USA today and consideration of switching from VTI to VT

Grog · January 11, 2021, 8:22am

Dear all
Background: I have a portfolio of 75% stocks, 25% cash/2nd pillar
of the 75% stocks, around 65% is USA, specifically a single ETF VTI.

I’ve ried to replicate more or less the world index by reusing some really cheap ETF in different vector (basically only VTI in my taxable, and Swiss/European/Asiatic ETC in VIAC 3a)

Now though I’m conflicted - I never thought I would see the day an angry mob of far right beat a cop on the stairs to the capitol using the american flag:

https://www.shelbynews.com/news/national/video-shows-rioters-beating-officer-with-american-flag/video_0b724a25-f2bb-5b35-b5ee-03451c10fd88.html

So in having only VTI, if business decides to relocate outside NYSE and the US, VTI needs to sell it and is lost. If you have VT (total world) and a company relocate sto london or whatever, and decides to stop being on the NYSE, VT would simply sell and rebuy on the new exchange.

In this time of uncertainty, it does seems that VT is more robust then VTI. That’s why I’m thinking to switch my VTI position to VT, and then adjust the holding in the VIAC 3a to avoid being underweight US.

Thanks for any feedback.

Cortana · January 11, 2021, 9:47am

I’m doing basically the same and wouldn’t change a thing about it. VTI in IBKR and rest of the world in Viac/ValuePension. Main advantages:

Fully refundable dividend witholdings from IBKR
exUS has higher dividend yields, especially Europe. As it’s inside of retirement accounts, it doesn’t get taxed as income.

If a company would leave the US (extremely unlikely) the exUS indices would add it. It just goes from VTI to whatever index fund will represent it in Viac.

Grog · January 11, 2021, 10:00am

yeah I created the same setup. The only unfortunate thing is that you cannot really time well with VIAC (don’t know about valuepension) because it rebalance autoamtically at the end of the month and you would probably need to manually readjust percentages if some things happens…and I’m very lazy
Thanks for the feedback

Cortana · January 11, 2021, 11:02am

I manually adjust the percantages once or twice a year in Viac/ValuePension. I’m 2.5% off my 60% target allocation for US, so I’ll probably adjust it soon. Or maybe not because such small amounts won’t result in significant differences.

Cortana · January 11, 2021, 12:22pm

Because someone asked about my asset allocation. First you need to know that I’m slightly deviating from VT because I have a Swiss home bias. Target SAA is 60% US, 16.66% Switzerland, 13.33% Developed Markets exUS/CH, 10% Emerging Markets. So in essence VT with a modified Developed Markets exUS part (>50% CH).

Currently 22k IBKR, 20k Viac (3rd pillar) and 20k ValuePension (2nd pillar).

IBKR: VTI/QQQ
Viac: 27% SMI, 30% SPI Extra, 27% World exCH, 20% EM, 3% cash
ValuePension: 90% World exCH, 9% EM, 1% cash

Currently 62% US, 15% Switzerland, 13% Developed Markets exUS/CH, 10% Emerging Markets. Savingsrate without bonus is ~1400 CHF per month, so 830 CHF IBKR (60%) and 570 CHF Viac (40%). So it matches my target allocation pretty good, but the recent outperformance from US resulted in a slight overweight in US stocks. I might rebalance or just leave it be.