RetireJapan

When the yen was around 160 yen to the dollar, I wouldn't have thought we'd be at 141.31 yen to the dollar so quickly... definitely something to be said for currency hedging your global bond exposure...

The approach for most Japanese Bogleheads (ala Random Walker: https://randomwalker.blog.fc2.com/) is Global Equities+ JGBs/Cash for this reason.

50/50, hedged and non-hedged seems reasonable.

I wonder how long bonds shares purchased at 160 will be underwater?

In my iDeCo I am 50:50 in to eMaxis Slim All Country + Tawara Developed Markets Bond Fund Currency Hedged and the bonds are still above water unlike the stocks fund which is unhedged (I also have inflation hedged JGB fund too btw).

ChapInTokyo wrote: ↑Wed Sep 11, 2024 12:04 pm In my iDeCo I am 50:50 in to eMaxis Slim All Country + Tawara Developed Markets Bond Fund Currency Hedged and the bonds are still above water unlike the stocks fund which is unhedged (I also have inflation hedged JGB fund too btw).

Which is exactly what you would expect from a hedged fund when the yen is strengthening.

The knock-on effect from currency appreciation and depreciation really makes fixed-income an undesirable vehicle for those investing in yen terms in my opinion.

All those Japanese portfolio simulators keep trying to convince me 100% global equities is risky, and I need to diversify into .....domestic stocks and REITs?

Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

ChapInTokyo wrote: ↑Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas

RetireJapan wrote: ↑Thu Sep 12, 2024 12:06 am

ChapInTokyo wrote: ↑Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas

Indeed, Emaxis Slim All Country represents EM and Japanese equities at the market rate. The REIT exposure is up for debate though.

Also, I do not think anyone is looking at 1 month periods with these kinds of investments. The recommended minimum target period for a global equity approach is a decade at least.

If you think about the yen-dollar exchange rate over the last 35 years or in relation to purchasing power parity, the yen is till incredibly weak.

RetireJapan wrote: ↑Thu Sep 12, 2024 12:06 am

ChapInTokyo wrote: ↑Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas

If a particular asset class moves up when the world index goes down and vice versa, that reduces the portfolio volatility. It is a different objective from keeping to the straight and narrow of market cap weighting, but there will be diversification benefits from adding lower correlation asset classes.

Tsumitate Wrestler wrote: ↑Thu Sep 12, 2024 12:12 am

RetireJapan wrote: ↑Thu Sep 12, 2024 12:06 am

ChapInTokyo wrote: ↑Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas

Indeed, Emaxis Slim All Country represents EM and Japanese equities at the market rate. The REIT exposure is up for debate though.

Also, I do not think anyone is looking at 1 month periods with these kinds of investments. The recommended minimum target period for a global equity approach is a decade at least.

Personally I am over weighting Japanese equities as well as world small cap value companies in my portfolio. These will not move in lock step with the companies included in the AWCI index.

As for the 1 month period of the google finance chart, I could not get a 10 year chart because of the inception date of the ETFs, but here is a 5 year chart. I think that you can see that correlation is not high among these asset classes.