RetireJapan

What? No REITs?

The longer your retirement is, the more it makes sense to keep in assets which will grow above inflation (ie equities, equity funds).

Yes, you are right to make sure you have some Japanese assets to reduce FX exposure.
But this could be just a larger pile of cash, to cover a few years worth of spending.

There is value in keeping things simple, and not getting caught in analysis paralysis.

ChapInTokyo wrote: ↑Fri Jan 10, 2025 12:10 pm

Tsumitate Wrestler wrote: ↑Fri Jan 10, 2025 11:38 am

Tsumitate Wrestler wrote: ↑Fri Jan 10, 2025 7:41 am Just copy a target date fund that matches your personal risk preference, or better yet just invest in said fund.

Did you just select a fund at random?

https://investor.vanguard.com/investmen ... file/vttsx

The asset allocation projections can be seen here.
https://acrobat.adobe.com/id/urn:aaid:s ... 5baec6f0dc

I would choose a Vanguard fund if I was living in the US, spending my money in USD...

beanhead wrote: ↑Fri Jan 10, 2025 1:54 pm What? No REITs?

The longer your retirement is, the more it makes sense to keep in assets which will grow above inflation (ie equities, equity funds).

Yes, you are right to make sure you have some Japanese assets to reduce FX exposure.
But this could be just a larger pile of cash, to cover a few years worth of spending.

There is value in keeping things simple, and not getting caught in analysis paralysis.

Well, REITS as well as commodities and private equity are also in my portfolio, just as they are in GPIFs so it's not a puritan 4 asset class portfolio...

I'm not a believer in the sort of 100% bonds, CD and MMFs retirement portfolio that you see in something like the DC Nissay Target Date 2025 Fund. I've built up my nest egg with a 60% stocks 40% bonds market cap weighted global portfolio and am now thinking of changing to a more conservative allocation with less volatility with something like the GPIF allocation. That model is still a fairly typical balanced fund in my mind, since it has 50% stocks and 50% bonds. The main difference is the overweighting (in market cap terms) of yen denominated assets which reduces risk for the portfolio. 4% expected return against that risk profile is not bad at all imho.

This table from the explainer article "GPIF（ジーピーアイエフ）の分散投資（2）" on the Daiwa Securities website shows how the 4 asset equally weighted allocation provides relatively good returns for much less risk compared to say a 100% stocks portfolio.

On second thoughts, the allocation that Vanguard uses for their UK based Vanguard Target Retirement Fund 2020 might be something I can adapt to my portfolio.

This one has less of a home country bias than GPIF (only 1/3 of bonds and 1/4 of stocks is UK, rather than the GPIF's 1/2 of each asset class to Japan).

I suppose that for a retirement portfolio, the 60:40 allocation between bonds and stocks might be better than the GPIF's 50:50.

So a revised allocation might be something like this...

• 40% International Bonds

• 20% Japan bonds (2/3 of which in inflation-linked JGBi funds)

• 30% International stocks

• 10% Japan stocks

ChapInTokyo wrote: ↑Sun Jan 12, 2025 6:55 am

So a revised allocation might be something like this...

• 40% International Bonds

• 20% Japan bonds (2/3 of which in inflation-linked JGBi funds)

• 30% International stocks

• 10% Japan stocks

It's interesting to see that this retirement fund uses GBP exchange rate hedging for its International Bond exposure (just as US Vanguard's taget date funds uses VTIIX Vanguard Total International Bond II Index Fund Institutional Shares, which is USD hedged, for their international bond allocation).

* Vanguard Global Bond Index Fund 19.17%
* Vanguard Global Aggregate Bond UCITS ETF 19.01%
* Vanguard U.S. Government Bond Index Fund 1.31%
*Vanguard U.S. Investment Grade Credit Index Fund 1.29%
* Vanguard Euro Government Bond Index Fund 0.96%
* Vanguard Euro Investment Grade Bond Index Fund 0.55%
* Vanguard Japan Government Bond Index Fund 0.35%

So, I guess I should really look at JPY hedging my international bond allocation but perhaps hold off on that until the short term interest rate difference between Japan, the US and the Eurozone become a bit more conducive to hedging...

Allocation idea for my portfolio during retirement:

• 40% JPY hedged International Bonds

• 20% Japan bonds (2/3 of which in inflation-linked JGBi funds)

• 30% International stocks

• 10% Japan stocks