Adjusting my portfolio - Planning for 2021

[San_Francisco]

Side note (also regarding the sector bias):

When you look at MSCI World Quality’s vs. “vanilla” MSCI World’s sector weightings…

Sector	MSCI World Quality	MSCI World
Information Technology	35.04	21.1
Health Care	20.08	13.07
Consumer Staples	13.18	7.8
Communication Services	9.5	8.94
Industrials	9.28	10.72
Consumer Discretionary	5.46	11.95*
Financials	3.92	12.78
Materials	2.79	4.48
Real Estate	0.39	2.73
Energy	0.3	2.76
Utilities	0.05	3.19

* There’s also an MSCI World Consumer Discretionary Index, 32% of which are Amazon and Tesla combined. But then, they both aren’t very profitable, if anything.

…MSCI Quality does happen to overemphasise sectors driven and growing by technological innovation. Though you’re not quite getting the early-stage (though hardly profitable) growing hotshots featured in ARKK.

[scooby_doo]

Hi @xorfish , firstly thanks a lot for sharing your portfolio and explaining about factor investing.
I am a newbie with whatever miniscule information I have gleaned from this forum.

A few questions -

Are you still with the same ETFs and allocation, especially with the US (Core and small value),
considering the rate hikes ?
Also, can you kindly explain why you picked DFAU over AVUS and DFAI over AVDE ?
The TER is marginally higher for both but seems they are better performing

https://www.etf.com/etfanalytics/etf-comparison/DFAU-vs-AVUS
https://www.etf.com/etfanalytics/etf-comparison/AVDE-vs-DFAI

I am thinking of mostly replicating your portfolio but with a lower exposure to US and change from Dimension to Avantis

		        TER	Weight
US: 		AVUS	0.15%	25%	
US small: 	AVUV	0.25%	10%
Intnl core : 	AVDE	0.23%	30%
Intnl small: 	AVDV	0.36%	10%
Emerging: 	AVES	0.36%	25%
		Avg	0.26%

My holding period will be around 25-30Y
I plan to invest around 400k CHF and plan to DCA for 2022 and 2023, including savings of 4-5k each month.
What do you think ? Thank you.

[xorfish]

This is my current portfolio allocation:

Factor Tilt

[scooby_doo]

@xorfish Thank you!
I see we are quite similar with the composition. May i ask why you choose to have both
Avantis Emerging Market Equity ETF AVEM and Avantis Emerging Market Value ETF AVES

Also, do you plan to still be at 56.6% allocation in US ?

[xorfish]

AVEM only has a weak Tilt like AVUS and AVDE. AVES has a stronger tilt, like AVUV and AVDV, just with all caps and not small. caps.

I hold US at roughly market cap based on data from MSCI. There are other reasonable weighting methods. I just haven’t found one that is reasonable and automatable.

I try to minimize the impact of personal judgment on my asset allocation. So I’ll just stick to my method, even if it feels like I have too much US.

[xorfish]

@Patron

I’ve seen that your factor tilt is at 50% now in the sheet. Isn’t that a bit high? Or what’s the reason for having such a strong tilt? I would probably have gone with around 10-30% …

You don’t gain that much with a factor tilt of 10-30% and 50% seemed like a sensible option. A cheaper option would be a 60% tilt with market cap weight funds.

@Patron

Did you find reasonable methods that would make sense in the context of regional weighting (US, Int ex US, EM) which are not automatable? I don’t mind if it’s not automatable but I feel like that market cap weighting is a bit stiff.

MSCI Value weighted or some of the Research affiliates indexes are good options are also good options.

[evertruelife]

Any reason for why to exclude the large/mid cap value tilt?