In today’s episode, we continue building our renewed hypothetical portfolio. We are taking a ‘core and satellite’ approach to this portfolio, so we spend this episode discussing the strategy for the core portfolio. We then select some specific ETFs that will form the basis of our core portfolio.
In this episode you will learn:
- The principles of a ‘core and satellite’ portfolio
- Our investing philosophy for our core portfolio
- The rules we will be applying for this portfolio
- How we are thinking about portfolio construction and rebalancing
- Some key asset classes that can be included in a core portfolio
- Examples of core portfolios
- The first six ETF’s we will be holding in our core portfolio
When listening to this episode it is important to remember that nothing discussed forms specific investment advice or an offer to buy, hold or sell individual securities. We are not investment advisors and are not aware of your personal financial circumstances or goals. The discussions are general in nature and are had for the purposes of financial education. Before investing please ensure you do your own research, reach the PDS available and speak to a financial advisor if you have any questions.
If you want to let Alec or Bryce know what you think of an episode, contact them here.
Some of our favourite resources and offers to help you during your journey:
- Want to do an online course with Equity Mates and Owen Raszkiewicz? We have the Beginner Shares Course and the Value Investor Program available now!
- Take control and track your investment portfolio with Sharesight
- Get a free stock when you sign-up to Stake, using the code EQUITYMATES
- Get exclusive access to our favourite data and insights platform, TIKR
- Take the emotion out of investing in Bitcoin, Ethereum, Gold and Silver with micro-investing app, Bamboo. Use EQUITY MATES for $10 when you sign-up
- Get $15 of Bitcoin, using one of our favourite crypto-currency exchanges, Swyftx
- Get 5 free trades if you plan to use the broker SelfWealth
Equity Mates Investing Podcast is a product of Equity Mates Media.
All information in this podcast is for education and entertainment purposes only. Equity Mates gives listeners access to information and educational content provided by a range of financial services professionals. It is not intended as a substitute for professional finance, legal or tax advice.
The hosts of Equity Mates Investing Podcast are not financial professionals and are not aware of your personal financial circumstances. Equity Mates Media does not operate under an Australian financial services licence and relies on the exemption available under the Corporations Act 2001 (Cth) in respect of any information or advice given.
Before making any financial decisions you should read the Product Disclosure Statement and, if necessary, consult a licensed financial professional.
Do not take financial advice from a podcast.
For more information head to the disclaimer page on the Equity Mates website where you can find ASIC resources and find a registered financial professional near you.
In the spirit of reconciliation, Equity Mates Media and the hosts of Equity Mates Investing Podcast acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and expend that respect to all Aboriginal and Torres Strait Islander people today.
Have you just started your investing journey? Head over to Get Started Investing – Equity Mates 12-part series with all the fundamentals you need to feel confident to start your investing journey.
Want more Equity Mates? Subscribe to our social media channels (@equitymates), Thought Starters * Get Started Investing mailing list and more, or check out our Youtube channel.
Equity Mates Investing Podcast is part of the Acast Creator Network.
