Exposure to overseas markets with ETFs via the ASX

qprjames · 4 March 2020

Hi there,

So i'm 38 years old.

I have about 400k of personal money just in ETF's which follow the ASX - STW and VAS to be specific.

As that is all concentrated in the aussie market, i wanted to get some exposure to international markets. I basically want to put money in and set and forget for 5 - 10 years.

So for example maybe NDIA for the india market or VAE (from vanguard) etc.

I thought now is a good a time as ever to invest a bit more money, whilst markets are a little down from their peak. I know markets might drop further, so i might dollar-cost-average for the next few weeks.

If anyone can recommend some ETF's to invest in that would be great.

I use commsec for my share trading. i typically buy a mimimum of $10,000 of shares each time, normally up to a maximum of $50,000.

I currently have around $150,000 to invest.

*my back story if it helps - i'm part time self employed - I earn $40,000 income a year (including those ETF investment dividends) - house where i live is paid off - no family commitments

thanks

qldfrog · 4 March 2020

If it helps, you can open with comsec a us shares account
And once there you really have an enormous amount of ETF
Anything you can think of....
But that is if you wanted to really be precise i wanted target sectors
Otherwise i would suggest
staying on the ASX you can buy us, euro asia etf market at a reasonable price/cost

qprjames · 4 March 2020

qldfrog said:
If it helps, you can open with comsec a us shares account
And once there you really have an enormous amount of ETF
Anything you can think of....
But that is if you wanted to really be precise i wanted target sectors
Otherwise i would suggest
staying on the ASX you can buy us, euro asia etf market at a reasonable price/cost

thanks QLDfrog......to be honest i never thought about opening a US shares account.

Would that be a good time considering the ozzy dollar is at an all time low against the usa dollar? is it hard to do - i.e. paperwork each etc

If I did stay on the ASX and did buy into the euro, asia, india market, what are some of the biggest funds? Can you give any specific names? I would feel more comfortbale just investing in the largest funds out there (i.e. vangaurd, beta shares etc).

qldfrog · 4 March 2020

Open a fund in USD or buying OS etf: you will pay the cost of a low AUD....same same..
But how do you know it will not be worse in 3 months....
Just google ASX ETF and look at the list.i indeed like the Vanguard choice
I do not own any at the moment so no recommendation off the top of my head

Warr87 · 4 March 2020

There are a few strategies that focus on ETF's. I really liked the book "The Ivy Portfolio". Once you get through all the explanation, the basis is that you can run an ETF strategy that is as simple as allocate 20% to 5 different sectors, buy whatever ETF has the highest gain in the past 3 months. Every month, or quarterly, or 6months, rebalance your positions.

If you are about to spend $150,000 it shouldn't be too much of an issue to spend a few hundred on a few books. The US market has a hugh amount of ETF's available compared to australia, and you will be able to spread your money across other sectors much easier too.

Zaxon · 4 March 2020

Warr87 said:
you can run an ETF strategy that is as simple as allocate 20% to 5 different sectors, buy whatever ETF has the highest gain in the past 3 months. Every month, or quarterly, or 6months, rebalance your positions.

Hmm. That behaviour, and others like it involving ETFs, I've never understood.

Some people believe "you can't beat the market". So index ETFs are perfect for them. Other, such as momentum and value investors, believe insightful stock picking can outperform the market. So they buy individual stocks.

The group that doesn't make sense to me, are people who are active investors, but buy ETFs and trade them in and out. If you believe you can gain alpha through your picking skills, you'll get a much better rate of return buying individual shares over ETFs. By definition, ETFs are a bundle of shares, so there's going to be a portion of bad stocks in there. If you believe in your picking skills, then you can just own the best share of those ETFs, directly.

But if you think buying individual stocks is too risky, then that's a statement that you don't believe in your active picking skills. And that's fine. But then suddenly, you believe in your ability to actively pick ETFs?

I believe this has come about because people have been taught that stocks are risky and ETFs are safe. OK. But ETFs are safe only if you treat them passively and buy and hold them for long periods of time.

