Yes I came to this conclusion about 18-24 months ago and reckon I probably posted about it upthread, but not as much lately. What did I do? Have been gradually shifting my VAS into better diversified options such as MVW, EX20, MVS and some LIC's too. I still have around 55% of my Oz equity investments in VAS, but a decent amount is now in these other products too.
Would love to hear some thoughts on how that's been travelling for you, although perhaps too early to tell really. I dip in and out of this thread so probably missed it the first time round or didn't appreciate it's import. But wondering what strategic or administrative issues you may have come across in creating a more
I think my main aim is raising the issue again was alerting newer investors to certain risks that aren't really front and centre in the index investing literature. Most of the material is tailored to US investors, and Australian Vanguard doesn't, as far as I know, address the concentration of something like VAS. A newbie might think they are doing the best thing by getting into VAS, and sure you could do a lot worse things, but may not appreciate some of the risks of homebias/lack of diversification.
I 100% agree with this. People have home country bias. The ASX is a bankwater stock exchange dominated by banks, and mining companies and a couple of supermarkets. - with an economy that was all about a mining boom which morphed into a housing boom. I can't help being pessimistic about the ASX top 10 getting hammered in any potential downturn.
Another thing to consider is that the 'standard' superannuation fund portfolio typically includes most of the ASX top companies. So your super is likely exposed to companies you're buying in your ETFs.
Often further compounded by being employed in Australia by an Australian company.
Yep.
Without totally dismissing the significant amount of economic activity in Australia provided by the provision of healthcare, services industries, retail etc, i.e. the amount of economic activity just required to keep 22 million people alive and thriving, are we possibly in a fortunate position of being able to allocate a significant amount of our investments offshore and allowing the greater productivity of foreign businesses to effectively pay for our consumption/lifestyle?
If you lived in a developing country, say in South East Asia, then if you derived a large part of your earnings from a US based or World index, it would effective boost your spending power in your poorer home country. Should we adopt a similar approach to living in Australia? I appreciate there's quite a bit of complexity here, but curious about adopting the strategy in principle.
Or am I totally dismissing the fact that the Big 4 Australian Banks have just been churning out profits year in and year out, whereas banks in other jurisdictions have fallen in value or failed completely, and Australian banks and retail will continue to do so? Are we in fact a different case......
I'll start a new thread on this topic if there are enough people interested. Don't wish to hijack the entire thread for this topic, but I'd still love to hear more thoughts and experiences, and strategies in response to countering home bias / managing risk from lack of diversification in your home economy.
Might even flush out some insights from people in other countries that have economies with similar characteristics - Canadians in particular.
Edit: garbled grammer, too fast typing = typos
Topic: Australian Investing Thread (Read 2695386 times)