Bryce: [00:00:57] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my Equity Mates Ren. How's it going? [00:01:11][14.5]
Alec: [00:01:12] I'm very good. Bryce very excited for our second episode of our hypothetical portfolio. [00:01:17][5.3]
Bryce: [00:01:18] Yes, a lot of momentum building with this one. We're going to have a lot of fun with this if you haven't tuned in before and you've just joined the show. Welcome to Equity Mates and our journey of investing. Great to have you as part of the community. What we are doing in this episode is building out well, discussing the core component of our hypothetical portfolio. I would suggest going back to last Monday's episode and having a listen to us kicking off the concept of the hypothetical portfolio, because it's going to be pretty fun. [00:01:47][29.0]
Alec: [00:01:47] Yeah. Yeah. Now, we need to reiterate that everything we talk about here, because we are going to get a little bit specific in this episode, is not advice. It is simply us trying to apply the lessons that we've learnt and the lessons that we continue to learn. Yeah. To a hypothetical portfolio. Yes. So do not take it as a buy or sell recommendation is simply another learning tool for you to do your own research on. Absolutely. [00:02:12][24.9]
Bryce: [00:02:13] So as we said, this is going to be all about building out the core component of our portfolio, which will be around ETFs and index investing. But before we do, we've got some housekeeping that we need to cover off. [00:02:25][11.8]
Alec: [00:02:25] Yeah, and then we should explain what you meant by that core and satellite. [00:02:28][2.9]
Bryce: [00:07:19] And as we said at the start, it's all about building out the core component of our hypothetical portfolio. And you mentioned it's very important that we discuss the reason why we're calling it core. We did sort of mention in the last episode that this was going to be our benchmark portfolio, but it's more than that. It is actually forming a larger part of our total portfolio. [00:07:40][20.8]
Alec: [00:07:41] That's it. So a bit of a Basics 101 for people who aren't familiar. The concepts of a core and satellite portfolio are really useful when you're thinking about how you're investing and what you're investing in. The core is those long term holdings with a multi decade time horizon, basically your superannuation. But in your brokerage account, they're generally index funds that track specific markets, whichever one you want to buy. And generally you're looking at, you know, dollar cost averaging or just holding for a very long time. And that forms the core of your portfolio. It's generally larger than the satellite, which we'll get to in a second. And the reason for that is that very few people beat the market over a long period of time. Getting market average returns and enjoying the power of compounding is all you need to grow wealth. So this whole concept of stock picking and of trading that so many people think about when they think about investing in shares, you can put that completely out of your mind. When we talk about the core portfolio, it's not needed and it's not needed to grow well. So the core portfolio is sort of set and forget in a way. And it's not lazy, but it's less work that's required. So that's what we're going to talk about today. Just for the sake of completeness, the satellite portfolio is then where you can take a little bit more risk. You can buy some individual stocks, you can trade, you can try and outperform the market. But you should do it in the full knowledge that it is incredibly hard for professionals to outperform the market. And if they're going to struggle to do it, we're definitely going to struggle to do it. So I think we're going to talk about the core today. We're going to talk about some of the things that we would invest in the core portfolio. Obviously, there's going to be a little bit more excitement in the satellite portfolio. When we talk about individual stocks, it's a little sexier. It's a little more fun that'll keep you guys interested. But yeah, I think the good a good foundation of anyone's portfolio is this concept of a core. And so that's what we're going to really get stuck into today. [00:09:48][127.1]
Bryce: [00:09:49] Yes. Nice one, Ren. So, yeah. To remain consistent with with our message and how we think about investing, that is exactly what we're going to be doing. Now, as you mentioned, Ren, in reality, your core generally makes up anywhere up to maybe 90 percent of your portfolio and 10 percent is that satellite now. [00:10:05][16.2]
Alec: [00:10:05] Well, even 100 percent if you want. [00:10:06][1.4]
Bryce: [00:10:07] Absolutely. Absolutely. That's in reality. In this instance, we haven't had the discussion of if we're going to actually try and replicate that. I don't think we probably will, given that we just like having a bit of a play around in the satellite space. [00:10:18][11.7]
