Lowering exposure to US tech by shifting from VWRL to VHYL

Investing / Portfolios
22

Nothing wrong with overweighting dividend stocks. But consider this:

  1. What do you know that the market doesn’t?
  2. What is your exit stratrgy? I.e. when will you quit your tilt and go back to MCW?
  3. How many years of investing carrier do you have to know yourself?
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23

Humans vs dinosaurs :wink:

24

Answered why I personally deviate from MCW (with both underweighting US and with a small Equal Weight Tilt.

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25

Looks good! The only thing I would also consider is the costs. VHYL is not supercheap (29 bps?) and distributes around 3% of dividend over which you pay ± 12% L1 tax. In total it is around 65 bps. Maybe there are better vehicles to realize your strategy.

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26

many interesting replies, here are my 2 cents:

Given that you want underweight US Tech due to high valuations, would want something ‘away’ for market cap weights. There are multiple way to do that.

  1. Move a big chunk to non-market cap wighted funds. You have looked into one - VHYL. Dividends are often a proxy for value. You can also target value and other factors like profitability (~quality) directly separately and jointly. You can go the multi-factor fund route like JPGL (as @Tony1337 mentioned), or IFSW, etc. Targeting single factor funds would lead to clutter and may not be optimal either.
  2. Instead of moving a huge chunk into another large cap heavy fund (which most of the multi-factor funds or single factor funds are), you can put a smaller chunk (20-30%) to Small cap (value+profitability) fund like AVWS (Avantis World Small cap). They just launched UCITS funds (started as 11 million in seed fund), but have been running similar funds in US (AVUV,AVDV,…) single 5+ years. Avantis is founded and run by former Dimensional Fund Advisers people. ‘Similar’ thought process, different implementation approaches.
  3. Move your 3a to Finpension and invest in CSIF MSCI World ex CH Value Weighted Fund. This is a large+mid cap fund, company weights are on the lines of Fundamental Index (of the Research Affiliates Fundamental Index). This is very much a value fund but rather than selecting only value companies it underweights the growth companies and overweights the value. See the PE, PB and dividend yield in msci world value weighted index factsheet
  4. EDIT: Add EXUS or WEXE UCITS (non-US marker cap weighted fund). They are relatively new and small currently.

What to keep in mind:
Value (only) funds and dividend funds give more dividend income (compared to cap weighted) and hence add to your taxable income. So better to have them in 3a first (which is currently possible only for large+mid cap), and then get some small cap value+profitability Avantis fund in taxable account.

Disclaimer: I own Avantis, Dimensional, and the MSCI World Value weighted funds among others.

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28

Our index portfolio managers get super angry when you call them passive investors…They manage quite actively to track the index.

Lets call it index imvesting :wink:

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29

Thank you very much for your insightful comments and recommendations.

For me, “being a passive investor” means primarily focusing on ETFs that track an index. I’ve never aimed to hold only a single ETF, but rather to keep my portfolio as streamlined and cost-effective as possible, minimizing both the number of funds and associated fees. For this reason, even if I occasionally select different ETFs due to political or economic shifts — provided these funds remain non-actively managed — I still view this as a passive approach.

With the recent election of Trump, I’m considering how best to adjust my portfolio in response. Increasing my allocation toward traditional, dividend-focused stocks and U.S.-centric companies that might be less impacted by potential tariffs — such as banks, energy, and local automotive industries — seems worth exploring. However, I’m uncertain about the best way to proceed, particularly as the U.S. exposure in VYHL is lower than in VWRL. Any thoughts on which option might be more advantageous would be greatly appreciated.

Thanks
F

30

Value focused strategies.

Small cap value has benefitted already quite a lot from the election.

It‘s alot of the sectors you mentioned. Lots of financials and industrials. And smaller companies are mor local by nature.

You could add some of Avantis new small cap value ucits fund AVWS. It has 60-70% US and rest ex-US developed.
Accumulating though

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