Managed Funds Core & Satellite asset allocations.

Hi All,

My portfolio is a work in progress. I have been slowly changing it over the last year. I really like DFA's plans but I don't have 1mil to invest. So I have made, what I call, The Johny Portfolio. I uses idea's from IFA/DFA but with local products.

I use the Core/Satellite approach. I have an ASX/200 index base to capture the market as a Core. And I have small Satellite funds to access higher risk funds.

My Asset Allocation as it stands at the moment is:

Cash 20%
F.I., Bond index 20%
ASX/200 index 25%
ASX L/C 10%
ASX Value index L/C 4%
ASX Small Cap 4%
ASX S/C value index 4%
Emerging markets 3%
Global Resources 10%

I haven't included property as I am making a second portfolio of REITS.
I would be very interested in everybody's A.A. and why they chose their design!



Cheers, Johny.

 

Asset Allocation

Johnny,

I have spent a lot of time looking at ifa.com and DFA websites over the past year. Their Risk calculator I think is very useful. I started setting up my profolio based on their suggested risk categry, however using ETF's and International ETF's.

I see your protfolio has very little International exposure. No one has a crystal ball however in Global terms Australian market is small, very much tied to resources as is the Aussie dollar and also thus tied to China growth. A$ is strong and US$ & UK Pound will likely continue to fall - how much and how far for how long who knows. Depending on your time frame I would increase your International exposure.

GunnerGuy

 

Hi GunnerGuy

You are absolutely correct. My portfolio is heavy Australian. This is because

1 I am patriotic
2 I am comfortable with the Australian market
3 There is some uncertaincies with the American market
4 I am not educated enough with world markets

The Future
possible S&P 500 index
possible World index
possible India index

If you compare the DJA with the All Ords for the last year, you will see that they are tracking very closely. The Australian market goes up and down in sync with US market. America's recovery/collapse will effect all markets. Even experienced economists can't predict the future. So I learn a little every day, and invest accordingly.





Johny.

 

Asset Allocation

Johny,

All good points. Having been inversting in multiple Global equity markets and currencies for over 18 years I have a couple of comments. These are not meant as red rag to a bull, just some polite comments from someone who has never met an expert, will never meet one (because there are none) and will never become one. Just some facts to consider in your learning (and mine).

1. I am patriotic.
This is nice but has no place in optimisting ones wealth management processes or acquiring wealth. Is one trying to increase ones wealth or increase ones feeling of patriotism to ones country. These are not necessarily related

2. I am comfortable with the Australian market.
So am I, that is why I invest in the Australian market, however no investor really knows what goes on in companys or has true access to their accounts.

3. There are some uncertainties in the American market.
Three things here:
i)Please let me know which markets do not have uncertainty. All markets have uncertainty.
ii)One might consider International markets have 'increased' uncertainty due to currency exposure - ie. currency uncertainty in addition to the usual market uncertainty.
iii) Interest rates in Australia are 500% higher than the US and will go up before the US rates go up. How will this affect the two markets respectively ?

4. I am not educated enough in World markets.
We are all learning and will never learn everything. Patience is important, conservatism is also important until one is comforatable outside ones comfort zone. Who knows which of the World markets is best to invest in.

The Future - Your choices seem reasonable.

Over the last year the All Ords and the US market may well have tracked each other but that is just the last year. I believe, as I am sure you do, investing choices are based on ones timeframe. So for me I tell myself that my investments are based on a 10 year time frame, others will be longer and some shorter. The past is the past and history can assist us in determining the possible futures however Mr. Market will do whatever he wants.

I agree economists are really none the wiser thus us investors on the street.

Again these comments are not meant as a red rag to a bull but just some comments.

I do a lot of reading on finance/markets etc., about 4 hours a day, but still struggle to understand what to do. I have tried all sorts of strategies to increase wealth from currencies, corporate bonds, many many different equity markets, index funds, mutual funds, individual shares, commodities and other 'vehicles' and to be honest still don't know what is best.

What I do feel is that diversification, time in the market, and patience are the three most important things in investing plus no one knows what asset class will go where or when.

Keep diversified, even just in index funds.

GunnerGuy ..... still learning, trying, adjusting, reading, seeking advice, and sharing some experiences.

 

Hey GunnerGuy

Nice one mate! Thanks a lot. Are you a busy guy? This forum would benefit from your constructive comments.




Cheers, Johny.

 

Investing

Johny,

I gain great enjoyment in discussing financial and investment matters across many areas including equities, IP's, commodities, Gold, Silver, UK markets, US markets, emerging markets, currencies, and even some deep dark politico issues in the US . I currently live O/S and plan to return to Perth in Q3/Q4 next year. Although I feel I have some experience in investing I sorely lack significant experience in tax matters in Australia regarding Trusts, SMSF etc. and am busy learning up on these.

I always have time to discuss investing options.

Gunnerguy.

 

Asset Allocation

Hi,

Is there anybody willing to disclose their asset allocation (and why)? I asked this question on 3/7/09 and didn't receive any response. Anyone?



Johny.

 

Asset Allocation

Johny,

Asset Allocation ....... so ..... well what is your favorite colour ? Why is that important you ask. Well asset allocation depends on sooooooo many things. The IFA.com risk capacity survey is interesting and informative.

Me personally - 44yrs old, married 2 very young kids, relatively financially savvy ..... I have Australian property, Some index funds in major markets, some commodities, some gold. But in the last couple of years I have dabbled in everything and also reduced my debt significantly in the last 3 years.

It depends on your levels of risk taking and your timeframe, and your debt levels, and your income and living expenses.

Due to recent moves in the equity markets my 'total assets' are about 60% in investment properties, 20% index and individual equities including International and 10% commodities/gold, and 10% cash at the moment.

The none investment properties stuff varies every few weeks depending on how I think the markets, commodities and currencies do.

Gunnerguy.