eMaxis Slim All Country vs Developed Countries vs...

[Akatani]

I'm not talking about timing the market based on day to day performance. More like, next January I'll compare the returns between all country and developed countries and say all country is doing way better, then I might put in a little money. Then if the trend continues, then I'll keep buying it.

[smalldog]

Previously I was investing with DCA into Emaxis Slim with 3 funds: Developing markets, all countries + all countries excluding Japan.

I later realised that “All countries excluding Japan” is not a necessary diversification for me, as my core strategy is to grow wealth and to ensure I am buying the index that carry’s the planet’s next Apple and we don’t know where that it - who knows, it might be the Nikkei. So personally now I weigh regular monthly investments into EMaxis Slim 80% all countries and 20% emerging markets.

[adamu]

EMaxis Slim 80% all countries and 20% emerging markets.

All country already includes 11% emerging markets BTW, so you're heavy on emerging (this link is a year out of date, I couldn't find an up to date version in a quick search).

https://www.msci.com/research-and-insig ... -breakdown

[mighty58]

I'm not talking about timing the market based on day to day performance. More like, next January I'll compare the returns between all country and developed countries and say all country is doing way better, then I might put in a little money. Then if the trend continues, then I'll keep buying it.

Don't do yourself a disservice and dismiss this as semantic differences, it's market timing all the same. In fact, what you're doing here (and I'm referring to the fact that you have mentioned comparing recent performance several times on this thread, and saying that you'd be willing to buy something if it showed good recent performance) is called recency bias, a common trait identified by researchers in investor behavioural psychology that often leads investors to underperform. You'll want to nip that in the bud.

And then this bit:

Then if the trend continues, then I'll keep buying it.

So you'll only buy things that trend upwards? Really? How long will you monitor the "trend" before making such decisions? And on the flip side of that, are you saying you will try to avoid buying when things go down (i.e. get cheaper)? Sounds awfully like a) attempted market timing; and b) a surefire strategy to locking in poor performance.

You've come as far as identifying two potential index funds to invest in, either of which will work just fine, but don't sabotage yourself at the last step with this timing nonsense, deciding which one to buy based on recent performance. Just pick one, and keep buying at regular intervals, REGARDLESS of whether it's gone up or down in the recent past. And really it's that simple.

[adamu]

Going the index investing route also means being able to cope with being in the minus for multiple years if there is a recession. This hasn't happened recently, the worst was for about a month in early 2020. The people that sold out then locked in significant losses, but if you held out you were treated to the year ending on record highs.

Here's a live action replay of RetireJapan experiencing it
viewtopic.php?t=834

[sutebayashi]

I was looking at my VWO (developing markets) etf position tonight and saw it is up 9.5% since I bought it late last year. You missed out on 9.5%

That is in US dollar terms so it might be down in JPY terms, but yeah, if you want to be in developing markets, just choose your allocation percentage and get it.

If you are worried about timing, I’d ring fence some money for that sort of thing and keep it separate.
(I dabble in speculative stuff on the side, but it’s more work and stress than the regular broad based index investing approach, which is now by far the mainstay of my financial assets and has made me more profits, at least in absolute terms.)

[Gulliver]

While we’re on the topic, do we know the function of making eMAXIS Slim Developed Countries (and various other funds) to be ex. Japan?

[sutebayashi]

I assume this is just a thing to avoid home bias.
Presumably many Japanese investors traditionally might have invested a lot in the Nikkei, and when they wanted developing markets they preferred to not get even more Japan when doing so.

There are similar vehicles that are ex-US too for example. I know my family members home are also very biased to home / nearby markets.

[Billy]

@sutebayashi

So if I understand this correctly, you reckon an overwhelming majority of people holding the developed countries excluding Japan fund are already holding other Japanese-exposed positions?

[sutebayashi]

That’s not quite how I would put it.

I imagine for a lot of Japanese domestic investors, yes they likely have Japanese stocks - at least the older crowd. They are more likely to buy shares in some Japanese company they think they know, before they go invest in say Facebook, I imagine.

I recall the Japanese investing book I started out with suggested a portfolio of domestic stocks (20% or so) plus foreign ones; it introduced ex-Japan options in that context and I have been investing in MSCI Kokusai based toshins since.

Actually there are MSCI Kokusai index based ETFs in the US that are mentioned here from time to time. They are relatively illiquid in the US (typical foreign investors would have to look up what Kokusai means), so I opted to go with VTI and VEA ETFs myself, with the later giving some allocation to Japanese shares. Personally I am bearish on Japan so I like MSCI Kokusai, but went with VEA instead since the liquidity is better, and hey I guess I can stand to own some Toyota etc. there are some decent companies.

On the other hand, Asia ex-Japan type funds are a different story. There I think it is more about segregating a mature market from the rest of asia that are likely to grow faster.