I have read ESRBob's excellent workbook (Work Less Live More - Semi Retirement) but have also seen recent forum comments from various people (including ESRBob himself) about implementing the books recommended portfolios using ETFs rather than the Mutual Funds mentioned in the book.
Can anyone recommend the best ETFs to match the "Rational Investing" Portfolio mentioned in the book? Specifically low-fee ETFs for:
Asset / Category / Weight / Mutual Fund
========================================
International Small Stocks (INT S) 10.0% VFSVX
Market-Neutral Hedge Funds (HEDGE MN) 2.0% ?
Commodities (COMM) 4.0% ?
Venture Capital / Private Equity (VC PE) 5.0% ?
International Large Stocks (INTL) 5.0% VTMGX
Emerging Market Stocks (EMG) 6.5% VEIEX
International Medium-Term Bonds (INT MT BD) 12.0% BEGBX
Short-Term Bonds/Money Market (ST BD MM) 4.0% VMMXX
U.S. Large Stocks (USL) 12.0% VIVAX
U.S. Small Stocks (USS) 8.5% VISVX
Long-Term U.S. Government Treasury Bonds (US LT BD) 4.0% VIPSX
U.S. Medium-Term Bonds (US MT BD) 10.0% VBIIX
High-Yield Bonds (HY BD) 4.0% VWEHX
GNMA Mortgage Bonds (GNMA) 5.0% VFIIX
Oil and Gas (OIL) 3.0% VGENX
Commercial Real Estate (REIT) 5.0% VGSIX
The portfolio size is "large".
I expect a larger upfront lump-sum investment into the various ETFs (rather than monthly investments)and the need to generate income from the portfolio for immediate semi-retirement.
Very interested in how the fees for the ETFs compare to the Mutual Funds.
I am keen to get 50% international exposure - particularly to EUR and GBP currencies as I feel the USD may reverse its recent 25% gains against these currencies. To this end, would substituting an ETF for GBPUSD Exchange Rate and an ETF for EURUSD Exchange Rate make sense? Perhaps in place of the following 3 asset types?
Market-Neutral Hedge Funds (HEDGE MN) 2.0%
Commodities (COMM) 4.0%
Venture Capital / Private Equity (VC PE) 5.0%
I also live in UK and expect to need funds in GBP and EUR (more than USD's) in the next 10-15 year time horizon and possibly much longer (I am age 44). However the funds are mostly held in the USA in USD accounts. I would expect to invest through ETrade USA, Scottrade USA and TD Ameritrade USA (USD) accounts.
(BTW - I reluctantly am not expecting to be able to immediately be able to convert the USDs to GBP/EUR and invest them from a UK brokerage account (or even an offshore-UK brokerage account). The reason being that this strategy seems very risky, complicated, expensive from a fee point of view and with USA tax-risks (I am a USA citizen)). Long story...
I acknowledge that this exchange rate comment/strategy may be viewed as market timing. Would welcome your thoughts on that as well.
I am intending to take a long-term buy-and-hold strategy as much as possible (with annual rebalancing most likely).
Finally is there an easy way to use Morningstar Premium to assess the mutual funds listed above and to find their ETF equivalents? Seems very difficult to use!
Thanks for your comments.
John
Can anyone recommend the best ETFs to match the "Rational Investing" Portfolio mentioned in the book? Specifically low-fee ETFs for:
Asset / Category / Weight / Mutual Fund
========================================
International Small Stocks (INT S) 10.0% VFSVX
Market-Neutral Hedge Funds (HEDGE MN) 2.0% ?
Commodities (COMM) 4.0% ?
Venture Capital / Private Equity (VC PE) 5.0% ?
International Large Stocks (INTL) 5.0% VTMGX
Emerging Market Stocks (EMG) 6.5% VEIEX
International Medium-Term Bonds (INT MT BD) 12.0% BEGBX
Short-Term Bonds/Money Market (ST BD MM) 4.0% VMMXX
U.S. Large Stocks (USL) 12.0% VIVAX
U.S. Small Stocks (USS) 8.5% VISVX
Long-Term U.S. Government Treasury Bonds (US LT BD) 4.0% VIPSX
U.S. Medium-Term Bonds (US MT BD) 10.0% VBIIX
High-Yield Bonds (HY BD) 4.0% VWEHX
GNMA Mortgage Bonds (GNMA) 5.0% VFIIX
Oil and Gas (OIL) 3.0% VGENX
Commercial Real Estate (REIT) 5.0% VGSIX
The portfolio size is "large".
I expect a larger upfront lump-sum investment into the various ETFs (rather than monthly investments)and the need to generate income from the portfolio for immediate semi-retirement.
Very interested in how the fees for the ETFs compare to the Mutual Funds.
I am keen to get 50% international exposure - particularly to EUR and GBP currencies as I feel the USD may reverse its recent 25% gains against these currencies. To this end, would substituting an ETF for GBPUSD Exchange Rate and an ETF for EURUSD Exchange Rate make sense? Perhaps in place of the following 3 asset types?
Market-Neutral Hedge Funds (HEDGE MN) 2.0%
Commodities (COMM) 4.0%
Venture Capital / Private Equity (VC PE) 5.0%
I also live in UK and expect to need funds in GBP and EUR (more than USD's) in the next 10-15 year time horizon and possibly much longer (I am age 44). However the funds are mostly held in the USA in USD accounts. I would expect to invest through ETrade USA, Scottrade USA and TD Ameritrade USA (USD) accounts.
(BTW - I reluctantly am not expecting to be able to immediately be able to convert the USDs to GBP/EUR and invest them from a UK brokerage account (or even an offshore-UK brokerage account). The reason being that this strategy seems very risky, complicated, expensive from a fee point of view and with USA tax-risks (I am a USA citizen)). Long story...
I acknowledge that this exchange rate comment/strategy may be viewed as market timing. Would welcome your thoughts on that as well.
I am intending to take a long-term buy-and-hold strategy as much as possible (with annual rebalancing most likely).
Finally is there an easy way to use Morningstar Premium to assess the mutual funds listed above and to find their ETF equivalents? Seems very difficult to use!
Thanks for your comments.
John
