Foreign ETF portfolio restructuring
Just updated the portfolio, net worth, passive income and expense figures on my blog. You will notice a big drop in the value of our foreign ETF portfolio. This is due to a small sale event in May 2017 where my wife sold her Vanguard All-World ETF (VWRD on LSE). We decided it was overlapping too much with my Vanguard All-World High Dividend Yield ETF (VHYD on LSE).
To make up for this going forward, my wife will be buying the Vanguard Emerging Markets ETF (VDEM on LSE) and Vanguard Developed Asia Pacific ex Japan ETF (VDPX on LSE) instead. The dividend yields of these ETFs are generally above 2% and allows us to slice & dice our investing approach a little.
I know it looks like we are reversing our position after having sold the same 2 ETFs in Mar 2017. It’s true. We are still trying to work out a simple and effective way to build up the foreign ETF portfolio without having too many ETFs or making too many transactions.
Then again, having just one All-World ETF is too general for our liking. Hence, the inclusion of the Emerging Markets and Developed Asia Pacific (excluding Japan) ETFs to allow us to focus on specific regions when we want to. This is taking into account our All-World High Dividend Yield ETF weighing more heavily on US, UK and Europe markets.
No plans to manually DCA for foreign ETF portfolio
There is something else. We are currently Dollar Cost Averaging (DCA) into Singapore ETFs via automatic monthly investment plans. However, we have no plans to start manually DCA into the 3 Vanguard foreign ETFs. Not yet anyway with overseas stock markets hitting new highs. Just waiting for a better entry point and hoping this approach doesn’t backfire.
Holding more cash with increases in other assets
Which brings me back to the net worth update. We have been raising our cash holdings to the point where it’s almost 50% of our total assets. This is mainly from selling our individual stocks (with some profits) and not aggressively investing our salary income. The buildup of cash reserves is intentional and these are just some of the reasons behind it:
- Increased level of uncertainty in both of our job environments with higher possibility of retrenchment
- Portfolio reallocation of investments from individual stocks to ETFs
- Not sure why stocks markets have gone up so much despite so few signs of the global economy improving
- Might as well take some profits off the table
Besides, we always keep ourselves vested in the equity markets via the monthly purchases of Singapore ETFs. So it’s not like we are not deploying our cash at all. But there is a time to invest less and a time to invest more. Hence, the Singapore ETF portfolio has continued to grow albeit at a slow pace. CPF and wholelife insurance values have also gone up but at an even slower rate. Takes a long time and a whole lot of patience to see results.
Why no change to tax and credit card liabilities?
As long as we remain employed and own our current apartment, we will incur the same personal and property tax liabilities next year. No point reducing them even though we are paying the current tax liabilities off. Same goes for the credit card liabilities until we are certain our spending levels have gone down sufficiently in a more permanent manner.