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Smarter Investing - Emerging market funds
Main Post:
I've just finished reading Tim Hale's Smarter Investing after reading a lot of recommendations on here.
Chapter 7 includes a table of sample growth assets. Later in the chapter it lists some appropriate market benchmarks for each asset category. I'm struggling to find a provider with access to funds that track these benchmarks though. The global stuff is fine, but the emerging markets side is proving trickier.
Category Benchmark Emerging markets – market MSCI Emerging Markets Index / FTSE Emerging Index Emerging markets - small MSCI Emerging Markets Small Cap Index Emerging markets - value FTSE RAFI Emerging indexThis will be going in a SIPP I'm looking to construct, and for simplicity, I'd rather stick with the same provider rather than have funds scattered all over the place.
Vanguard has a good rep and I've found a funds for all the global categories as well as VFEM to track the FTSE Emerging Index, but I can't find anything to track the small or value categories. I know Vanguard is quite limited in the number of funds offered, but even looking elsewhere (H&L, AJ Bell, Interactive Investor, Fidelity) I'm struggling.
Vanguard do do an emerging market all cap (V3MB), so I could just go for that which would give the market coverage, but not allow tweaks to the weightings.
Just wondering if anyone has any suggestions on where to look, or what approach they would take.
Top Comment: Hi u/pledge_X , based on your post the following pages from our wiki may be relevant: https://ukpersonal.finance/index-funds/ https://ukpersonal.finance/investing-101/ https://ukpersonal.finance/pensions/ These suggestions are based on keywords, if they missed the mark please report this comment.
Emerging market ETF suggestions?
Main Post:
I'm currently invested in AVES as my emerging market play because factor investing has really sold me. It's a bet on value and coincidently scores lower in size compared to other market cap weighted funds.
My problem is I dislike the China allocation percentage. It's far too high for my liking.
Any suggestions for me?
Top Comment: DGS is small cap EM value with less than 9% allocation to China
Do you recommend moving off of vanguard money market now?
Main Post:
I have about 25% of portfolio in vanguard money market which yields about 5%. I think the environment is changing in a way that bonds and money market will get weaker due to rates dropping.
Top Comment: If you want a principal stable highly liquid asset that pays a floating rate then you should own a money market, HYSA, or ultra-short t-bill fund like SGOV. It doesn't really matter what the rate is. If you want a long term portfolio bond position that will spread out interest rate and reinvestment risk then something like BND or AGG makes sense. If you want to speculate on interest rate changes then there is TMF and TMV Don't confuse the three strategies :)
How do money markets make money?
Main Post:
So I understand why other things offer high yield. In a CD you’re loaning the bank money so they pay you yield. Bonds you’re lending the government money.
Why is Schwab willing to give me 5.2% in money market funds? What are they doing with my money to generate that return for me? Are they lending it for even more money? Is it the exact same thing as a savings account then?
How do money markets generate the yield to pay investors?
Top Comment: Money market does both things you mentioned and more, they are loaning to banks (buying CDs or bank loans), buying short term Government debt, or short term commercial paper (loaning to companies for cash needs like payroll). A money market should only be lending to high quality institutions and for very short timeframes, making the investments safe but not completely risk-free.
Why should I invest in emerging markets as well? Why not 100% developed markets?
Main Post:
I get that international exposure is important, but why should I also have exposure to emerging markets?
Top Comment: Emerging markets are less correlated to U.S. stocks than developed Ex-Us stocks so potentially a better diversifier. Especially if you are a young investor, you probably do not want to neglect emerging markets because your labor capital is already invested in the US. The biggest issue with emerging markets is obviously the fat-tail risks. Global market cap weighting for emerging markets is around 15 percent last time I checked.