ING Super?

[barronkanetaylor]

I have been debating back and forth between the different super providers who will let me buy etf's rather than using their mutual funds - here is my thought process / background:

• I was with an industry super fund, taking 2% per year, got pissed off and decided to move.
• I only really want to buy-and-hold ETF's for the next 30+ years - ING had the most vanguard funds, and since all the offerings seems to cap you to 20% per ticker and 80% in shares, I went with them so I could at least find 4+ ETF's that aren't expensive. If there is something else I should consider, I am all ears.
• I only started working at a 'real' job about a 18 months ago, and I have been capping contributions ( 30k/year ). Currently at 45k in super.
• I am currently 100% in cash while I sit here deciding.

From reading - I have seen people saying the tax burden of selling locks them in (ie, paying tax to move mid-worklife vs waiting till 60 to take advantage of 0% tax transition-to-retirement). Should I be concerned about this? At some point in my career, I will have well over 200k in there, which seems to be where people start considering SMSF's?

These are the funds available to me.

I can only contribute 80% of my funds to ETF's, and only 20% of my funds to a given ETF. With that in mind, I have been thinking about something like this:

• Vanguard Total US - 0.05% mer - VTS
• Vanguard World Ex US - 0.14% mer - VEU
• Vanguard MSCI World Ex Aus - 0.18% mer - VGS
• Vanguard Australian High Yield - 0.25% mer - VHY - or VAS, I am not too sure if it matters.
• potentially adding iShares SP500 0.07% mer IVV as a fifth so that I don't keep hitting the 20% max-per-stock cap.
• remaining 20% that has to be with Ing will be my cash/bond split.

This is a paranoid double check - Can anyone spot a gaping hole?

Looking at the breakdown on betterwealth, it seems heavily weighted towards the USA (52% USA, 21% aus, the rest developed markets - I don't really know the best way to get cost-effective exposure to emerging markets if I can't buy more than 20% of VEU). Link

ING set me up with a one-off financial advisor, except he wasn't very helpful - he looked at my cash allocation (I only opened the account and transferred my money from the other super fund a few days ago). His advice was: "I can double your money over your lifetime by putting it in a 0.75% fee mutual fund instead of cash", and wouldn't talk about anything else.

Puppy tax.

 

[wdferry]

@barronkanetaylor No advice but that looks a little old to be a puppy.

 

[barronkanetaylor]

@wdferry He's a puppy at heart, that's what counts right?

 

[grace2018]

@barronkanetaylor I'm also an ING Super customer and have similar problems deciding my allocation.

IEM is a pretty good idea to get exposure to Emerging Markets. The other way is to go more narrow into geographies. I've been thinking about iShares BRIC ETF (IBK)

For me though, the problem is about what to select for the remaining 20% that cannot be allocated to ETFs. Fund Managers generally perform worse than the index after fees. In the SPIVA 2015 report, 71% of Aust large cap managers were beaten by the index, whilst 86% of Aust bond managers were beaten by the index

By that account, I'm thinking that the 20% non ETF should be in Aust equities, since they are likely to perform less bad (so weird I have invest in less bad options) ...

If that is the approach, then I'm thinking of taking out any Aust Equities allocation in my ETF portfolio.

Not sure if that is consistent w your thinking but thought I'd share w you my pain w ING ...

 

[barronkanetaylor]

@grace2018 Hmm, thanks for that - I will look up IEM when I get home.

I had thought that I would leave at least half of that allocation in the fee free cash options (interest, bonds, term deposits), and I have been further debating the idea of putting some in the property fund (Instead of allocating anything to VAP). I haven't checked if you can choose to put a percentage into the 'balanced' option either - ie, 50% high interest, 50% shares, 0% fee.

What makes you lean towards trusting fund managers picking australian equities instead of internationals? Performance as of 2015 December - They beat the 2-3% I received with my existing fund in 2015 in both share categories, so there is that.

 

[grace2018]

@barronkanetaylor Fund Managers accessible by Australian investors (like you and me) investing in International Shares have a worse record (when compared to the index) than FM investing in AU shares.

This is just a statistical point from the SPIVA Report see here

So I think it is more likely that ING's International Shares Investments will be underperforming the relevant international index. At least more likely that their equivalent AU Shares Investments

We can compare the ING Funds w the equivalent Vanguard ETFs. Say ING AU Shares vs VAS and ING Int' Shares vs VGS ...

12 month return to 31 Dec 2015:
AU Shares: ING 4.4% vs VAS 2.8%
Int'l Shares: ING 10.93% vs VGS 12.18%

Unfortunately there is no comparison on a 3 year basis as none of the Int'l shares ETFs have been around for 3 years. This is just an eg obviously as 1 year is not a great point of comparison

 

[heiwa]

@barronkanetaylor I don't know any industry fund that charges 2% fees, I suspect you had some auto insurance which you felt as a cost. The ING shares category is a good product reasonably priced for what you get access too. The yearly fee is going up to $300 but that is still cheap. Broke ridge can be the hidden cost so just be careful there and make sure you have adequate insurance cover.

 

[jemmren]

@barronkanetaylor Have a look at Bogleheads asset allocation, good reading I think you will get some ideas from there. (Percentage in Shares, Bonds/Cash etc.)

For your emerging markets exposure question, there is an ETF on the ING Super shares list that deals directly with emerging markets. (IEM).