Alec: [00:10:19] I think for the easier comparison, we should just try and aim for sort of 50/50. Yeah, because then yeah. [00:10:24][4.8]
Bryce: [00:10:24] Well, given that we're going to be taking about a grand a month in available cash, you know, it's probably going to wait out the same relatively at the end of the day. [00:10:32][8.1]
Alec: [00:10:32] So obviously, you know, it depends on your personal circumstances. It depends on your money and your expenses and all of that. But if you're thinking specifically for you, you should speak to a financial planner or someone. As a general rule of thumb, you hear people who want to take more risks and trade more in their satellite portfolio. Sort of look at 60 percent cent, 40 percent satellite for people who want to have less. Risk, think about stocks less, don't have the time to do as much research on individual stocks to Bryce as points out of nine or 10 or even 100 zero. [00:11:04][31.4]
Bryce: [00:11:04] Nothing wrong with 100 zero. [00:11:05][1.1]
Alec: [00:11:06] Nothing wrong at all. Market average returns serious? [00:11:09][2.9]
Bryce: [00:11:09] Well, yes, I'd take that any day. Nice. So let's move on to the structure of this building out the core portfolio. What is the aim of our portfolio and what are we really trying to achieve here? Ren, you mentioned the first one, which is long term set and forget multi decade investing time horizon. [00:11:28][18.6]
Alec: [00:11:28] Yes. Yes. So that's the philosophy, the investing philosophy. I guess what we're trying to achieve, I would summarise as a global market, average returns. Perfect. [00:11:39][10.7]
Bryce: [00:11:40] I'm happy with that. [00:11:40][0.6]
Alec: [00:11:41] Nice one. [00:11:41][0.3]
Bryce: [00:11:41] So how we will achieve that, we will get into a little bit later. But let's discuss the rules for this portfolio. So we made some rules for our satellite portfolio. Now, those rules aren't necessarily going to apply to our core, completely different way of thinking. So how about we start with our purchasing sort of cadence with this? Because we made the rule with our satellite portfolio that we don't necessarily have to buy every single month. We don't have to sell every single month. It's an unconstrained approach. A little bit different for this one. [00:12:13][31.4]
Alec: [00:12:13] Yes, yes. This one. We're going to fully embrace the concept of dollar cost averaging for people who are unfamiliar with that term. It essentially is you're buying a set dollar amount of an investment of an asset at a set time period. And so it takes all the concept of trying to time the market off the table. If the market's down, the set amount that you're spending will buy more of the assets. If the market's up, it'll buy less. But over time, the purchase price that you're buying it up will average out. It's the extension of the set and forget approach. It's the have sort of rules based framework to average into the market. And so that's what we're going to embrace here, because all we're trying to do is invest for the very long term and average into ETFs and funds that track the market. [00:13:02][48.9]
Bryce: [00:13:03] Now, we will obviously be including brokerage fees in all of this and tracking that just as we so we can replicate reality. And we'll be looking at one of the brokers, I guess, that has the lowest fee because we face [00:13:15][12.0]
Alec: [00:13:15] yeah, we hate fees and we'll get into that when we talk about the ETFs. Let's not nominate a broker at this stage. [00:13:21][5.9]
Bryce: [00:13:22] Now, the other point to that Ren, is that given that we're going to be constrained somewhat by the thousand dollars available each month, and we'll discuss in a little bit how much we're actually going to start with to kick this whole thing off. But given that we're going to be doing a thousand a month, we're not going to be able to dollar cost average into every single one of our ETFs every single month. No. So we're going to need to give thought to how we maintain the weighting of our portfolio and structure that over the next sort of 12 months or so. So we'll discuss that as time goes on. [00:13:48][26.3]
Alec: [00:13:49] That's a question around portfolio construction and weighting and all of that. [00:13:52][3.7]
Bryce: [00:13:53] And it's something that everyone faces every day anyway. You're not always going to have money available to invest in every single ETF you have at a consistent timeframe. [00:14:01][8.5]
Alec: [00:14:02] Yes. Yeah. [00:14:02][0.5]
Bryce: [00:14:03] Now, the next question comes down to actively managed ETFs, Ren or index only. Now this is a component of portfolio construction as well. What are your thoughts around this? Well, I. [00:14:13][10.9]
