Switching funds to a more defensive/less growth oriented option

[tamaplanian]

Hi all
Wanting to get an opinion on something.
I’m in my early 50s and have invested mainly in growth orientated index funds of the emaxis slim variety and this has worked out really well. A lot thanks to the advice on this forum.

I’m actually tracking ahead of plan and think it’s a good time to switch out from some funds and lock in gains, especially those derived from the weakening of the yen.

However I don’t want to just sit on cash, prefer something where I can still get some return. Something like a balanced fund.

I was thinking the
ｅＭＡＸＩＳＳｌｉｍ バランス（８資産均等型
Might be a good option.
Any thoughts on this or any other recommendations?
Thanks in advance.

[sutebayashi]

That balanced fund is an even split between 8 different asset classes iirc. You could think about an asset allocation that makes sense to you, or look at a site like myindex.jp to see what combinations of assets classes give a risk/reward balance that you like and then buy funds accordingly. You can plug in the balanced fund asset allocation there too and see how it compares with different combos.

[tamaplanian]

Thanks for this.
Two other good balanced funds I have been looking at are:

ｉＦｒｅｅ 年金バランス - 25% Japan Bonds 25% Foreign Bonds 25% Domestic Shares 25% Developed Countries Shares

たわらノーロード　バランス - this offers three different levels of risk to choose from and includes more diversification - REIT, Emerging marketing as well as currency hedging

You can replicate these by investing in individual funds and adjusting to your preferred level of risk and types of asset but very convenient if you can find the mix you want in a fund like these. Investment costs in these are pretty low too at 0.143％

With inflation in the States seeming to cool only a matter of time before the Fed starts to lower interest rates and the Yen will start to strengthen.

[sutebayashi]

With inflation in the States seeming to cool only a matter of time before the Fed starts to lower interest rates and the Yen will start to strengthen.

This is a popular topic of late.

Personally I’m taking the other side of that wager.

And even if the yen does strengthen, does it strengthen from 158 whereabouts it is today, or from 170 or wherever it might be when the tide finally does reverse?

[Deep Blue]

Personally I’m taking the other side of that wager.

Why?

[sutebayashi]

Because I don’t think a few rate cuts from the FOMC is going to cut it for the yen.

[Deep Blue]

What do you think it will take?

[beanhead]

I’m actually tracking ahead of plan and think it’s a good time to switch out from some funds and lock in gains, especially those derived from the weakening of the yen.

However I don’t want to just sit on cash, prefer something where I can still get some return. Something like a balanced fund.

When will you need to use the money?
Early 50s = potentially stop working 10 years or so from now? And then use for another 20 years maybe? If so, your horizon is still pretty long, and it seems a bit early to start consolidating those gains.

If you are on course to retire in the net few years, then your plan is more sensible. But still worth considering about the length of time the portfolio needs to sustain you.

No recommendation on balanced funds from me, sorry. I haven't see one I like.

[tamaplanian]

So Im on track to be able to semi-retire in a couple of years - 55 is the original target but Im ahead of plan so could probably do before that.

The dream would be to get laid off around that time so i could take a package and then collect unemployment insurance.
However that probably wont happen so i will probably need to quite voluntarily and then apply for unemployment insurance and figure out my next move.

To be honest Im not sure what i want to do next but after I quit my current job i would be looking just to pay for living expenses - and not wealth accumulation. Ive been living the corporate life for so many years now i just want to do something different.

I would still keep some investments in index growth funds S&P 500 etc but at this point start to shift a proportion into a more defensive posture.

Yes I believe once America begins to lower its interest rates the Japanese Yen will strengthen and while it may take a few years I think we will eventually get back to the 110 mark. Just my view of course but I believe we at at an extreme right now, just like when the yen was at around 70 yen to a dollar. This is driven primarily by the gap in interest rates - once these gaps begin to normalize so too will the exchange rate.

[sutebayashi]

What do you think it will take?

Quite a lot… I can’t imagine much happening very quickly.

I may be completely wrong and with a few rate cuts overseas people will dump their foreign currency for yen. I won’t be one of them, but will try to remember to tell you if I change my mind.

The other aspect to this is that’s it an ugly contest. It’s not like the US is a the paragon of virtue with regard to its currency’s management either. But I prefer dollar to yen, in the competition between uglies.

I’ve been increasing my gold exposure as a result. It doesn’t yield anything but it doesn’t get printed by central bankers either.