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Thanks for the follow up, slt and for the candid and insightful points you’ve raised.
very very interesting! I really appreciate it!
I concur, unless it is a straight up bet, I can’t see a world where this kind of approach is compelling longer term and certainly doesn’t suit a buy hold (long term) strategy.
Still. I’d love to get an IPO that grows 3000% in 3 years (the dream). That’s the 0.1% [gamble].
Up0All hugely interesting answers. As always, Owen was the sounding board I needed.
All responses took me back to BHP (inluding on the moat aspect! thanks slt), which is where I was originally looking anyway… but already have significant exposure in to BHP in VAS and I don’t want to increase that with a direct investment (although I’m tempted!), as it is already big enough.
Food for thought!
I think my head keeps jumping around microcaps that IPO – WA1 still amazes me… Honestly, I can not understand its journey!
Thanks everyone!
Up0Hey Owen,
This is a super interesting and good problem to solve. I was trying to think about how best to provide a valuable answer, as my thoughts were multi-faceted. Let’s see how I go…
As a Core member, I’ve looked at picking 1 of the 3 core options based on my risk profile, growth aspirations and, most importantly, time horizon. The only one of these that aligns with how I pick satellite’s is the growth aspiration. In other words, I might pick a satellite to improve my (financial) growth over a shorter or longer time period. However, the total amount I invest in my satellites is a small percentage in comparison to my core – I try to keep it no more than 10% – but its about 20% atm (whoops).
So, I like DerekB’s suggestion of using multipliers/percentages. If you go down this pathway, there is even the option of calibrating percentages for individual satellites (e.g. one might represent 1% of portfolio, the other 9%).
In essence, it would be awesome to have some kind of option like:
CORE – [Portfolio Percentage (%)] – Manage for me (auto) | self-managed
Add Satellite Option (select from your suggested list) – [Portfolio Percentage (%)] – Manage for me (auto) | self-managed
+ Add Un-managed Satellite Option (not sure you want to go down that pathway!)
This way, it might avoid multiple accounts, while still maintaining a single dashboard for the portfolio.
Just my $0.02.
Up0Love this Owen! The other aspect I was thinking about is what you do with the dividends….
So if you’re reinvesting these and having that compounding effect – I’m starting to think that would have an even greater influence on VHY taking the lead for the longer term (10+ Years) – notwithstanding the massive issue if commodity prices don’t maintain or grow in the years to come as they have in the past and the banks seeing less lending etc. Makes me think of that saying.. one way or another… cash is king – but this is where tax would need to be brought into the conversation and much more on the different investor profiles (retiree (who might spend) vs accumulator (who might reinvest)).
I’m always left thought-provoked, Owen! Thank you as always! Super interesting and insightful perspective!
Up0Out of curiosity, Ben, what would you like to see more of in the future from the community? Let’s make it happen!
Up1Hi Anthony, they are displayed a little differently than they used to be (the portfolios), so fair point to ask!
From what I can see here – https://etf.rask.com.au/updates/1q24/, it looks like this:
- AAA – 5%
- IAF – 15%
- VAS – 25%
- VBND – 10%
- VHY – 5%
- IHVV – 10%
- IVV – 20%
- FEMX – 10%
Up0Hey Kevin,
I love these insights. I love the point on concentration in particular (which scares me right out of my socks, because of everything I’ve been taught on concentration)!
I’ve also been pondering Owen’s statement the last few days “One of the salient benefits of diversification is not on the ‘risk’ side, but, rather, the fact that you always catch the top stocks”.
I actually don’t yet think I’m brave enough to stop investing in the ETF’s in my core in substitution for the singular stocks. Instead, I’m thinking it’s another 3 year apprenticeship investing in targeted companies (while continuing to build the core). yep… I’m feeling a touch oxymoron this morning!
Thanks, Kevin!
