Home bias: how much CH for a broad diversified portfolio?

[Tony1337]

@xmj

The fact that it’s underperformed each of the last seven years

Momentum works

That’s not how momentum in stocks works though. Momentum in stocks doesn’t exist over such long periods. It’s not statistically significant.

The most basic definition of momentum in stocks looks at the last 12-1 months where it’s statistcically significant.

Momentum Factor Effect in Stocks - Quantpedia

You’d need to look at the last 12 months and look at relative momentum, on a continuous basis (meaning every month you re-check the momentum between the two indices to decide which to go long of the two), to be able to say which is likely to drive higher returns in the short term future.

Looking at the last 12 months, seems to be almost the same:

So momentum wise, the expectation for the near term are pretty much the same.
You cannot make longterm predictions with momentum.

[xmj]

The point is not to overdo it

@xmj

Word of caution, SPI Extra has underperformed the SMI over the last 7 years. So if you must own it, don’t own a lot of it.

You’d have to go back to 01.01.2015, more than 11 years ago, to find a period in which SPI Extra actually outperforms until today

If you must, pick a market cap weighted SPI fund with some small SPI Extra addition.

Do keep it small, otherwise you’ll come back lamenting the decline of swiss smallcap stocks some time in the future

[Wolverine]

You keep making definitive statements about the future based on the last short-ish to medium-ish term time period of 7-15 years that aren’t supported by longer term and broader analyses.

People take context into account when they read posts on a board, I feel compelled to underscore that what you are indeed saying is that large caps are more likely to outperform smaller caps in the future. The tameness is mine, direct interpretation of your messages is that they will outperform rather than them being more likely to. You also make assumptions about other people’s psychology while asking other people not to put words in your mouth (you put thoughts in their heads)…

The main question about SMI, SPI and/or (a mix of) SPI Extra was about concentration rather than performance. The question isn’t which is more likely to provide more returns in the future but rather how exposed we are to catastrophic falls if things turn bad and how to mitigate them. The SMI might be fine for some, either as a mix in a broader portfolio or even on its own. For other people, a more diversified portfolio is prefered, which is where an SPI Extra ETF adds options we kind of lacked before.

[Abs_max]

I am not sure if I am understanding correctly. SPI extra should be used together with SMi I assume.
Otherwise we wouldn’t get exposure to top Swiss companies. I don’t want to not invest in Roche, Nestle , UBS etc

Btw -: trivia question. For last 5 years , which company with offices in Zurich city Center performed better ?

Google or UBS ?