Comments on: Asset Allocation for Foreign Equities

By: Tidying up the Sleepy Portfolio

Tidying up the Sleepy Portfolio — Wed, 15 Aug 2007 23:00:00 +0000

[...] with ETFs than I was two years back. I am also tweaking the asset allocation slightly so that foreign stocks reflect their respective proportion in world market capitalization, US equity at 23%, EAFE equity at 22% and emerging markets at 5% and reducing allocation to [...]

By: Phil S

Phil S — Tue, 12 Jun 2007 21:06:24 +0000

FourPillars, the transfer of the LSIFs “in kind” is what I was referring to as requiring too much paperwork. I have a colleague that had LSIFs and moved his account from Manulife (a mutual fund only account) to E*Trade. E*Trade was more than happy to get the new business, but Manulife dragged their feet for 2 months to do all the necessary paperwork to transfer the assets “in kind”.

By: GIV

GIV — Tue, 12 Jun 2007 19:38:08 +0000

Phil,

the E*Trade high-interest account I’ve been hearing about seems like a good one (for getting interest on cash before you invest it), but my online broker is RBC.

Under my system, there’s a one-day lag to move money from my ING high-interest account into my regular RBC chequing account. Then another day to move it from there into the brokerage account (although I’m told if you really want to and are willing to pay a bit you can do it over the phone in the same day.)

SO typically, if I start moving a few grand out of savings on a Monday morning, when I wake up on Wednesday that money will be there for me to invest in the market.

Not exactly “real time” but it serves my needs.

By: FourPillars

FourPillars — Tue, 12 Jun 2007 18:04:52 +0000

Phil, can’t you transfer the LSIFs “in-kind” to Etrade from your current dealer?

I was hoping to do this myself since I’m paying $50/yr for the account where the LSIFs are.

By: Phil S

Phil S — Tue, 12 Jun 2007 16:39:38 +0000

Hey GIV, which high interest accounts have you been using and how easy is it to transfer back and forth to your brokerage account? I’ve been loading up on 30-day cashable GICs, but I would definitely prefer a high interest savings account if it were easy to transact.

I had been considering opening a new account at E*Trade but I don’t have enough cash quite yet to meet that minimum $50K balance to get the 100 free trades introductory offer. But I like the 4%+ cash rate they offer. I could move my existing brokerage account and more than qualify, but that would require too much paperwork, or a huge tax hit (I have a few LSIFs trapped in my existing account). Talk about being stuck between a rock and a hard place!

By: GIV

GIV — Tue, 12 Jun 2007 14:50:22 +0000

it will be a while before I initiate positions in emerging markets

That’s going to be my next purchase, too, although like you, I’m in no hurry. I’ll keep stockpiling those funds in a high interest savings account and see how prices look in a few months

By: Phil S

Phil S — Tue, 12 Jun 2007 14:36:48 +0000

CC. I find it amusing that you’re moving out of individual stocks towards indexing while I’m moving out of all mutual funds and towards individual stock picks. Too bad we can’t just cut out the middlemen (brokers) and trade with each other, eh?

By: Phil S

Phil S — Tue, 12 Jun 2007 14:30:28 +0000

I’m now more of a stock picker than a mutual fund investor although I admit that I still have a few mutual funds and one ETF. For stock pickers, it is easy to buy stocks on the TSX, TSX-V, NYSE, NASDAQ, but overseas stocks are not nearly as accessible.

The only available overseas stocks available to me are ADR (American Depositary Receipts) of foreign companies trading on the NYSE. The good thing about ADRs is that they must report using GAAP accounting principles which makes it easy for us North American investors to understand. The taxation and accounting rules in foreign markets make it extremely difficult to properly value a company.

That said, as a stock picker, I only put my money where the best values are to be found. It seems to me that most of the ADRs on NYSE are overvalued in terms of P/Es because of the trendiness to pour money into foreign markets. Outside of ADRs, I have no idea how the remainder of the foreign stock valuations sit.

By: Canadian Capitalist

Canadian Capitalist — Tue, 12 Jun 2007 14:14:52 +0000

Our portfolios are still a bit out-of-whack because I’ve been cleaning up our individual stock positions and moving to a mostly indexed portfolio. Still, it will be a while before I initiate positions in emerging markets and REITs because I think they are very overvalued.

By: MillionDollarJourney.com

MillionDollarJourney.com — Tue, 12 Jun 2007 12:44:38 +0000

CC, with the current markets so high, have you been re-balancing your portfolio? Or do you not believe in market timing?