Up0Hey Owen,
hehe yessss, you can ask how I pick the top 15 from VAS.. but, I wish I could say I have a secret sauce (which again might suggest a good reason to go with the ETF itself, rather than choosing 15.
In I pick the companies based on size and past performance and companies I believe will have a good opportunity to grow… AND that I use in some way… AND that I know a little about where they are positioned in their industry. You then might ask, what do I use to evaluate size, past performance, etc.
The only exception to the above might be mining companies (like BHP), just because I don’t know enough about them/their commodities of trade/volatility.
But I can say – I can’t wait for the podcast with you and Mike talking about this!!!
Thank you for making us better investors, Owen!
Up0Impeach… I’ve been here a few times. My approach was to invest the full lumpsum into my core (IVV (40%), VAS (40%), FEMX (10%) (what about the remaining 10%? – everything else!)) using Stake as my broker (I wouldn’t recommend this platform if a single investment amount is over $20k, nor would I recommend this if you are going to sell using Stake – my goal will be to transfer my shareholdings over to Pearler at some point in the future – but Stake is cheaper brokerage at the mo for one off big investments – I mean we are talking $2.50 difference, so it’s probably silly, but it adds up overtime).
Here’s what happened:
- VAS tanked.. (it went down by almost 15% over the space of 6months)… it’s now well in the green – but these short term volatilities occur, and when there is a lot of money in there, you can freak out! just don’t go hitting that sell button!!!! and try not to look at your broker dashboard eleventy-hundred times a day!!!!! (but let’s face it… we do anyway knowing it’s not good for us or our anxiety!!).
- IVV tanked a little… then skyrocketed – good choice? Maybe, but remember a decade ago it was going sideways for quite sometime.
- FEMX – OMG it’s all over the place.. sometimes good, sometimes bad… i think for the time I’ve been invested with it, it’s gone up a huge amount, currently down from where I bought it, but the dividends alone have covered any (shareholding value) loss. Bring on emerging markets!
So, if it is the first time ever investing… I would go $500 in VAS, $500 in IVV…. and that’s it. Then watch it for [insert time you think you’ve learned what will happen] (probably 3-6months), then do your investment.
However, DCA rocks for many people. Strongly consider it
My only final comment is, just get invested.. don’t let this decision going for DCA or lumpsum stop you.. just pick one by end of next week and begin the journey.
It’s time in the market that counts in long term investing!
Up0Awesome breakdown, Kevin! Love the insights.
Up0Very interesting, Steve. Thanks for the reminder! I remember this as well.
And if memory serves, I remember a podcast on this, as well as Visa and Mastercard, which has just prompted me to go check those out as they are incredibly well performing stocks over the long hall and I have forgotten to keep an eye on them for any meaningful ‘buy’ dips.
Thanks for reigniting this discussion – I’m keen to know as well.
Up0I read, I read. Loved the analyst too, Owen – thank you and the team for it!
I’m waiting for a dip with ResMed for 2 reasons:
1) I think its a bit expensive (but who cares in the long run if I get it a dollar per share cheaper, its a good company – so I should)
2) Christmas was expensive! and I’m building (slower than I’d like) the $2k sparezies to invest :p. Who knows, I might fortuitously manage to buy it on a bad day for them and get it cheaper! Always the eternal optimist!
Ps Owen… Happy New Year!
Up4Hey Jas B,
Sure:
- ACDC – Original motivation was to get exposure to battery tech. I think it was a good move, but it’s definitely not my best performer for having held it for 3 years now.
- AEF – I was all about going in ethical stocks when i first started off (changed my mind now to some extent), and I actually thought AEF was a managed fund – it isn’t. one of my worst performing stocks…currently down 60% on my original purchase price (tsk tsk – was a good lesson though!)
- DHHF – was doing better than VDHG for a while. and has done fairly well overall.
- ESPO – I thought gaming would have grown immensely during and post covid… it has not!
- FANG – was a good buy to grab US tech stocks.. but there were better options I wish i went with.
