@drfazl Comparing SPY to the PSEi makes sense in this case as we don't seem to have alternative index funds other than those that track the PSEi.
But what you bring up is valid. PSEi as an index is very flawed as it only captures the top 30 corporations in terms of market cap, making it more susceptible to swings
@gautamallahbadia Any country specific index fund is not an optimal index to hold on a risk adjusted basis. A truly passive investment is buying a whole market global index
@drfazl And that's the point of comparing PSEi to the SPY. Both are country specific. Both are targeting a sub group of the entire Market. Both have index tracker funds.
It's asking the relevant question, "Sa pinas bako mag invest o sa labas?" which a lot of newbie investors have asked themselves. And I've seen plenty of people recommend buying PSEi ETFs.
@drfazl Diversification is also just one of those calls an investor must make. Three years later from your post you've proven correct in that Pse is sideways for another 3 years, making it a total of 10 years stagnation. American etf stocks meanwhile have shot to stratosphere in valuations. As the most seasoned investors know, valuations way above the historical trend dramatically increase the risk of a crash over the next 10 years. This does not mean it will happen but for the last 7 times US market has been this much above the historical trend it had been followed by a 10-40% decline over 10 years 6 out of 7 times. The 7th time it was stagnant. This does not mean that is what will happen 10 years later this time as past performance is not necessarily indicative of future performance but just saying that aside from diversification, gauging market risk is critically important as well!
