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-   -   The FIRE dividend ETF portfolio (https://www.early-retirement.org/forums/f28/the-fire-dividend-etf-portfolio-21202.html)

preben 05-15-2006 09:39 AM

The FIRE dividend ETF portfolio
 
Well my friend wanted a conservative portfolio and have access to US ETFs but not funds(Alien). He also wanted a super simple portfolio and income of around 4%. I came up with this:

DVY 25%, PID 25%, TIP 25%, GIM 25%

TIP was chosen over AGG as GIM holds little/none inflation guarenteed bonds.
My only worry is the high focus on financials/utilities. So considered IWW and EFV instead but income around 2% only which MIGHT be enough.

Also I would prefer a foreign ETF for foreign bonds rather than GIM (closed end fund) but lno choice currently.

Finally I considered some foreign RE like IGR or RWF for diversification as well as income booster. Might be added later after which IWW and EFV might be able to take over from DVY/PID.

he plans to never sell any shares except for re-balancing.

Cheers!

brewer12345 05-15-2006 09:54 AM

Re: The FIRE dividend ETF portfolio
 
Interesting idea. I guess I would probably shave 2 or 3% of each weighting for a basket of individual securities to play with, but that's probably just the male hormones at work, as UM would say.

preben 05-15-2006 09:58 AM

Re: The FIRE dividend ETF portfolio
 
He does have some gambling money in another account for single stock fun only. Cheers! ;D

wabmester 05-15-2006 10:20 AM

Re: The FIRE dividend ETF portfolio
 
PID doesn't have any exposure to Asia from what I read.* *I'd want a chunk of exposure to those economies.* *With EFV, he'd at least have a chunk of Japan but still no emerging Asian economies.

Nords 05-15-2006 10:35 AM

Re: The FIRE dividend ETF portfolio
 
Quote:

Originally Posted by wab
PID doesn't have any exposure to Asia from what I read.* *I'd want a chunk of exposure to those economies.* *With EFV, he'd at least have a chunk of Japan but still no emerging Asian economies.

Oh, c'mon, Wab, you're fishing in the wrong place. I'm not buying PID for exposure to Asia and you shouldn't be using that as a reason to not buy PID.

First, with 90 seconds of research I noted that PID's fourth-largest holding is Nam Tai Electronics, which claims to be headquartered in Hong Kong. So you're not reading enough.

Second, the ETF is based on a dividend index and not on country sectors. If you want more exposure to Asia then you should go find a country sector fund.

Third, if Asia is indeed under-represented in PID, I wonder if it's because their companies aren't paying enough dividends to meet Mergent's criteria. So you apparently have a choice right now-- Asia or dividends, but not a lot of both in PID.

It's possible over the next decade that more Asian companies will be added to the index. But I bet that whatever companies are in the dividend index will be outperforming most of the companies that aren't, no matter what language they write their reports in. I think that performance is more important than an arbitrary map line.

lazyday 05-15-2006 12:01 PM

Re: The FIRE dividend ETF portfolio
 
Where does your friend live/plan to live? It might be sensible to have a higher % in home country currency, to reduce currency risk. Could TIP be replaced with inflation indexed bonds in home currency? Maybe GIM too (replace with nominal local government bonds?) then get currency diversification from the equity, but have about half of portfolio in local currency.

preben 05-15-2006 01:16 PM

Re: The FIRE dividend ETF portfolio
 
He plans as crazy/international life as I wherefore the currency exposure is purposely split as mentioned. Buying in home country will expose him to much higher taxes on both income/capital gains (50%+ in taxes...welcome to Scandinavia) so makes no sense. Cheers!


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