1 Million CHF to invest any suggestions?

Investing / Portfolios
1

Hello everyone,

I have a chunky amount to invest that is currently in cash. I know not very smart but anyways I want to take action now.

So my idea is the following.

10% Senior Loans Fund
50% FTSE All World
20% Global Agg
10% AT1 ETF
10% SMI

And investing quarterly 250k until I am fully invested.

Thanks for suggestions & ideas

2

Is this your first time investing ?
If yes - I would suggest to talk to a financial advisor and try to understand what could be a right asset allocation for your risk appetite.

Once you know your asset allocation, the community here can recommend various ETFs/funds.

But for first time investor, with a lot of money to be invested, I would recommend to try to understand your emotional profile first.

4 Likes
3

Are you going to retire soon or just add these funds to your portfolio and keep accumulating?

4

I add it to my portfolio. It seems I did not invest enough over the last few years. I am 42 and my plan was to retire somewhere in the time range of 6-10yrs. But you never know.

In term of asset allocation I am happy to take some risks but don’t want to put all just in equities as well

5

Hi Matchpoint,

I looked at your activity and think it isn’t your first time seeing an ETF. Regardless:

You should have a plan for your investments. Why do I invest, how and when will I use this money later. What do I do if X happens. Do some spreadsheet simulations or let a professional help you with calculations (though, I’d be too cheap for that, and also wouldn’t feel comfortable leaving this to someone else). This can also inform you of how much risk you need and can take.

The emotional part is important too. The “best” strategy is useless if you sabotage it. A less perfect strategy that you can stick with could be better. I personally have found that gaining more knowledge gives me conviction (but this eats a lot of time). Not depending on this money helps too.

The staggered investment over one year seems reasonable to to me, since I assume that this million is only a part of your portfolio and the assets are very diversified.

This out of the way, I’ll go through your positions:

  1. 50% FTSE All World: Highly diversified. Seems reasonable to me, and is a go to position for many.
  2. 20% Global Agg: Also highly diversified. Bonds haven’t been popular in the last cycle (low returns), but it’s a solid asset class, and an ok diversifier from stocks (just not recently). It is often recommended to hedge bonds to your local currency (by buying hedged share classes).
  3. 10% SMI: Home bias is also reasonable, but SMI is not home bias. It is highly concentrated in 3 big international companies. I’d look into Swiss mid-caps instead.
  4. 10% Senior Loans Fund: High yield bonds have tax disadvantages over stocks (income vs. capital gains). Also at a quick glance those bonds seemed to be overwhelmingly from US companies.
  5. 10% AT1 ETF: Same tax disadavantages. But this is concentrated in financial institutions in Europe.

We all have the urge to beat the market, to get more than boring maximally diversified ETFs. But if you don’t have good reasons for 4 and 5, I would question those positions.

Also, since I don’t know the rest of your positions, I can’t comment on how well this fits in your portfolio.

There is a lot that can be optimized and fine tuned. But if you have just some time to sink into learning more about investing, you could try and see if you can understand managed futures / trend. There is convincing (at least to me) long-term research that it pairs very well with stocks (anti- or uncorrelated) whilst having higher return than bonds. The fees have come down in recent years and products with solid indexing approaches have emerged (reduces single manager risk).

5 Likes
6

Examples @Helix ?

7

A somewhat disorderly source of information is our managed futures thread:

Specific products from that thread:

  • iMGP DBi Managed Futures Fund R USD: UCITS fund version of DBMF ETF. Replicating SG CTA Index (20 biggest CTA funds).
  • RSST ETF: Leveraged ETF in 1x S&P 500 and 1x replication of SG Trend Index (10 biggest trend funds).

There are other products that could make sense, but probably not as standalone position, since their approaches are tied to a specific strategy or management team.

2 Likes
8

RSBT also notable in that context, same as RSST, just with Bonds + MF.

Might be the better candidate here, as RSST will increase your stock allocation, which you might not want.

Although for a single tax efficient allocation (without single manager risk, otherwise KMLM wins this imo), as a diversifier the DBI mutual fund is probably the winner here. As you don‘t use extra leverage and the tax efficiency is better.

1 Like