Low-cost diversified global portfolio

[adamu]

Well Japan-based low-fee global index fund? got a bit out of hand, and the ultimate conclusion is this: No, there is no good single-fund option.

Update: Dec 2018 - there now seems to be a good option, checkout One fund to rule them all?

Perhaps I was looking for a specific solution to a general problem, a better question would have been this:

What is a simple, tax-efficient, globally diversified stock portfolio suitable for investing at a Japanese broker?
Preferably it should be suitible for all of iDeCo, NISA, and Taxable (tokutei) accounts.

The guidelines given the products currently available seem to be:

1. Use Japan-domiciled investment funds (投資信託), and as a rule avoid dividend-paying ETFs, especially foreign-listed ones, or funds that wrap them.
2. Use a mixture of 3 low-cost funds: Japan, Developed Markets Ex Japan, and Emerging Markets.
3. A Rough guide for asset allocation based on MSCI ACWI Index is Japan (8%), Emerging Markets (12%), Developed Markets (80%).

[jcc]

I would agree with those guidelines and for simplicity say to get a well diversified stock portfolio to just buy

eMaxis slim developed
eMaxis slim emerging
eMaxis slim nikkei average

And be done with it. Unfortunately using the eMaxis slim world(minus japan) is actually more expensive just for the privilege of them rebalancing automatically for you.

There's lots of competition out there between the index funds with tawara and nissei both having already lowered rates and talking about lowering them further, so the recommendation of which fund to use may change, but the tax principles remain the same

[adamu]

Thanks jcc. I was expecting you to jump in with eMaxis slim. Interesting about the ex-Japan working out more expensive.

http://www.retirejapan.info/blog/dividends-in-japan
The best way to invest may be to buy low-cost Japanese mutual funds that reinvest dividends within a diversified portfolio. This can be done with three funds: a developed world equity (ex-Japan) fund, a developing world equity fund, and a Japan fund. To match world markets, the proportions would be 80% developed, 12% developing, and 8% Japan.

Hmm sounds familiar.

I'm planning on posting some potential fund combinations myself once I've had time to sit down and look into a bunch of funds, but I've got other priorities at the moment so it will probably be a while.

[N00bster]

Thanks jcc. I was expecting you to jump in with eMaxis slim. Interesting about the ex-Japan working out more expensive.

... although the benefit of rebalancing yourself is mitigated by the higher cost of the developing fund:

eMaxis slim total world ex Japan: 0.15336%

vs:

eMaxis slim developed countries: 0.11771%
eMaxis slim developing countries: 0.20412%

In order to have a total world portfolio, you would also add Japan to these two sets:

eMaxis slim topix: 0.17172%

Since developed countries is 80% of the portfolio, I believe the cost of buying the 3 funds yourself is still a bit lower, but we are talking about a bit more than 0.03%.

[RetireJapan]

http://www.retirejapan.info/blog/dividends-in-japan
The best way to invest may be to buy low-cost Japanese mutual funds that reinvest dividends within a diversified portfolio. This can be done with three funds: a developed world equity (ex-Japan) fund, a developing world equity fund, and a Japan fund. To match world markets, the proportions would be 80% developed, 12% developing, and 8% Japan.

Hmm sounds familiar.

Ha, ha, indeed. Wonder where I got that from

Really appreciate the contributions here. The forum is one of the best things about RJ. We're about to hit 2100 posts!

[adamu]

but we are talking about a bit more than 0.03%.

Or in other words, about 20% cheaper.

[jcc]

Since developed countries is 80% of the portfolio, I believe the cost of buying the 3 funds yourself is still a bit lower, but we are talking about a bit more than 0.03%.

0.1324% if you mix your own 3 at 80/12/8 or .1548% with japan and ex-japan mix.

Either way it's cheap. But it's basically free savings and gives you more control over your allocation. VT has a .1% expense ratio so it's really quite competitive(and when you consider tax issues it comes out ahead)

With vanguard talking about selling directly(instead of via a gouger like saison or the rakuten partnership which is just taking a huge cut in between) and nissei and tawara talking about cutting custs further too, low cost investing is really coming together here

[N00bster]

Since developed countries is 80% of the portfolio, I believe the cost of buying the 3 funds yourself is still a bit lower, but we are talking about a bit more than 0.03%.

0.1324% if you mix your own 3 at 80/12/8 or .1548% with japan and ex-japan mix.

Either way it's cheap. But it's basically free savings and gives you more control over your allocation. VT has a .1% expense ratio so it's really quite competitive(and when you consider tax issues it comes out ahead)

With vanguard talking about selling directly(instead of via a gouger like saison or the rakuten partnership which is just taking a huge cut in between) and nissei and tawara talking about cutting custs further too, low cost investing is really coming together here

Indeed, good times! Now if the online brokers could just improve their security with 2FA...

[Akatani]

Which Nissei funds are considering lowering their fees?

edit: just looked up those eMaxis slim funds - Wow! I have the Nissei, but will be buy eMaxis from now on

[Neil]

Update: Dec 2018 - there now seems to be a good option, checkout One fund to rule them all?

Bit late to the party, but the link above is broken. Do you remember where it was meant to be pointing?