Alec: [00:14:14] I haven't had a step further back, which is there's more there's more in the world than actively managed ETFs and indexes. Yeah. I mean, we can talk about managed funds like private managed funds. We can talk about Elyse's. We're not really going to talk about individual stocks for this core portfolio. I think any of the above are acceptable. We're definitely going to wait towards passive ETFs. So ETFs that just track an index or a basket of assets or stocks. But I don't see any reason why you couldn't apply these principles to a managed fund and allies, say, or an actively managed ETF. But I'm interested to get your thoughts as well. [00:14:57][42.3]
Bryce: [00:14:57] I don't disagree with you at all. I don't think there should be a rule around us sticking to passively managed indexes. Interesting that you included Elyse's in here. I perhaps would have considered them more in the satellite portfolio, but now that I think about it, it probably makes more sense to include them in here. It just means we would probably be actively managing this portfolio more than perhaps otherwise. [00:15:22][24.4]
Alec: [00:15:23] I don't think so. I think let's use a specific example. If you think Paul Moore's Asian Opportunities Fund or whatever it's called is going to, you know, is going to outperform for the next 20 years ago and you just want to average into that position, I think that's that's completely fine. Obviously, the risk then is a little bit higher. And so for some purists, that may not be an acceptable approach in the satellite portfolio. But I think if you're following the same rules, if you're just averaging in over a long period of time, you're not trying to. Bait the market, I mean, he's trying to bait the market, but you're you're just putting money in, I think it's acceptable. [00:16:01][38.3]
Bryce: [00:16:02] All right. So no rules around actively managed versus passive. So that's great. And to your point around Fais Ren, we're going to be aiming for the lowest fee ETF in that category, give or take. Yeah. If we're looking at that sort of investment type, yeah. [00:16:21][19.3]
Alec: [00:16:21] Yeah. For some of them, there's eccentricities when it comes to what you're actually buying. So gold is a really good example of that. There's a number of ETFs that track gold. The cheapest management fee for a gold ETF is the Perth Mint Gold ETF management failures point one five percent. So basically, rather than the fund holding physical gold, it gives the owner of the ETF basically a fully paid call option on a set amount of gold. And so you still you still benefit if the price of gold goes up, but it's structured a little bit differently. So, yes, at a high level, we're going to prioritise lowest management fees with the exception. If there's something in the fund that means that we're not going to do it. But we'll obviously we'll talk through that when we get quite specific. [00:17:13][52.0]
Bryce: [00:17:14] One more rule just to close this section out, and that is around where we will be buying these for simplicity's sake, we'll only be focussing on ASX listed opportunities. That's just, you know, a little bit easier for everyone. [00:17:27][12.4]
Alec: [00:17:27] Yeah, we're an Australian podcast and everyone in Australia has access to Australian stocks. If you're listening overseas or if you're an Australian investor that has brokerage and wants that can access international markets and you want to access into international markets, the principles will still apply. Yes. Just so you may have to do some of your own research to look up, you know, UK listed ETFs, American listed ETFs. But all of the principles that we're talking about are truly universal. Capital markets are global and the rules are all similar. So take what we're talking about and just do your own research on the tickers in your home country themselves. [00:18:06][38.4]
Bryce: [00:18:06] Nice. So those are the rules that will be generally trying to stick to. We've covered off the, I guess, the aim of the portfolio in terms of the portfolio construction. We've spoken about the mix between actively managed and index and we're okay with sort of mixing that to other main areas that are worth considering in portfolio construction, i.e. asset allocation, obviously. And then within that, there's a sub asset allocation consideration. But what we mean by that is how are we going to be positioning the portfolio between, say, equities, other assets such as property, fixed interest and then commodities are probably the other main asset class to consider. So we will break that down in a moment. Ren, when it comes to these sorts of portfolios as well, rebalancing is a concept that is often spoken about. Is this something that we want to be doing? Yes. Yes, it is. Or yes. [00:18:57][50.4]
