Concerning asset class allocation for an aggregate of investors it is not accurate in any way. Like you pointed out, they may use other instruments like single stocks, bonds, real estate, physical gold, cash etc in their allocation. How did I come about the Xetra allocation: Xetra publishes a spread sheet https://www.deutsche-boerse-cash-market ... tatistiken, I imported the tables into python pandas dataframes, aggregated them, categorized the intruments via their benchmark index into the different asset classes (This was the main part of the work, a lot of indices can be sorted automatically since they contain words like bond, MSCI World or similar. The remaining indices had to be categorized manually.) and summed up by asset class. So it is what it is: how all the investors are allocated with respect to ETPs available through Xetra. It does not say anything about how you should be allocated because the aggregate allocation into ETPs does not tell anything about you, your ability, willingness ...Interesting, thank you for the data, very usefull. I did not expect people have so much stocks. Maybe they have Bonds or cash more often in other financial vehicles than ETPs, than they have stocks in ETP's.... so how accurate ist that concerning the asset allocation and not the "packaging"?The Xetra asset class allocation, that is the allocation of all investors in Xetra ETPs (more than a trillion $$) is roughly:
Stocks 76%
Bonds 17%
Gold 5%
(the missing 2% are other commodity ETCs, trading ETFs, cash ETFs)
Yesk I am a European Investor, from Germany.
But still there maybe is some wisdom of the crowd in this allocation since all the investors are free to use these ETPs or any other instrument. They diffuse in and out of the available investment instruments and this is what they end up with. Some kind of stable point. They as an aggregate and with all their freedom to invest do not end up with 100% stocks.
What I wanted to say: Going from 60% (global) stocks and 40% (global) bonds (which is kind of the global market allocation, see this post: viewtopic.php?p=7965058#p7965058) to 100% stocks after a history of unsuccessful market timing sounds like another shot at market timing.
But as others pointed out: If you are a civil servant of the government (Bundesbeamter) and to a lesser extend also if you are a civil servant of a state (Landesbeamter) you and your income are basically a bond (a bond from a single issuer with idiosyncratic credit risk, the state of Northrine-Westfalia is in the top 50 of the largest debtors in the Vanguard Global Aggregate Bond UCITS ETF). Your pension will likely cover your basic needs and it is not far from reasonable to go "All in".
Simplicity and no rebalancing is a huge factor. There are no tax sheltered retirement accounts as of now in Germany. I struggle with rebalancing myself since it leads to serious capital gains tax hit. As somebody said (was it Warren Buffett or Rick Ferri?, I forgot) Investing is easy, taxes make it hard.
How much you will have to pay in taxes for switching the allocation and how long it will take you to recover from that tax hit? The 15% Gold gains could be tax free if holding for longer than 1 year via ETCs that offer physical delivery (Xetra Gold, Euwax Gold, and some others), the bonds should have not gained very much so no big tax hit there. Maybe you are lucky with taxes and won't have to pay much.
A note on bond ETFs and the fact that the largest debtors are the largest holdings: the largest debtors have the ability to sell that huge amount of debt to investors because of their creditworthiness. So the largest debtors are usually also the most creditworthy (up until some kind of debt crisis that cannot be predicted and timed by the investor) If your income and pension depend on a German state like Northrine-Westfalia and you trust it to pay you in the future and this state is a tiny part of some global aggregate bond fund with numerous debtors having a better creditworthiness than Northrine-Westfalia, so how dangerous is such a Bond-ETF regarding default risk? I would say not very. It is dangerous with regard to inflation though. 60%/25%/15% stock/bond/gold is a good moderate allocation. Not knowing anything in particular, just guessing: If you factor in your real estate (supposably also worth about 10x earnings) and the present value of your pension (also 10x earnings) starting in twenty years, your portfolio probably looks more like 20%/40%/5%/35% stock/bond (including present value of pension)/gold/real estate right now. Going to 100% stocks would change it to 33%/33%/33% stock/bond (including present value of pension)/real estate. Worth to consider if you can stick with the stocks through thick and thin.
Statistics: Posted by tre3sori — Thu Sep 12, 2024 12:52 am — Replies 26 — Views 2229