- GOAT – has been a good all rounder.. but again, not particularly high growth. I did it to get global companies with high moats. the catch is.. those high moat companies tend to be slow growers! still a good stock.
- KSS – no longer listed – i thought data science space companies would go well (e.g. digital twin space), but i think they find it really hard to deliver a product and become more service oriented.. so hard to grow and scale without significant expense. Definitely a gamble that didn’t work out.
- MFF – i thought it would be a good managed fund. I would have got more value from an index fund… but i’m giving them time. I invested when Magellan was all the rage.
- RUL – still a big believer, but it has lost value (~20%) since I invested.
- SOL – best first investment!
- VDHG – i thought diversification was good long term. But i think I actually wanted high growth. still it’s been a good all rounder.
- VESG – the ethical play again. it hasn’t been too bad, but eh.
- VEU – wish i knew about the US/AUS tax thing before I invested and just did IVV instead. Actually, if i had to do the US/AUS tax thing, i wish i did VTS instead of no US exposure.
- AFI – always a good all rounder to hold as a LIC – good old Barefoot.
Of all of these, I will keep:
- RUL (I think)
- SOL
- AFI
- MFF (Maybe)
The rest, I’ll look to divest from in the coming 12 months and look to buy specific companies and continue to top up. Next is ResMed when it hits that $21-22 mark and wesfarmers. Then Sonic Health and Ramsay Health. – sensing a health theme! watch that space.
If you are super interested in health – check out MAP – I think it is a bargain at anything less than $0.5! And it is currently ~$0.2! In fact, i need to lift my position in that! Hehe you should ask me what’s in my current portfolio other than the above!
Up1Hey Sawagland,
Liam’s link is correct, but there was a more specific page that used to be available. I’m guessing Owen and the team are making changes to it, so it will likely be updated and viewable at that point. I’ll include what I remember of the Jupiter (High growth) portfolio shortly, but before I do, it’s good to get a sense of how long you’ve been investing and what your goals are.
If this will be the first time you’re investing, it’s best to do a smaller amount of $1,500-$2,000 into an ETF for 2 reasons. 1) more than this gives you serious anxiety when the etf goes down (which they all do!) at some point and makes you second guess whether you made the right call – on this, dollar cost averaging is a good future cure to combat this anxiety! 2) this amount tends to offset the brokerage cost.
Now goals.. these portfolios are all about long term investing (12months+ or hopefully a lot more). The Jupiter portfolio from memory was targeting 5-10 years invested with minimal rebalancing/changes (<15% of the portfolio) to see 10%+ per year returns. That means, if you stick your cash in… and you pull it out after 12months.. your risk of loss are high or risk of not getting the 10%+. Most people call themselves long term investors, but the average hold period of a stock is 6months. So we say more than we act!
Alright alright, portfolio (from memory and subject to errors):
– top 300 companies listed in Australia (VAS – there are alternatives, but VAS is the largest ETF in Oz) – 40%
– Top 500 companies listed in the US (IVV) – 30%
– Top 500 companies listed in the US hedged (IHVV) – 10% – (to be honest, I just have 40% in IVV and don’t hedge any of it, but I’m probably less sophisticated than others)
– Actively managed fund of companies in emerging markets (e.g. FEMX) – 10%
– Bonds as defensive assets (e.g. AAA) – 10%
One comment on IVV… If you are based in Australia and you pay Australian tax, it can be useful to choose IVV over others (e.g. VOO, SPDR, VTS, etc) to avoid paying tax in both Australia and the US. I wont go into the details, but look into it before you make a choice.
If it helps, my portfolio looks something like:
– IVV (35%)
– VAS (40% – need to rebalance!)
– FEMX (15%)
– then a bunch of legacy buys I made to learn about investing (I still believe investing is a 3 year apprenticeship that we all have to go through to get comfortable with the volatility of the market).
Best of luck!