Alec: [00:18:57] Rebalancing you asked me yes or no question. I guess that's a fair call. So for people unfamiliar with the term, it may be easiest to explain is with an example. If you have four stocks, you put a thousand dollars in each of them. They're worth twenty five percent of the portfolio over the course of the year. Things change, prices go up, prices go down, blah. At the end of the year, if one stock has doubled in price to have stayed the same and one's halved in price, then they're not all worth. Twenty five percent of the portfolio did the maths earlier. One is then worth forty four percent to it worth twenty two percent and one's worth eleven percent. Nice. So given that, and if you want to be equally exposed to it, all of those stocks, then what you would do is you would sell the some of the one that has doubled in price to rebalance into some of the stocks that are now worth weighted less in your portfolio. So rebalancing is about getting the balance of the assets that you have in your portfolio back to the weighting that you want it. [00:19:58][60.5]
Bryce: [00:19:58] Why is rebalancing important? [00:19:59][1.3]
Alec: [00:20:00] So generally, your asset allocation is built on a number of factors, including your tolerance for risk and then where you think the returns will come from and stuff like that. And so let's put real practical examples to this. If you have Australian US and you're paying exposure, your US exposure will have done extremely well over the past two months since the depth of Covid and some of your other exposure may have done well, but may not have done as well. There's a lot of risk in the US right now. And so part of rebalancing is about getting the weighting of your stocks back to Avon so you're not overly exposed to one market. So in this actual example, you would sell some of your US exposure and then rebalance towards Australia in Europe. And then it means if the US keeps going, well, then you've still got some US holdings, but you're not too exposed for the amount of risk that you want to take on and stuff like that. And so we're rebalancing really comes into play is let's say you want to be quite conservative and you want exposure to bonds, as your stocks do really well while they're waiting, will increase in the portfolio. But you want to be quite risk averse and you want to be quite conservative. So you're selling some of the the gains you've made on stocks and putting that back into bonds to keep the risk weighting where you want it to be in your portfolio. So that's the concern. Yeah. How do we want to apply it? I think we should just as the intellectual exercise of doing it. Absolutely. In terms of how often we rebalance, I think. Yili Yeah, I think that makes sense given, given that we're not just got a big lump sum and we're just putting it in and then letting it ride, given that we're going to be putting money in, you know, every month or however often we do these episodes, we will sort of be rebalancing as we go. Like if the US is running japes then we won't be putting more into that USCF or maybe we will, but [00:21:51][110.5]
Bryce: [00:21:51] depends on the dollar cost averaging strategy. [00:21:53][1.3]
Alec: [00:21:53] But yeah, yeah. Yeah. So yeah Yili I think makes sense. [00:21:56][2.6]
Bryce: [00:21:57] So Ren, by this point, we have Covid off building the core portfolio. What are the rules around it, as well as a little bit around portfolio construction and how we're going to approach rebalancing now to get into the nuts and bolts of the actual construction? What we've done is taken a lot of what the experts are saying in terms of building an ETF portfolio. We've looked at a lot of the literature out there and also taken a couple of examples from some of the robo advisors who really specialise in this area to see how they construct a portfolio. Now, I have an example of one. I know you've got a bit of an approach as well. Do you want to? [00:22:31][33.8]
Alec: [00:22:31] Well, this isn't my approach, but a lot of people may have heard of the term a 60-40 portfolio, and it's sort of the staple when it comes to this portfolio, construction asset allocation. It's sort of the ubiquitous one that that used to be the standard back in the day. And and it refers to 60 percent exposure to equities. So shares and then 40 percent exposure to bonds. And that was the the classic the old school core portfolio, really. And that 60-40 portfolio would be rebalanced at a quarterly or yearly. So it was extremely safe. It was probably made for a time when bond yields were a little bit better. With interest rates being so low, having 40 percent of your exposure in low yielding bonds is safe, but it's not a great return. So, yeah, that's probably the first. Although like the earliest and the classic iteration of of what we're talking about here, core portfolio, portfolio construction, but with robo advisors, with the absolute ease that we can access some of the asset classes that were a little bit harder to access back in the day. Things like commercial property and stuff like that were difficult to access now that easy to access through the share market. So now portfolio construction is a little bit more complex, I guess, but also robust. Yeah. [00:23:52][81.1]
