Indexfundfan\’s blog (new URL is Indextown.com)

May 3, 2006

Easy allocator

Filed under: Investing — indexfundfan @ 10:48 am


Easy Allocator is an interesting tool created by Diehard Nick (yobria) for performing asset allocation planning. It includes the following asset classes: commodities, foreign bonds, REIT, overweight value/small, micro-cap stock, equal weight Europe/Pacific/Emerging markets, equal weight Pacific rim and foreign small-cap. The popular portfolios like the Coffeehouse, Bernstein-4 and the Couch Potato are included as well. It even includes a forecast of portfolio performance. Try it!

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8 Comments »

  1. How was the last week for ya?

    Comment by Aragorn — May 20, 2006 @ 2:15 am

  2. Hi Aragorn,

    I assumed you are asking about my portfolio. I don’t have details about the last week, but my month-to-date return is currently -3.02% and YTD has dropped to 5.5%. What about yours?

    Comment by indexfundfan — May 20, 2006 @ 8:49 am

  3. hi shlow, notice you dun go sgfunds liao so looked you up here.

    i’m thinking abt EEM in the long run, what do you think abt that category?

    regards

    Comment by Drizzt — May 20, 2006 @ 10:45 am

  4. Hi Drizzt,

    You asked about EEM which is the iShares for emerging market equities. I am personally invested in VEIEX and VWO, which are Vanguard’s versions of emerging market equity funds.

    My view is that for the long term, this asset class should provide good diversification for a portfolio. I have 10% of my entire portfolio invested in this asset class but this was built up through the past several years and I would continue to hold it according to my investment plan.

    I would however be wary if I have to invest a lump sum into this asset class to dramatically increase the (or start an) allocation. If you do find that emerging market equities belongs to your portfolio, I suggest to DCA into this asset class over a period of 6 months to 2 years.

    Comment by indexfundfan — May 20, 2006 @ 9:13 pm

  5. My Uob international growth fund lost about 4-5%

    Comment by Aragorn — May 21, 2006 @ 12:29 am

  6. hi shlow, that is one of my dilemma as well. i plan to start off with 2.5K sgd. now if i put in oen etf. chances are that i will not be able to DCA. So it boils down to the need to DCA.

    You seem to be against lump sum ETF investing. is there an underlying reason?

    regards

    PS: the forum is diff without you there.

    Comment by Drizzt — May 21, 2006 @ 6:12 am

  7. Drizzt,

    I agree with you that to DCA using a Singapore brokerage might not be cost efficient.

    When an investor wants to lump sum into an asset class that has a huge run-up over the past few years, he runs the risk of being sorely disappointed (imagine a lump-sum investment into technology in Mar 2000).

    Normally, it is good practice to invest immediately if the asset class belongs to the portfolio since equity tend to trend upwards. But in the case when the investor wants to add the asset class after it has a huge run, the investor needs to ask himself if he really thinks that the asset class has a place in the portfolio or is it just performance chasing? What if it is an asset class that has dropped 50% over the past few years? Would the investor still want to add it to the portfolio?

    If it is feasible (cost efficient) to DCA over a period up to 24 months, the risk of disappointment is reduced and the investor can get a better ‘taste’ of how the asset class performs in the portfolio.

    Comment by indexfundfan — May 21, 2006 @ 1:12 pm

  8. Hi indexfundfan,

    Assuming the asset class has a place in a portfolio, the case you made for DCA is that it reduces investor’s shock of seeing it falls dramatically, right? Otherwise, if the investor can stomach the volatility (usually realized after a rude shock), then he/she can invest immediately.

    Well, Singapore high brokerage fee seems to force us to invest immediately, or at most DCA sparingly.

    Comment by choozm — May 28, 2006 @ 11:02 pm

  9. choozm,

    You might want to check out the recent conversation, 50719 on Diehards.

    I do believe DCA is a form of short term risk management strategy that helps to prevent the shock of seeing an investment fall drastically.

    However, in Singapore context, as you mentioned, this strategy can only be used sparingly due to higher brokerage costs.

    Comment by indexfundfan — May 30, 2006 @ 6:30 am


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