Trading in and out of ETFs, you expose yourself to selection risk, and market timing risk, but you're not rewarded with the potential for massive market beating runs (at least of the short term) that selecting individual stocks can give you. Personally, I don't see that the risk:reward ratio of trading ETFs is worth it.

Dona Ferentes · 4 March 2020

Zaxon said:
Hmm. That behaviour, and others like it involving ETFs, I've never understood.

But if you think buying individual stocks is too risky, then that's a statement that you don't believe in your active picking skills. And that's fine. But then suddenly, you believe in your ability to actively pick ETFs?

I believe this has come about because people have been taught that stocks are risky and ETFs are safe. OK. But ETFs are safe only if you treat them passively and buy and hold them for long periods of time.

Trading in and out of ETFs, you expose yourself to selection risk, and market timing risk, but you're not rewarded with the potential for massive market beating runs (at least of the short term) that selecting individual stocks can give you. Personally, I don't see that the risk:reward ratio of trading ETFs is worth it.

or you can find a manager that, for a MER, could deliver skills. Let them make decisions for you. The unlisted fund sector is huge, and there are also a bunch of International LICs and mFunds that trade on the ASX.

Like your thinking, Zaxo

Warr87 · 4 March 2020

Zaxon said:
Hmm. That behaviour, and others like it involving ETFs, I've never understood.

Some people believe "you can't beat the market". So index ETFs are perfect for them. Other, such as momentum and value investors, believe insightful stock picking can outperform the market. So they buy individual stocks.

The group that doesn't make sense to me, are people who are active investors, but buy ETFs and trade them in and out. If you believe you can gain alpha through your picking skills, you'll get a much better rate of return buying individual shares over ETFs. By definition, ETFs are a bundle of shares, so there's going to be a portion of bad stocks in there. If you believe in your picking skills, then you can just own the best share of those ETFs, directly.

But if you think buying individual stocks is too risky, then that's a statement that you don't believe in your active picking skills. And that's fine. But then suddenly, you believe in your ability to actively pick ETFs?

I believe this has come about because people have been taught that stocks are risky and ETFs are safe. OK. But ETFs are safe only if you treat them passively and buy and hold them for long periods of time.

Trading in and out of ETFs, you expose yourself to selection risk, and market timing risk, but you're not rewarded with the potential for massive market beating runs (at least of the short term) that selecting individual stocks can give you. Personally, I don't see that the risk:reward ratio of trading ETFs is worth it.

There is nothing less risky about an ETF. it is a financial intrument, therefore carries a risk. The premise behind these ETF strategies is to buy those with the highest moment in a sector. You are right, you are buying a bundle of shares, but I don't see your point? The point is to get diversification by focusing on sectors, and choosing the highest momentum within those sectors. Some sectors do great, some do bad. When a sector is doing bad, the majority of shares within that sector will fall with it.

if you are unsure why it works, then try reading one of the books. Or maybe look at their testing? The Ivy portfolio is based around an examination of how portfolio managers from Ivy league schools manage there endowments and get their returns. A substitute that works is utilising ETFs. Active stock picking will likely get you better results, but the book shows how you could get after market returns with only needing to rebalance at most once a month (if not quarterly). Not everyone has time to run a weekly system/portfolio.

qldfrog · 5 March 2020

For what it is worth, i tried running a momentum system on an etf realm
The idea of being able to catch currency, material, O/S short with a simple long only weekly system..... does not work really well, you get so so results but you miss the multiple baggers etc which actually give you returns above average.if anyone has been successfull there please PM me
But does not seem to be worth the effort.i was looking at that in prep for the Australia market specific hit...

Exposure to overseas markets with ETFs via the ASX

qprjames

qldfrog

qprjames

qldfrog

Warr87

Zaxon

The voice of reason

Dona Ferentes

And who shall I say is calling?

Warr87

qldfrog

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Exposure to overseas markets with ETFs via the ASX

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