1. 3

Most American resources I’ve read recommend going all in on S&P 500, while a lot of EU-based resources recommend a 70/30 combination of MSCI World and EM.

I’m curious those of you who invest regularly in ETFs, what asset allocation do you use and why?


  2. 2

    As a relatively young American I’m basically 75% VTI, 25% VXUS (although using Admiral Shares instead of ETFs). If we extend this to the whole household, there’s a really small slice in BND too.

    I’m not sure I have a succinct answer for “why?” at this point. I set those targets when I was really young, didn’t leave notes for myself to read later, and haven’t really revisited it since.

    If I’m trying to be more complete in this response, probably there is probably some significant “because I’m young enough to never have seen a downturn” going on here, given that it is in effect all in on equities.

    1. 1

      The portfolio I’ve designed has 75% in stocks, and 25% in bonds. In order to avoid the 15% tax on dividends, I’ve picked only accumulating funds.

      75% stocks comprising of:

      First I was skeptical about the extra overhead of holding also small cap and emerging markets ETFs, given that in backtests, the long term returns when holding only large & mid cap, compared to adding small cap and EM too are very similar. Eventually I decided to just trust the market and replicate it.

      25% bonds comprising of:

      The bond part of the portfolio gave me a lot of headaches, because of the instability of the eurozone, deflation and low interest rates.

      First I decided to split between US and EU, to hedge the political & default risk in the EU. I understand this gives me more currency risk.

      Then between the low yields of the short term bonds, and the increased risk of the long term ones, I decided to go with intermediate term, considering also the duration of my investment, I hope that in the long run, the interest and inflation risk I hold will be compensated by higher total returns.

      The Lyxor euro bond was chosen instead of the iShares or db-x equivalent ones, due to higher fund size & liquidity. Corporate bonds (either individual or via aggregate funds) were not chosen due to the increased risk which is not compensated by higher returns, as far as I saw in the 10 year history charts.

      What do you guys think?

      1. 1

        Currently 80% in treasuries, and 20% play money dedicated to Keller’s ideas. Here’s a blog discussing the strategies.

        1. 1

          I’m still reading up on this but how’s that 20% been faring under the direction of those ideas? How long have you been doing it like that?

          1. 1

            I’ve rebalanced a week ago – so far so good, but obviously the point of employing momentum strats like these is to withstand recessions and (thus) beat the benchmark. Having said this, the real test is yet to come 😊