Portfolio asset allocation update

Three changes I have made to my portfolio asset allocation plan. The first two are already explained in my March post HERE, so not going to repeat the reason. The third is to remove an asset class that I am still not familiar with hence not comfortable to own. All three changes are made not due to current market condition, but to simplify portfolio management and tune it to my risk appetite.

Change #1

Use Lyxor ETF Asia Pacific Ex Japan listed at SGX (symbol: AEJ) to replace VWO and to represent Emerging Market (EM) asset class.

Change #2

Change the core equity allocation for Japan from 8% to 10%, and the core equity allocation for Emerging Market from 17% to 15%.

Change #3

Remove asset class “Commodities Futures” and redirect its allocation (5%) to REIT, thereby increasing REIT allocation from 10% to 15% within the equity portfolio.

The Portfolio page has been updated and the old version is archived below.


Objective

  • Saving for retirement

Time frame

  • 25-30 years

Risk Tolerance

  • I’m comfortable with 75% Equity and 25% Fixed Income.

Asset Allocation

  • 75% Equity

27.00% US
18.00% Europe
04.80% Japan
10.20% Emerging markets
07.50% REIT
03.75% SGX stocks
03.75% Commodities

  • 25% Fixed Income

10.00% Global fixed income
05.00% Asia fixed income
10.00% Singapore fixed income

The fractional percentage numbers are due to the ratios I use below.

  • Equity Asset Allocation Ratio

Core : Supplementary = 80 : 20 = 100%

Core = US : EU : JP: EM = 45 : 30 : 8 : 17 = 100%
Supplementary = REIT : SGX : Commodities = 10 : 5 : 5 = 20%

  • Fixed Income Asset Allocation Ratio

Global : Asia : SG = 40 : 20 : 40 = 100%

Fund Allocation
Using Cash and CPF-SA. Prefer one fund per asset class for simplicity.

  • Cash

Equity
US – Vanguard Total Stock Market ETF (VTI)
EU – iShares DJ STOXX 50 ETF (EUN)
JP – DBS Japan Growth Fund
EM – Vanguard Emerging Market ETF (VWO)
REIT – REIT stocks in SGX
SGX – <Few old holdings from the past. Stop adding currently>

Fixed Income
Asia fixed income – ABF Pan Asia Bond Index ETF

  • CPF-SA

Fixed Income
SG fixed income – CPF-SA money

  • Not confirmed

Commodities
Global fixed income

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6 responses to “Portfolio asset allocation update

  1. choozm,

    I like simplications and this portfolio is certainly simpler.

    Your fixed asset allocation is neat but the equity portion is “not so neat”. I know your rationale behind the equity division but why deal with the 0.25%? It is not going to make much difference anyway.

    Instead of

    27.00% US
    18.00% Europe
    06.00% Japan
    09.00% Emerging markets
    11.25% REIT
    03.75% SGX stocks

    why not simplfy all the way to say (example)

    25% US
    20% Europe
    05% Japan
    10% Emerging markets
    10% REIT
    5% SGX stocks

  2. indexfundfan,

    When I first derived the numbers after setting the equity division, that 0.25% and weird number like 27 and 18 got me jumped up, “Gosh, how to remember and keep track of this kind of numbers?” Fortunately, I have already setup a spreadsheet to do the calculation for me, so now I only look at the “Deviation %” column to check for asset classes that need rebalancing, and rarely look at those weird numbers.

    Good point, I will look into ways to simplify the portfolio management more. Thanks for your comment.

  3. Pingback: Lyxor ETF trading characteristics « The Mamak Stall Investor

  4. Hi, after your asset allocation for 2007, what was the return for 2007? thank you.

  5. Hi, I am waiting for Vanguard to publish my benchmark’s return for comparison. Been busy lately, I will see if I have time to publish my portfolio review this weekend. Stay tune. Thank you.

  6. Pingback: Sell VWO to cut future dividend withholding tax? « The Mamak Stall Investor

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