1. I’m 64 and looking to diversify my share portfolio (which is currently dominated by quality Australian shares other than 5% of my portfolio in Berkshire Hathaway B shares) to include a greater allocation of international shares and technology stocks. What are your thoughts about the ETF’s IVV and NDQ given the strength of the Australian dollar now? Would you hedge?
If you want broad US market exposure, go for IVV, which tracks the S&P 500. The currency hedged version is IHVV.
If you’re concerned about missing out on the tech sector, I would go with NDQ, which tracks the NASDAQ 100. Tech stocks make up about 48% of the index.
Over the medium term, I think the Aussie dollar will go higher due to weakness in the US dollar, so I would hedge. The hedged version, which trades under ticker HNDQ, is not as liquid and the management fee of 0.51% pa is a little higher.
You could also consider FANG from ETF Securities. 10 stocks (the 5 FANGs plus Tesla, Baidu, Alibaba, Twitter & NVIDIA). Management fee just 0.35%. No currency hedged version.
2. Tony Featherstone mentioned the ASX as one of the seven high quality companies. (see https://switzersuperreport.com.au/7-high-quality-companies-that-are-cornerstones-of-any-portfolio/) Your thoughts on ASX and at what price should we buy it?
I really liked Tony’s article and agree that ASX is a great company. I am not sure that it really has the pricing power he suggests, and, at the moment, it is way too expensive for me. It is trading on a forecast PE of 35.5 times FY21 earnings and 34.5 times forecast FY22 earnings. It has soared in part because of the boom in trading by retail investors, but outside this, there is almost negligible growth.
According to FN Arena, the brokers agree with me. Of the 7 recommendations from the major brokers, there are 7 sells!
The consensus target price is $72.52, some 18.2% lower than the last closing price of $88.70.
3. I’m a 72-year-old retiree with an SMSF very heavily weighted in financials. I understand the bumpy ride since the Royal Commission and now Covid. My concern is post the government stimulus, bad debts may crystallise in 12 to 24 months’ time. Further value and yield reductions? Is it time to reduce /sell? I have been comfortable with my returns, happy with my lifestyle but not sure if I can wait another 5 to 10 years to regain lost value and yield. What should I do?
You haven’t told me how overweight you are!
If you have been comfortable with the returns and can afford to be patient, I would now wait it out. I think the worst is behind them (at least in terms of behaviour and capital), although the Covid-19 problem could be more damaging. That said, they are pretty well provisioned. Huge opportunity still to close branch networks and slash costs.
They are more of a buy than a sell.
4. Telstra’s share price fell today by 9 cents, going under $3. Was there any reason for this?
One of the main reasons is that it traded ‘ex’ its dividend of 8 cents per share. If you buy Telstra now on the ASX, you won’t receive this dividend, which will be paid on 24 September.
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