Hello, I've been a "simple" user of VIAC, just clicking the defaults, but I started reading a bit about investment and keep thinking what's the best use of VIAC.
AFAIK, the out of the box strategies are algorithm generated and maintained, that's why it's low-cost. Given the long term horizon I've been investing in 100% Global. My financial markets knowledge isn't anywhere close to good but I'm growing a sentiment towards excluding certain assets/regions. However the individual strategy offers so much choices that I'm simply lost what to choose.
I wonder if anyone went the "individual strategy" route. How did you compose it? Did you just copy the out-of-the-box strategy and removed what you don't like or squeezed in your preferred asset? Is there a better way, like copy a portfolio from some well managed fund?
One way you could try is "replicating" a popular market cap ETF (such as VT; this probably requires picking and weighting 5+ components).
Another could be doing a "factor tilt" of your preference, e.g. pick a Quality-tilted fund.
Yet another one could be to try minimize taxation of dividends outside the 3rd pillar - and to keep mostly Developed ex-US within 3rd pillar (then US and Emerging outside).
In general, I think the default Globals are putting too much into CH if looked at in isolation; but IMO one should always consider 3rd pillar in the context of all other investments you might hold.
Interesting point. For me, the only incentive to buy 3rd pillar was the immediate return of ~50% of it from taxes. That's a big boost compared to free market investing, but the choices in 3rd pillar are limited.
I use Finpension as my 3a pillar, and since I have little over 30 years until retirement I invest 99% in stocks:
CSIF (CH) III Equity World ex CH Blue - Pension Fund Plus ZB 73.0 %
CSIF (CH) Equity Emerging Markets Blue DB 16.0 %
CSIF (CH) Equity Switzerland Large Cap Blue ZB 10.0 %
I created this based on an article I can no longer find, but this portfolio was supposed to mimic a Total World ETF. Every year I open a new portfolio with the same strategy so that later this can be paid out more tax-favorably.
You have neither the knowledge nor the finances to attempt replicating a fund either an ETF or a managed fund. You need to have a good knowledge of portfolio construction, synthetics, performance & attribution analysis, financial modeling etc.. to attempt it plus an investment pot of several million and even then you’d be unlikely to achieve it.
Using ETFs and Asset Allocation to construct a well balanced portfolio is going to be challenging enough for more than 90% of the people, but since asset allocation delivers the biggest part of the return, it’s worth doing. I’m with Charlie Munger on this one - most people have no business being in the stock market.
And people should stay the hell away for small cap tech/pharma/medical devices etc, because no matter how much you think you know about the technology involved, it very rarely comes do to technology - it is about how to build a business on top of it and with 9 out of 10 going to the wall, your chances of picking a winner are very small. And even when you do if it is a winner it will in all likelihood be bought out before you get the full benefits - Buffet literally thought me that when he took over a company I had found and was building up my position.
I'd just stick with Global 100 assuming it matches your risk appetite. VIAC doesn't offer a huge amount of funds to choose from so defining a custom strategy will either increase the TER or have you end up with a similar portfolio as Global 100 offers.
Unless you intend to become an expert investor, I think following a simple strategy is the right way to go.
If I were in your shoes, I would:
Invest in an S&P 500 Index mutual fund or ETF. Let it ride. - OR - Invest my age in years (i.e., if you’re 45, 45% of your investment) in a high-quality no-load Bond mutual fund or ETF, and the remainder in an S&P 500 Index mutual fund or ETF. Every year rebalance to your age. This is I believe a variation the Bogel Three Fund Portfolio .
In the long run the S&P 500 Index beats something like 85-90% of managed mutual funds and has lower costs and fees. If you want to be more conservative mix in the Bond Fund which reduces the negative impacts of market fluctuations which hurt more the closer to retirement you get.
If you must make your own stock choices I’d set aside 5-10% to play with, and the other 90-95% do the above.
In the US my 401-K is in a target date fund, and here I’m in the S&P 500, and I’m quite satisfied.
this. Indeed, I spent some evening hours digging, creating a spreadsheet and gave up as the choices are very limited.
Very good answers here, thanks!
I was with Global 100 since I opened the account with them, but then converted to cash some time ago being bothered by the turmoil on the market (kind of stop loss, peace of mind idea). At the time I opened it I didn't have any better idea how to make use of the individual strategy option but I hoped I'll learn more and adapt it if needed in the future. Turns out that I didn't learn much since then However what I don't like about Global 100, is the huge allocation in Switzerland. I think a 10% would be enough.
Oh well, I'll check the other providers, finpension, etc. maybe it make sense to move (and better to do it now when I hold the assets in cash).
For sure with FinPension you can tilt more away from Switzerland than VIAC. I just looked at my regional allocation with FP and it's 1.7% Switzerland, which is all the cash component.
The rest is:
North America 58.1%
Asia 18.3%
Europe 13.2%
Oceania 7.6%
South America 0.6%
Africa 0.3%
Not classified 0.3%
I'm invested in funds as follows:
Equity world ex CH ESG 69%
Equity Emerging Markets, Equity Pacific ex Japan, Equity World ex CH Small Cap all 10%
The only downside requirement there is that 34% (or something alike) need to be "CHF"; so you are forced to partially use the CHF-hedged funds for typically USD-denominated funds.
(And hedging is not the best choice for equity)
I have accounts at both VIAC and Finpension, and you can arrange the funds pretty much however you want them (with above caveat for VIAC).
Explore forum.mustachianpost.com for more ideas on how people have allocated their custom portfolios on both.
I have to admit I agree totally with the these statements, however I was surprised to discover that when you lift up the bonnet to review the actual constituents of VIAC’s global 100 offering, it’s actually nearly 40% weighted towards Swiss stocks -
It was for this reason that I used the ‘individual strategy’ approach to tilt more towards a typical global fund’s weightings - at least as far as possible considering the maximum values allowed in each fund/currency and the required diversification levels.
Swiss stock doesn't necessarily mean Swiss revenue. From among the SMI members, Swisscom probably generates the smallest share abroad but even that is still 20-25%, whereas Nestle generates 99% abroad.
I don't want to exclude it completely, I just prefer to keep it proportionally closer to the level of the Swiss market cap vs. global.
I'm far from an expert so I don't know enough to justify it being 40% of my pillar 3 when it is low/medium single digit % of a standard global tracker. But what do I know!
And yes I understand the argument about source of revenue...but that is for me not the only consideration (e.g. similarly, US-listed companies also attract a decent chunk of earnings in non-US currencies). I just feel a weighted portfolio that is closer to the global landscape is a safer balance of risk/return for a relative novice like me.
And for those who don't have (or pretend to have) the skill or time to do differently, it's the most logical choice - to just buy the global index/ETF, and be satisfied with "the average".
And certainly way better in terms of diversification than betting 40% on a single country market, 50% of which is in 3 companies.
I disagree, because of that revenue thing, see the sanctions on Russia for instance. The same applies to currency risks. If any of the big ones were domiciled and headquartered elsewhere, your country allocation would change even though the risks wouldn't be affected too much.
I tried to optimize one portfolio with True wealth - result after 3 yrs that portfolio lost money and the one done by Truewealth gained quite a bit... So for me I will now just let the portfolios be given there are people who know more than me 😁