A small change to get 2018 off to a good start, the long bond position has been changed from cash to invested.
| Monthly Asset Allocation | ETF | Target | Position |
| Swiss government bonds CH 7-15 years | CSBGC0 | 10% | Investment (ETF) |
| Gold | AUCHAH | 5% | Permanently invested (ETF) |
| Swiss real estate | SRFCHA | 15% | Permanently invested (Equities or ETFs) |
| Developed country equities (50% dom. / 50% int.) | CHSPI / SWDA | 65% | Invested (Equities or ETFs) |
| Emerging countries equities | DEMSX | 5% | Investment (ETF) |
| TOTAL CASH | 0% |
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I don't have any bonds or gold in my portfolio (yet?), because I don't see the point (literally or figuratively). What are your reasons for devoting part of your portfolio to them? By the way, is DEMSX the Wisdom Tree ETF for EM dividends? I've chosen VSS and CQQQ as my exposure to these markets for the time being.
Thank you and a wonderful year full of dividends to you!
Concerning the reasons for having a little gold and bonds in a portfolio, they are explained in detail here (continuation of 20 posts):
https://www.dividendes.ch/2017/08/comment-diversifier-son-portefeuille-pour-se-prevenir-des-risques-de-marche-120/
each individual will adjust the weightings according to his or her needs and objectives
DEMSX is at https://us.dimensional.com/funds/emerging-markets-small-cap
but you can simply take IEMS from ishares, which is the equivalent (small caps in emerging countries).
VSS is small cap outside the US and CQQQ techno China, so it's not quite the same thing.
the point is to find assets with low correlation (hence a bit of gold, bonds, real estate...), I think VSS is too linked to other indices and CQQ perhaps not diversified enough because it's too techno-focused, but that's debatable.
happy new year to you too!
I'm inclined to take more risks at the moment. To diversify from equities, buying real estate seems the most obvious option. Then, in small doses, I'm trying things like short-term loans to SMEs (see Advanon.com), which offer interesting returns but not without risk, of course. And a bit of cybercurrencies like Ethereum.
Otherwise, it's true that VSS offers only partial exposure to EM (24%). It's an easy way to diversify my very US-oriented portfolio. CQQQ is a bet on the growth of China's Internet sector; it's my way of gaining exposure to the fast-growing Tencent and Alibaba companies.
I also find WisdomTree's dividend ETFs interesting:
- WisdomTree Emerging Markets SmallCap Dividend UCITS ETF (NYSE:DGSE): https://www.wisdomtree.eu/fr-ch/etfs/small-cap-dividend/wisdomtree-emerging-markets-smallcap-dividend-ucits-etf#tab-BD825353-8897-4914-83CD-D6ED9C33E565
- WisdomTree Emerging Markets Equity Income UCITS ETF (NYSE:DEM): https://www.wisdomtree.eu/fr-ch/etfs/equities/wisdomtree-emerging-markets-equity-income-ucits-etf
Thanks for the link to DEMSX, which I didn't know about.
I have no confidence in crypto-currencies. I don't understand how it works, how it can be given an intrinsic value and I have the impression that it's a big bubble a la Tulipomania or, closer to home, dotcom. Sometimes I even think it might be worth shorting them...
The two Wisdomtree ETFs you mention are interesting because the TER is low. However, as I've already mentioned in a number of articles, dividend-oriented ETFs aren't always optimal, as the stock selection methodology is often not very good (most of the time, you're limited to taking the highest yields, which isn't at all what you're looking for from a dividend growth perspective).
As far as crypto-currencies are concerned, I'm like Jérôme: I don't really understand what makes them so valuable, why and how they move. As it is, I think it's speculation, even casino, with an artificial side that I don't like. When in doubt, I abstain. I'd rather miss out on a possible major gain, but avoid an equally possible loss.
On the subject of real estate, JL mentions the idea of investing directly in property. Why not, but it takes patience to find a good deal. What's more, direct real estate is not liquid and it can take time to resell at a decent price. What's more, rental property is not without its risks (difficulty in renting, contestation of the initial rent, non-payment of rent, difficulties and costs in getting rid of a defaulting tenant, etc.). Furthermore, capital gains on the sale of real estate are taxed in Switzerland, unlike capital gains on the sale of shares or other assets. Finally, in Switzerland, a minimum of 20% of equity is required to acquire a property, which is no mean feat (in France, on the contrary, it is possible to buy without equity, provided you have sufficient income to afford the mortgage charges and thus reassure the bank; in France, access to property ownership is thus facilitated, even for people with no savings and modest incomes).
Cryptocurrencies are causing a sharp divide in opinion, between technological revolution and speculative bubble. Time will tell how this story evolves.
When it came to real estate, I was thinking primarily of buying my own home as an investment. In the two years since I bought the apartment in which I live, I've seen the benefits in terms of reduced housing costs. Low mortgage rates are a godsend that I'm currently taking advantage of. Buying to rent and create a return would be quite different, and I share your view Laurent that it's not without risk and worry. US or European REITs, like SPS or Allreal real estate companies, offer the possibility of an interesting return while avoiding the worries you mention. I've been keeping an eye on US REITs for some time now, and the yields on companies like VTR, CUBE and STOR are very attractive, and the dividends are well covered.
As far as I'm concerned, I started by buying my first apartment, then when I moved out I rented it again and bought my new apartment. Renting is done via a property management company, so there's no work involved! The return is not too bad without being extraordinary, you also avoid unnecessary rents and above all it allows you to get money out of those thieving pension funds!
I also have a few real estate investments in the stock market.