With the cash built up from the delayed contribution in October 2010 and April 2011, I have finally made the purchase in July and August. The delay was because (1) I have been trying to get Saxo to offer two global bond ETFs in London Stock Exchange since October 2010, which Saxo finally added them in May 2011, and (2) I was evaluating and setting up Standard Chartered bank online trading in July 2011.
Following my asset allocation plan, I have bought the funds below (through the broker stated in brackets):
- iShares MSCI Europe ETF (Saxo)
- Lyxor Asia Pacific Ex Japan ETF (SCB)
- Lyxor Japan ETF (SCB)
- iShares Citigroup Global Government Bond ETF (Saxo)
On the other hand, I have taken the opportunity in the recent rise of bond price to sell Legg Mason Global Bond Trust, an actively managed unit trust fund. Following the sale, I do not have any actively managed fund in my portfolio, except UOB GrowPath 2040 in CPF SA. I will allocate the sale proceed to US equity, again, according to asset allocation plan.
Posted in Bonds, ETF, Investment, My Portfolio, Stock Broker, Transaction
Tagged active, Activity, buy, ETF, My Portfolio, sell, unit trust fund, year 2011
My regular half-yearly investment should have already happened in October but it was delayed, due to difficulty in finding a suitable platform to buy global bond ETF—Saxo refused to add the global bond ETFs I requested because it is multiple-currency while POEMS added the ETFs but their commission is high, read my post here. The portfolio asset allocation has been within the 5% threshold from the target 75/25 stock/bond ratio since October, but within the bond portion, global bond is under-allocated and requires top-up. That’s why I am looking for global bond ETF to add. I prefer not to add to the current global bond unit trust fund in my portfolio because of the fund’s active management.
Recently, a reader left a comment that a multiple-currency ETF was added to Saxo upon his request. I have sent a request to Saxo again to add the two global bond ETFs. Will update when I have their reply.
Posted in Bonds, ETF, Investing, Investment, My Portfolio, Portfolio Management, Rebalancing
Tagged Activity, Bonds, ETF, LondonStockExchange, My Portfolio, Stock Broker
The latest portfolio activity happened in May. It was scheduled in April but was postponed due to travelling in overseas.
According to my asset allocation plan, I needed to top up US asset class. But after allocating the required amount from my fresh fund to the US asset class, there was some, but not much, surplus left. I could allocate this surplus to the asset class that almost reached the bottom threshold of its allocation, which was Asia Pacific ex Japan.
In the end, I topped up only the US asset class with all the fresh fund to save time and commission, since the top up of Asia Pacific ex Japan by the relatively small surplus did not change much the allocation of all asset classes.
October is the time to do my semi-annual purchase of funds. My asset allocation plan shows that I need to top up two asset classes:
- Europe equity
- Japan equity
No top up for REITs as the current holdings in my portfolio is over the target allocation already, because I have accepted a number of rights issues offered by some of the REITs.
For Europe equity and Japan equity, the funds that I will use remain the same: iShares MSCI Europe ETF and Lyxor Japan (TOPIX) ETF respectively. There is an alternative to Europe equity: Lyxor MSCI Europe ETF that was listed in SGX a week ago. The broker fee to buy this ETF is cheaper than iShares MSCI Europe ETF, which is listed in London Stock Exchange. But for now, I will give Lyxor MSCI Europe ETF a miss because it is quite new and the asset under management is only slightly more than USD 6 million.
I have made the transaction for Lyxor Japan (TOPIX) ETF and will buy iShares MSCI Europe ETF next week, after its ex-date on 28-Oct-2009.
Just to update my regular fund purchase in April. The asset allocation plan in April indicated top up required for asset classes:
- Asia Pacific Ex Japan
I have only bought REIT in April, while I was preparing for the funds for the rest. When the fund was ready, it was July and the asset allocation had changed due to the rise in Asian stock markets. The asset classes to top up in July was US equity only, for which I bought Vanguard Total Stock Market ETF (VTI).
As of 7-September-2009, my portfolio allocation is shown below.
The next regular fund purchase is in October. The 7% cash shown above is the savings for this coming purchase.
Right now, I still hold Vanguard Emerging Markets Stock ETF (VWO) and pay the dividend withholding tax every year. I wonder if it would be better to sell VWO to cut the future dividend withholding tax. Before I continue, here’s some background:
- In a portfolio asset allocation update in 2007, I decided to use Lyxor ETF Asia Pacific Ex Japan listed at SGX (symbol: AEJ) to replace VWO for future purchase. But I still keep my VWO holding.
- As a result, I am still paying every year 30% dividend withholding tax on the dividend I receive from VWO.
- The dividend withholding tax is about USD10-15 every year.
- In my previous post on claiming back US dividend withholding tax on non-US equity ETF, I decided not to pursue that avenue to claim back dividend withholding tax for VWO, because my broker’s Form 1042-S does not list the necessary information and the dividend tax amount is small to worth the effort.
To get an idea of how much dividend withholding tax I would be paying if I were to hold it for the next 30 years, I calculated the cumulative present values of the tax in this spreadsheet Present value of VWO dividend tax (Google Docs) with a discount rate of 2.5%. The rate 2.5% is the interest rate of CPF Ordinary Account.
As you can see, the cumulative present values of the tax paid for the next 30 years are between USD200-300. Compare this with the broker commission of USD15 if I sell VWO, it seems logical to me to sell VWO to save on the tax. The sales proceed would be used to buy VWO’s replacement – Lyxor ETF Asia Pacific Ex Japan.
Does this make sense to you? Is the maths correct? Let me know and leave your comment, please.
Posted in Cost, ETF, Investing, Investment, My Portfolio, Portfolio Management, Tax
Tagged ETF, My Portfolio, Portfolio Management, portfolio pondering, Tax, VWO, Withholding Tax
This post is way overdue, but just to update my portfolio activity for the regular fund purchase in October. I topped up the followings according to my asset allocation plan:
- Europe — iShares MSCI Europe ETF
- Asia Pacific Ex Japan — Lyxor Asia Pacific Ex Japan ETF
- REIT — REIT stocks in SGX
- SG fixed income — SGS bond ladder (partial)
I bought 4-year and 6-year SGS bonds from Fundsupermart, and 5-year SGS bond from primary auction. So the bond ladder is 50% complete. I will hold these SGS till maturity and add 5- or 6- year SGS bond in the future to complete the bond ladder.
The fund purchase was done in late September/early October. It brought my asset allocation to the target 75/25 but it didn’t stay for long (which is normal). The fnancial crisis that followed brought the equity allocation down and it hovers around 65% since then. I thought may be I would do an early top up in January next year, before the next scheduled one in April. But, nah, I think I will be too lazy to do it. Back to my life…