Bryce: [00:23:53] So as I said, I've got an example here now. This is generally how some of the portfolios are constructed from an asset allocation point of view. And of course, each of these asset allocations, there are ETFs available for you to cover them. So if we look at most options available, you have Australian equities. And an example of that is the beta shares a 200 ETF. Then obviously there's the international equity component. Now you can buy one ETF. The Vegard, which is the MSCI International shares, covers 1500 securities across 22 countries. That's excluding Australia because you want international component. Then you have Australian listed property, international listed property. Then you move into the fixed interest component. So you've got Australian fixed interest, which is you bonds, as Alec was just talking about, as well as international fixed interest. There's an infrastructure component and then there's obviously the cash component. So as you can see there, you've got equities, property, fixed interest or bonds, infrastructure and cash. So that's kind of the broad range of assets that you can build a portfolio around. [00:25:03][69.2]
Alec: [00:25:03] There's one missing. Well, there's many types of assets missing, but commodities. [00:25:09][5.5]
Bryce: [00:25:09] Yeah. Yeah. So we will discuss that in a second. To Ren point, how you then construct your portfolio in terms of your time horizon and your goals is dependent on how you weight each of these asset classes. So, for example, a growth portfolio might be aggressive towards growth assets, which is your equity side of things, whereas a defensive portfolio is much more likely to be leaning towards income assets such as fixed interest bonds or cash, for example. [00:25:38][28.4]
Alec: [00:25:39] And so when you're talking about aggressive and you know where it will be leaning, that that then comes down to the percentage of each that you're holding. So the weighting of equities in an aggressive portfolio will be greater than 50 percent. Correct. [00:25:53][14.2]
Bryce: [00:25:53] To take a very specific example, we went to a stock spot, which is an online robo advisor, and I had to look at their aggressive portfolio, [00:26:00][6.2]
Alec: [00:26:00] not sponsored, not [00:26:01][0.7]
Bryce: [00:26:01] sponsored, looking at their aggressive portfolio with the time horizon of seven plus years. To give you an example of what aggressive means to them, they have a 50 per cent weighting towards Australian shares. Well, they then have 20 per cent in bonds, 10 percent in emerging markets, 10 percent in a global ETF for equities and 10 per cent in gold. So they're obviously backing in Australia to do pretty well. [00:26:27][26.3]
Alec: [00:26:28] I find that really interesting. [00:26:29][1.0]
Bryce: [00:26:30] Yeah, but anyway, that just gives you an example. [00:26:32][1.7]
Alec: [00:26:32] I'm going to I'm going to say it now. We're not going to have 50 percent exposure to Australian equities when the Australian share market is two percent of the global share market. That's not going to be us. [00:26:42][9.8]
Bryce: [00:26:43] Let's now get to the absolute juicy stuff Ren given our time horizon for this is decades, ten plus years, where I feel like we're in a position to take an aggressive approach to this. Absolutely. [00:26:54][11.2]
Alec: [00:26:55] We're going to be more aggressive than you on the footy. [00:26:56][1.7]
Bryce: [00:26:57] Well, that's very, [00:26:58][0.5]
Alec: [00:26:59] very hard to [00:27:00][0.6]
Bryce: [00:27:00] do. So that means we're going to be very much in favour of growth equities over defensive assets such as cash and gold and bonds and bonds. There are some asset allocations to consider when it comes to this sort of stuff, such as small caps and domestic versus international versus emerging markets, et cetera. So we'll cover all of that off in the next short time period. But for now, Ren, let's just focus on building out, say, six ETFs that we want to include in our portfolio. [00:27:29][29.2]
