If I buy a fixed portfolio of asset of ETF indexes for many years but some of the ETF indexes are not doing well in some years, should I sell and buy others or keep buying to rebalance? - Seedly

Investments

Asked by Anonymous

Asked on 21 Aug 2018

If I buy a fixed portfolio of asset of ETF indexes for many years but some of the ETF indexes are not doing well in some years, should I sell and buy others or keep buying to rebalance?

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Ng Lip Hong Kyith
Ng Lip Hong Kyith, Chief Editor at Investment Moats
Level 4. Prodigy
Answered on 21 Aug 2018

When you start this, you should have an idea why you buy the ETF that forms your portfolio. So typically folks would want to cover on a global context. Say

  1. International Stocks
  2. US Stocks
  3. Singapore Stocks
  4. Singapore Bonds

Why the above 4? it is an example but you have a strategic, or high level reason. Typically, the idea is that all 4 over time, are like savings deposits. They have a positive expected return which means that over time their compounded rate of return is positive. It is just that over time, they are volatile. there are some years they are under performing there are some years they do much better.

The ideal strategy here is to rebalance those that are doing well into those that is doing not so well.

Or if you have capital injection, prioritize injection into the ones that are not doing so well.

This is a systematic buy low sell high.

Now if you have no idea what is your strategic idea in the first place, then its more challenging to answer the question above.

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Nicholas Chan
Nicholas Chan
Level 5. Genius
Answered on 18 Sep 2018

If you believe in reversion to the long term mean, then yes, you should rebalanced. However if u believe there are fundamental shifts that have permanently resulted in the lower performance, then no.

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Jay Liu
Jay Liu, Diploma in Accountancy at KHEA
Level 6. Master
Answered on 18 Sep 2018

Go into depth of the ETF holdings. Determine whether why is it not doing well. Decided whether to sell if off, holding it, or buying more. Alternativelt if there's not much of capital gains, but stable, you can look at collecting dividends instead.

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Zeeeee
Zeeeee
Level 4. Prodigy
Answered on 18 Sep 2018

Sometimes it is about not timing the market and just letting it rise and fall over the decades, enjoying long term benefits eventually

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Good Day Every Day
Good Day Every Day
Level 6. Master
Answered on 18 Sep 2018

Have a portfolio consisting of Singapore and international equities, bonds and commodities etf and rebalanced every half yearly or every quarterly depending on the market situation.

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Luke Ho
Luke Ho, Venture Capitalist at CFX
Level 6. Master
Answered on 18 Sep 2018

I'm glad you asked because thousands of people like you won't. They'll panic and sell, because its tradable, which is where banks and securities get their money from. Liquid money is a bait.

If you did your analysis prior to the purchase, stick with it.

If it hasn't fallen out of a historical drop, stick with it.

If you still feel really insecure, start to dollar cost average it.

But don't change the investment objective. If you don't have one, make one. Otherwise investing is going to be a largely unsuccessful, flip coin glorified bank account. If you've been investing for some time and haven't been making money, get a review.

Do drop me a PM if you'd like to consider diversifying for the long term, or for someone to see specifically whats going on there. Otherwise, keep going. It's normal.

https://www.facebook.com/luke.ho.54

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Marcus Goh
Marcus Goh
Level 3. Wonderkid
Answered on 22 Aug 2018

Learn about the underlying fundamentals and company of the index ignore short term volatility and more on long term investment.

For starters, you can explore:

1) Singapore ETF (Home Ground Advantage where we grew up using these companies product and services)

2) US ETF (Global Coverage of companies that have presence around the world)

Before you buy, ask yourself if this market is going to grow moving forward and you will get your answer from there :)

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