XIRR

Veloflyer

Apologies - I perhaps should have mentioned that I do not contribute to any of these funds at present. I just leave them to (hopefully!) grow.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82144799#Comment_82144799

I'd stop trying to find "the best" and plan more for "good enough". There are an almost infinite number of portfolios that you can construct so you can quickly descend into a hole and end up not seeing the wood for the trees…maybe one too many metaphors there. A global tracker is a good start for a relatively young investor. Many people will stop there, but some will add satellite investments in particular equity sectors or styles, ie tech, small cap, value, certain geographical regions and off course bonds, cash etc. These choices will be justified from research and statistics that are almost always riddled with bias and dubious conclusions drawn from flimsy evidence. We don't know the future so spending too much time on developing a complex portfolio to work in the future isn't worth it IMO. Keep things simple.

For a long time I had a simple 60/40 portfolio and as I got older I stopped rebalancing with the intention of letting my equity portion increase. I'm basically an index investor and eventually got up to 85/15 and as I have a large percentage in US index equities I had a large tech component. Recently I've become worried by global instability and the bias of US stock markets to tech so I have increased my cash allocation to 20% and moved my US equity index funds to a US value index to reduce my tech exposure. My equity allocation is now 68% of which 18% is tech. When you are picking a global tracker take some time to look at how much it has in each sector and country.

Veloflyer

The ETF that I'd be tempted to junk would be the Vanguard FTSE Developed Europe UCITS ETF. Not simply as it has the lowest IRR of my portfolio over around a year, but also because I don't see much future growth in it. Proceeds would be re-invested in one of the other funds. I'm tempted by Vanguard FTSE Developed Asia Pacific ex-Japan UCITS ETF which is IMHO a little more risky, but then I can afford to take a little more risk.

Notepad_Phil

https://forums.moneysavingexpert.com/discussion/comment/82146351#Comment_82146351

I've been retired for a few years and have actually been selling down some of my Asia-Pacific ex-Jap index funds as in my eyes they've become too dominated by a handful of companies, e.g. if memory is right doesn't the Vanguard have 30% of its assets in just two companies and 50% in South Korea.

I might have kept them if I still had many years of adding regular amounts to them, so I'm not saying you're wrong, but if you've not done so already then you may want to look at how concentrated the various funds are in certain areas and decide whether you're happy with those concentrations.

Veloflyer

I don't doubt the above but I can afford to be a little more adventurous in terms of risk. What I am trying to do is rationalize my non-contributory portfolio by removing some poor performers in stages - e.g. one every year - and re-invest in the better ones - taking advantage of any upswing in prices of those better ones within my portfolio. For sure such thinking relies on a longer term appreciation of each fund not just XIRR, and some reasonable confidence that my thinking would apply for say at least a couple of years and not plummet downwards in a ball of fire next week.

So, if I thought the Vanguard FTSE Developed Asia Pacific ex-Japan UCITS ETF would outperform the Vanguard FTSE Developed Europe UCITS ETF for the next (say) couple of years, then there may be some justification in selling the latter and buying more of the former - assuming the risk of the former is acceptable to me.

OldScientist

https://forums.moneysavingexpert.com/discussion/comment/82146438#Comment_82146438

I will preface my reply by saying that I have no idea what will happen in the future! However, with regard to Developed Asia and Developed Europe I can safely say that there are broadly two possible outcomes* over the next couple of years:

1. Developed Asia has higher returns than Developed Europe and a portfolio with more of the former than the latter will do better than one with less
2. Developed Asia has lower returns than Developed Europe and a portfolio with more of the former than the latter will do worse than one with less

If the outcome is 1) you will (quite rightly!) congratulate yourself on your prognostic abilities. If the outcome is 2), using the same approach you are proposing, you would presumably sell Dev Asia and buy Dev Europe despite the fact that Dev Europe would then be relatively more expensive (or am I misunderstanding, and you would hold Dev Asia indefinitely regardless of future performance, i.e., a long-term tilt rather than short-term active positions).

* Actually there is a third possibility, where the returns are equal

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82146772#Comment_82146772

I also have no real idea what will happen in the future. I only have XIRR - which arguably is of very limited use, and my very limited understanding of global economics. The latter would seem to suggest that I should not mess about, and to that extent, I don't - in so far as the vast majority of my SIPP investment portfolio is in 10 passive tracker ETFs. I'd like to reduce that number for simplicity/reduced fees purposes. Some are, and will clearly perform better than others, so which ones do I junk and which - if any - do I reinvest the proceeds in?

Assuming (rightly or wrongly) I sell Dev Eur and reinvest the proceeds in Dev Asia.

If outcome 1 - then happy days, but I would not undertake any future comparative assessment as the decision has been made and Dev Eur would no longer be in my portfolio

If outcome 2 the above also applies.

After year or so, compare Dev Asia with the other 8 ETFs and junk another ETF. That may or may not be Dev Asia.

I suppose what I am banking on is that the present performance and outlook for my ETFs remains reasonably constant until such a time as I reassess them - say a year. My view being ETF trackers are relatively stable investments not (usually) prone to wild fluctuations. Even at the point of reassessment I could easily get it wrong and I appreciate there may be market crashes, unexpected global events, etc., in the intervening period.

dunstonh

I only have XIRR - which arguably is of very limited use, and my very limited understanding of global economics. 

It's not merely limited; it's actually damaging.

Assuming (rightly or wrongly) I sell Dev Eur and reinvest the proceeds in Dev Asia.

Which Dev Asia would you invest in?

This is a very important question because Developed Asia under the FTSE benchmark differs from Developed Asia under the MSCI benchmark. And not in a minor way; we're talking about a very significant difference.

My view being ETF trackers are relatively stable investments not (usually) prone to wild fluctuations.

The fact that it’s an ETF tracker has nothing to do with stability. We also need to question your your perception of stability. For example, you are discussing an investment that could lose 80% in a year. That's not what most people would consider stable.

Veloflyer

I only have XIRR - which arguably is of very limited use, and my very limited understanding of global economics. 

It's not merely limited; it's actually damaging. Maybe so, but it is the only hard data and understanding I have. Besides, it is only potentially damaging to me and I accept the risk it carries.

Assuming (rightly or wrongly) I sell Dev Eur and reinvest the proceeds in Dev Asia.

Which Dev Asia would you invest in? Potentially Vanguard FTSE Developed Asia Pacific ex-Japan UCITS ETF

This is a very important question because Developed Asia under the FTSE benchmark differs from Developed Asia under the MSCI benchmark. And not in a minor way; we're talking about a very significant difference.

My view being ETF trackers are relatively stable investments not (usually) prone to wild fluctuations.

The fact that it’s an ETF tracker has nothing to do with stability. We also need to question your your perception of stability. For example, you are discussing an investment that could lose 80% in a year. That's not what most people would consider stable. I did say relatively stable - by which I mean less risky. Practically any investment could lose 80% or more in a year. The issue is how likely is it to lose 80%.

How would you go about solving my dilemma?

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82147089#Comment_82147089

Get you asset allocation where you want it now. 10 ETF trackers seems like a lot to me so rationalize to remove overlap.

Equity ETF trackers are not stable investments. You want growth and might well see large losses. There are a lot of assumptions in this thread and attempts to perfect things given what might happen in the future. That sort of thinking is for the foolish or the smart people who sell the promise of future returns to the foolish. Keep things simple and try to maximize your chances off success rather than maximizing your expected investment return. Make decisions because of what you know today rather than what you hope will happen in the future.