I’m an investor in Vanguard’s funds myself. The problem with indexing here in Australia is that our market is too concentrated. Our index is  basically four banks, a couple of retailers, a couple of miners, and a telco. Besides, your figures are incorrect: VAS has only been around since 2009, and in any case, AFIC has slightly outperformed the index over the last decade.

[dndln]

hmmm okay, I've never heard of Licensed Investment Companies, and read up a bit on them! Thanks for introducing me englyn!

The main differences it seems (to me):

LIC's are managed, so they're more likely to overperform or underperform the ETF, depending on your LIC manager.
ETF's trade at about the NAV, but LIC's might trade far below or far above their NAV for extended periods of time.
ETF's are more transparent with taxation, LIC's behave like managed funds.
ETF's pass on any income within the financial year, LIC's pay company tax and pass through franked credits.

I had a look at AFI's holdings, and they're pretty much the same as VAS.
(http://www.afi.com.au/List-of-Investments.aspx)
(https://au.finance.yahoo.com/q/hl?s=VAS.AX)

So I'm leaning more towards VAS, because it seems more transparent and sticks closer to the market, while LIC's operate more like shares in a company.
The investments in AFI look pretty concentrated too, so not much benefit there.

portfolio v3:

30% VTS
30% VEU
30% VAS or AFI or ARG or what-have-you (still leaning towards VAS unless convinced otherwise)
10% VAP

Any thoughts?

[marty998]

LIC stands for Listed Investment Company (not "Licensed")

Some of them (Like AFI and ARG) have been around for 50+ years. You don't survive that long without doing something right.

VAP stocks are included in VAS so you are doubling up there as well. Truthfully though I think you've missed the boat on VAP, property trust stocks have done very well the past few years due to falling interest rates. They will get slaughtered when rates start to rise.