The idea of building the Portfolio from the perspective of another country is pretty interesting and is possible with a couple of countries using ETFs including Australia.
The cash portion is simple with the Rydex Currency Shares Australian Dollar Trust (FXA). It captures the movements of the currency and has a yield that is generally inline with rates set by the Reserve Bank of Australia.
With the equity allocation they usually have a broad large cap fund in mind. There are at least a couple of those to choose from with the iShares MSCI Australia Index Fund (EWA) and the WisdomTree Australia Dividend Fund (AUSE). There is no reason though that the equity portion can't take in more than just a single broad based fund. There is small cap exposure via the Index IQ Australia Small Cap ETF (KROO) and you might find a materials ETF out there that might be enough of a proxy for Australia. Of course there are also individual stocks from just about every sector to choose from as well.For the fixed income portion there is the long standing and client holding Aberdeen Asia Pacific Income Fund (FAX) which is usually heaviest by far in Australian debt and the WisdomTree New Zealand Dollar Fund (BNZ) is due to convert on Monday to the WisdomTree Dreyfus Australia & New Zealand Debt Fund.
As for gold, I believe there are funds in other countries that price gold in other currencies and while I could see a couple of these coming to the US at some point I think any that exist now would be difficult to buy logistically.
This is sort of doable with Canada also with the Global X Canada Preferred ETF (CNPF) as a proxy for the fixed income--we own a few shares of CNPF. It is possible to do this with China now that there are a couple of Dim Sum bond ETFs trading however I would want no part of the Dim Sum bond funds. The concept of foreign Permanent Portfolio will get easier as more foreign fixed income ETFs come to the market.
In the real world there is no reason to be limited to one country and there is no reason not to have a fully diversified equity portfolio instead of just one broad index fund and there is no reason not to have a fully diversified fixed income portfolio instead of just owning something like TLT. And as I have said 25% in gold is way too much for my tastes but obviously some people are comfortable with that much (or at least they were before this big plunge).
That was an insanely clutch homerun by Dan Johnson of the Tampa Bay Rays last night.
8 comments:
50% in gold may make sense over a short period and a short could be several years. But, 25% in gold permanently is dumber than dirt. Like wise 25% in cash permanently is equally stupid even if 100% cash is best at times.
You must be running out of things to write about as your investing approach is solid.
Interesting portfolio idea; I find it interesting how other people implement ideas like this.
The games last night were crazy. I couldn't believe Longoria homered literally 2 minutes after Papelbon blew the save.
I believe CEF holds gold and silver denominated in Canadian dollars.
running out of things to write about? I find utility in exploring all sorts of approaches
SD last night was truly amazing.
Longoria was clutch beyond clutch and the Red Sox loss was Papelbonian ™
There's a lot of subtlety in such a simple concept. Under normal times returns seem to range from blah to OK. The concept shines during tough times - hyperinflations, depressions, civil unrest. Not many asset constructs can make that claim, especially one that requires so little time and effort to maintain.
Rich
How bout those RED SOX!!!!! Gag, choke, flop, collapse.....
I would be reluctant to participate in any permanent portfolio that focuses on one country's securities.That seems to fly in the face of Browne's concept.
Am I missing something?
T
T, what are SPY or VFINX if not country funds?
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