Alec: [00:27:30] Yes. Yes. So we're going to start with the sexy stuff. We're going to start with the equities, both Australian and international. And let's start with Australia. Yeah, OK, so the first decision is what's available in Australia and what do we want to invest in with the focus on low phase? Yes. Now we should say at this point that none of these holdings are sponsored. ETF providers will generally all have an option for each of these categories, shall we say, and they're all very similar. And so you should do your own research, figure out the intricacies of each and decide what's right for you. This for us is just us applying our own learnings in deciding what we think we personally should should be choosing for this hypothetical portfolio. So what's it going to be? I don't know. Yeah. All right. So Australia, there's a number of funds that track different indexes. So the All Ords will track about a basket of 500 Australian stocks, the ASX 200 trucks, 200 stocks. You can find ETFs that track, you know, the ASX 20, which is the top 20 stocks. And then you can also find thematic Australian ETFs like Australian tech, Australian agriculture and stuff like that. We're going to choose the ASX 200 index and we're going to focus on the ETF that as of recording, offers the lowest fees for that index. And so that's data shows a two hundred. [00:29:01][91.3]
Bryce: [00:29:02] Nice. All right. First cab off the rank beta shares a two hundred is going to be the representative for our Australian equities component if we move now to international equities. Now, two approaches we could take you Ren first approach would be to get an all encompassing MSCI International World Index. It includes everything, Australia. However, that's a pretty boring approach from our point of view and not how we would do it. So the way we have decided to get international exposure and this is also because an all encompassing world index is would be primarily dominated by US stocks. Anyway, we are breaking it down into three components US equities ETF, a Europe ETF and an Asian ETF. [00:29:47][45.6]
Alec: [00:29:48] So just to add some colour to that, because I think that's a really important point. Vanguard's international ATF, they G.S. so that's the MSCI World Index. Ex Australian stocks is 70 percent North American weighted, 20 percent European weighted, and then 10 percent the Pacific, which is really Asia and then basically nothing anywhere else. And so whilst that makes it easy, you can buy one stock or one ETF and get global exposure. You're very heavily weighted to the US where you've made the decision that we don't want to be that heavily weighted to the US in our international exposure. It's a perfectly fine decision if you want to be exposed to the US, but we're going to break it up into three regions, shall we say? [00:30:34][45.9]
Bryce: [00:30:35] Yeah, because if in your example that you just gave there and it's going to take a huge shift in the Asian component to move the dial on that. So, yeah, you know, it's not it's not that helpful. So we've broken it up. Yeah, yeah, yeah. So our U.S. equities component is going to be the Vanguard Total US Market ASX Ticker VTS. It is unhedged, has a performance fee of zero point zero three percent and gives access to three thousand five hundred and thirty stocks in the US market. So it covers everything. [00:31:09][34.5]
Alec: [00:31:10] Yes, boom. Lowest fees again is critical. Yes. So moving on to Europe, we have again prioritised lowest fees available in Australia. The European indexes. There's a few different ones you can choose. So have a look at the different options available to you. A lot of our information we got from market index com dot I you they've got a list of all ETFs in Australia, so that's a good one to have a look at. But the European one we've chosen is the Vanguard Footsie Europe Shares Index, ASX ticker they. Q which is currency hedged. So they try and track the euro, the returns of this European index in Aussie Dollars nice. [00:31:49][39.1]
Bryce: [00:31:50] And then to close out the international equities component, we have got an Asian fund. So it's the Vanguard Footsie. Asia, excluding Japan, I think it excludes Australia and New Zealand as well. It has a point four percent management fee just to give you a bit of colour on on this ETF 1300 stocks that it covers some of the big names, Alibaba, Tencent, it's got China Construction Bank in there. And really it's, you know, weighted pretty heavily towards China, but there's also Taiwan, Hong Kong, Korea and India in there as well. So really Covid some of the large economies in Asia. [00:32:24][33.6]
Alec: [00:32:24] I think that's something you've got to watch out for with both Asian ETFs and emerging market ETFs is how heavily weighted they are towards China. So potentially you can make another tactical decision to find one that's ex China as well if if you decide to do that. [00:32:40][15.7]
Bryce: [00:32:40] Yes. So those are going to be our four core component ETFs for the moment will be rebalancing, as we said as time goes on. We've also included two property ETFs. Given that we've spoken about the importance of asset allocation and [00:32:56][15.9]
