There is much correlation to one asset class. I think if you have US exposure and Asain exposure, you portfolio is exposed enough to catch stockmarket global. You will have included the prime leaders of the economy and/or the next leader. Maybe included Germany. So three etfs will covered it.
Regional ETF Strategy Thoughts
- Thread starter LaxFan
- Start date
Yes, maybe this is a simpler approach:
ITOT - Total US. .04 expense ratio
IEFA - Broad International (Japan 25%, Europe 60%) .07 expense ratio.
IEMG - Broad Emerging Markets (China 32%, South Korea, Hong Kong, etc) .14 expense ratio
AGG - Core US Bond .05 expense ratio.
I’d like to add EPP to get more Australia, Hong Kong, and Singapore.
Thoughts on this revision?
ITOT - Total US. .04 expense ratio
IEFA - Broad International (Japan 25%, Europe 60%) .07 expense ratio.
IEMG - Broad Emerging Markets (China 32%, South Korea, Hong Kong, etc) .14 expense ratio
AGG - Core US Bond .05 expense ratio.
I’d like to add EPP to get more Australia, Hong Kong, and Singapore.
Thoughts on this revision?
What is the objective of your portfolio?
Is it important to be exposed to all stocks market? or to be exposed to a généralisation of the stock market? World Stock market is very correlated, something like the tide raise all ships. Here and there you have some outliners, but it is hard to know this in advance. Your example will cover 99% of overall performance. But you will have also have a big correlation that will give greater volatility, if it's going in a down market.
Is it important to be exposed to all stocks market? or to be exposed to a généralisation of the stock market? World Stock market is very correlated, something like the tide raise all ships. Here and there you have some outliners, but it is hard to know this in advance. Your example will cover 99% of overall performance. But you will have also have a big correlation that will give greater volatility, if it's going in a down market.
Traditional retirement portfolio. You’re right about the correlation. What would be some uncorrelated assets? GLD?
You could copy Dalio all weather port:
30% short term bond (around 7 years period)
40% long term bond (30 years)
5 to 15 % commodities (depending your age)
15% to 25% wold index stocks.
But there are many possibilitys. It depends on your objectives like how much drawdown you can tolerate, how much you want to make a year, also the exit over how many years, are you going to withdraw at a certain moment, do you know how it will act in a rolling period. And so on. I know a lot of people that they needed money to retire on the wrong moment in time. (crisis)
30% short term bond (around 7 years period)
40% long term bond (30 years)
5 to 15 % commodities (depending your age)
15% to 25% wold index stocks.
But there are many possibilitys. It depends on your objectives like how much drawdown you can tolerate, how much you want to make a year, also the exit over how many years, are you going to withdraw at a certain moment, do you know how it will act in a rolling period. And so on. I know a lot of people that they needed money to retire on the wrong moment in time. (crisis)
For this purpose am I using a basket containing the following ETFs:
Equity US: VUG, VTV, VO, VB; Europe: EZU, VGK; Other: EWJ, EEMA, IEMG
Bonds: GOVT, BNDX, VWOB
The attached sorted_correlations.csv.zip (columns separated by semicolon) has ETF/ETN correlations to other ETFs/ETNs sorted low-to-high based on the past three years of prices adjusted for dividends and splits.
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FIRST glance looks fine; except EPP 3 year chart is sideways= slop= chop. But IVV most likely will do well for decades, like SPY + QQQ. Average uptrending bull market is 4 years, some go past 10 years. 2020 hindsight note$ this one started in 1st week in JAN, 2019. NOT a prediction, not bank insured .................................................................................................