Alec: [00:32:56] because Australians love property and, you know, we're trying to trying to pander to the base here, throw [00:33:00][4.0]
Bryce: [00:33:01] you guys a love [00:33:02][0.4]
Alec: [00:33:02] property. [00:33:02][0.0]
Bryce: [00:33:03] So we're going to be including two property ETFs, the first one being an Australian property ETF, the Vanguard Australian Property Securities Index Fund, point to four percent management fee and tracks Australian real estate investment trusts. I think the top 300, [00:33:21][18.4]
Alec: [00:33:23] I think, is real estate investment trusts that are in the top three. I don't know if those three hundred right now. [00:33:29][6.4]
Bryce: [00:33:30] Yeah. So that's going to be the Australian property component. Equally, there is an international property ETF and that's the SPDR Dow Jones Global Real Estate Fund. The ticker for that is DJRE and it has 200 real estate investment trusts within it. So that's what we're going to be using as a property component. [00:33:51][21.2]
Alec: [00:33:51] So for all those people who think they can't afford to buy a house, you can buy a ETF that owns many houses as well as other types of property. So you can be a property owner and just one trade. [00:34:03][11.9]
Bryce: [00:34:04] So six stocks there. We're going to be buying into them, which we will cover in our next episode. What we have not included in this episode are things like gold, emerging markets, small caps, thematic ETFs and also fixed interest. [00:34:20][16.0]
Alec: [00:34:20] Yeah, and concentrated ETFs. [00:34:22][1.5]
Bryce: [00:34:22] So there's a still a lot to cover, but we thought in this one we'd at least get the foundations in place and commit to those six that we're going to be buying. And in next episode we will cover off how we're going to be buying them in terms of weighting and also look at these additional asset allocations that we haven't touched on. So stick around for that episode as well as Ren thinking about our satellite portfolio because we need to do some readjustments there. [00:34:46][23.4]
Alec: [00:34:47] Yes. And if you think we have made a bad decision, if you think there's a better ETF that can be chosen for any of these things, if you think the names are wrong, yes. Hit us up on Sociales or go to Bryce Brice's weird shoe trading thing on Tuesday and Celebi on the panel. [00:35:07][20.4]
Bryce: [00:35:09] I mean, there's no better chance to talk about this as well than with our Beta Shares Live webinar. So we'll be discussing some of this with them as well. But absolutely Ren. We would love to hear your feedback because this portfolio is as much about you as it is about us building it. We would love for your submissions if to Ren point, there is a better ETF out there, we'd love to hear about it. So hit us up on Sociales or email and include you in our considerations. A big shout out, I think Ren goes to Trevor Myers, Harry Kastin and James, who have already submitted stocks to be considered in our satellite portfolio. [00:35:42][33.4]
Alec: [00:35:43] Yeah, so James doesn't get it last night. Not on James recommendation. Must have captured you in the same way. But look, we [00:35:50][7.3]
Bryce: [00:35:50] will be taking submissions from you guys to include into the portfolio. And if you'd love to come on the show and chat about them, then we would equally love to do that. So we'll leave it there. We've Covid of, I guess, the basic six ETFs that we're going to be including. We'll get these up and visible in some form by next episode. [00:36:07][16.4]
Alec: [00:36:08] That's a promise that you might not be able to catch. I know, [00:36:10][1.9]
Bryce: [00:36:10] but I will make it even if it's just a screenshot on social. That's good enough. But look, I'm really looking forward to seeing how this sort of pans out and really looking forward to your feedback as well. As we said, your submissions are welcome. And if there's a better way of doing this, constructing this, we'd love to hear from you. So I look Ren we'll leave it there and also make sure you head to Beta shares dotcom today forward slash equity hyphenates to sign up for our live event with beta shares on the eleventh of August. [00:36:36][26.4]
Alec: [00:36:37] Sounds good. [00:36:37][0.3]
Speaker 3: [00:36:38] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything here in Equity Mates investment podcast was general advice. Only the content has been prepared without knowing the personal objectives, specific financial circumstances or goals. The host of Equity Mates investment podcast may maintain positions in the. As discussed before, considering any investment, please read the product disclosure statement and consider speaking to a licenced financial professional. [00:36:38][0.0]