Selling off NZ equities in favour of global exposure

[herbert240]

Wifes financial adviser is suggesting she sell AIR, NZ, FBU, IFT, SPK, TPW, VCR, ZEL and AFI (and 2 LPT's which I wrote about in another thread)
She inherited a shares and bonds portfolio from her father and decided she would like her investments managed.
The reason for the proposed sell off is that the adviser reckons she needs to have global exposure and has suggested a raft of Australian shares plus the likes of Berkshire Hathaway etc.
I don't really see any "dogs" in the existing shares with the possible exception of AFI and can't get enthused about getting into overseas shares considering the currency risks and tax treatment. To me it seems little would be gained and I feel she may be being "taken for a ride" Does anyone agree/disagree with my thoughts?
Cheers,

[BeeBop]

Personally, I wouldn't let anyone else manage my money. But getting global exposure is a good idea.....how about she sell some of her shares and buy into The City of London fund (listed, or used to be, on the NZX) and or purchase a NZ listed Aussie smart share EFT. Possibly good timing for the UK and Aussie market for exchange rates too. If you have the wherewithal, the UK market is dynamic and interesting to work in yourself but you would have to manage the total capital and have a low cost international broker. Check out TCL.NZ if it is still on the market.

[peat]

did I hear a butter machine ?
yes global exposure is good, and some of those individual stocks could be reduced, but mass transition sniffs of butter.




churn
noun


a machine for making butter by shaking milk or cream.

[macduffy]

I'd agree with you, Herbert, particularly if income from those shares is important to your wife. A modest proportion of overseas exposure is desirable but I reckon the argument about the need to strongly diversify away from NZ's miniscule share of the world's available equities and bonds is rather overstated/overemphasised considering that most of our expenditure occurs in NZD.

[herbert240]

Thanks guys, I should have elaborated and said that my wife and I are recently retired so income is more important to us than growth. For that reason I can't see the logic of investing in Berkshire Hathaway (which doesn't pay dividends)Wisdom Tree Japan Hedged Equity Fund and SPDR S&P 500. Forecast gross income for these 3 is $798.00NZ on an outlay of $58409.00NZ. Go fgure!

[BIRMANBOY]

Maybe you could change if you had a written guarantee that you can do better with the new regime? Yes , I thought not. NZ has a very competitive return on its offerings on the NZX. Since you are retired and looking for income I cannot see any advantage in moving elsewhere. What return are you getting now?

[Hoop]

AGREE TOTALLY...

Investor Maxim:..Never invest in something you don't understand...(or not comfortable with)

Financial advisors love for you to invest in other things you don't understand, makes them feel important and needed..eh;).

Personally I never let anyone else touch my money...agree with Beebop.

Some financial advisors are just salesman pushing their company's financial service products..From the posts you have written there's a huge chance you are financially smarter than them...Your post#5 proves this point, that Financial advisor has no idea about creating an investment portfolio to taylor-suit you and your wife's needs...

They say having some global exposure is prudent....... It's a textbook thing to "not put all your eggs in one's basket" ... negative correlating instruments can do the same job if global exposure doesn't suit your needs.

If you have been successful in the past, and had been comfortable investing in NZ high yielding blue chips in the past, then why change now???..

If it "aint broke don't fix"..

[Snow Leopard]

Wifes financial adviser is suggesting she sell AIR, NZ, FBU, IFT, SPK, TPW, VCR, ZEL and AFI (and 2 LPT's which I wrote about in another thread)...
...The reason for the proposed sell off is that the adviser reckons she needs to have global exposure and has suggested a raft of Australian shares plus the likes of Berkshire Hathaway etc...


...on an outlay of $58409.00NZ...

I am very dubious that you are getting good financial advice.

Best Wishes
Paper Tiger

[Beagle]

Wifes financial adviser is suggesting she sell AIR, NZ, FBU, IFT, SPK, TPW, VCR, ZEL and AFI (and 2 LPT's which I wrote about in another thread)
She inherited a shares and bonds portfolio from her father and decided she would like her investments managed.
The reason for the proposed sell off is that the adviser reckons she needs to have global exposure and has suggested a raft of Australian shares plus the likes of Berkshire Hathaway etc.
I don't really see any "dogs" in the existing shares with the possible exception of AFI and can't get enthused about getting into overseas shares considering the currency risks and tax treatment. To me it seems little would be gained and I feel she may be being "taken for a ride" Does anyone agree/disagree with my thoughts?
Cheers,

I agree with all the other posters and their comments and I think the financial advice you're being given is primarily in the financial advisors best interests, (will generate a lot of commission).
Seeing as you're retired and need the income I'd be sticking with the portfolio you have inherited for now, looking to get some professional advice that's directed towards your needs and not your advisors needs in due course.

No hurry, I like most of what you have. I especially like what another poster said about all your costs being in $N.Z. and seeing as you are retired and looking for $N.Z. income to have a decent standard of living in retirement I'd fire that financial advisor right away and as a first step spend a lot more time on here.

[777]

And AFI gives you exposure to the Australian market. I have held them since 1996 with reasonable dividend flow. They have been around since 1928 or there about. I would not consider them a dog.

[Snoopy]

Wifes financial adviser is suggesting she sell AIR, NZ, FBU, IFT, SPK, TPW, VCR, ZEL and AFI (and 2 LPT's which I wrote about in another thread)
She inherited a shares and bonds portfolio from her father and decided she would like her investments managed.
The reason for the proposed sell off is that the adviser reckons she needs to have global exposure and has suggested a raft of Australian shares plus the likes of Berkshire Hathaway etc.
I don't really see any "dogs" in the existing shares with the possible exception of AFI and can't get enthused about getting into overseas shares considering the currency risks and tax treatment. To me it seems little would be gained and I feel she may be being "taken for a ride" Does anyone agree/disagree with my thoughts?


Herbert, I would venture to suggest that your Advisor knows a lot more about you and your wife's personal circumstances than a whole lot on anonymous handles on this Sharetrader forum. There may be reasons your advisor is suggesting these changes that are not apparent to us on Sharetrader given what you have not disclosed.

For example, you and your wife are a 'team'. So no doubt the advisor is taking into account your own investments as well as part of the overall advice package. You and your wife or both may have other pension income outside of NZ Super. If your income, excluding shares, is sufficient to meet your propsed outgoings on a normal daily basis, the advisor may be trying to get you some more capital growth to inflation proof future income in the medium term. You also didn't mention if these proposed sales amount to all of your wife's portfolio, or if your advisor is suggesting that some other shares she holds be kept.

You should also be aware that the price of high income shares all over the world (including NZ) will almost certainly be hit as interest rates rise globally. However the actual cash dividends are less likely to be affected. But be prepared tp stomach, say around 15% drop in the net worth of your portfolio, for a while. Also NZ to 'almost any other currency that I can think of' exchange rates are very favourable for offshore investing at the moment. So if you were going to move some funds overseas, now is historically speaking a very favourable time. This is not to say of course that things might get even more favourable in the future!

Having said this you already have 'AFI' for exposure to the Oz Market and 'Vanguard Consumer Discretionary' for US exposure. And Air New Zealand, with their long haul services and Fletcher Building, with exposure to the Australian and US market also increase the overseas footprint of your share portfolio as it is now. So you already have significant overseas exposure, depending on the relative size of each investment overseas investment in relation to your total portfolio.

SNOOPY

[GTM 3442]

Thanks guys, I should have elaborated and said that my wife and I are recently retired so income is more important to us than growth. For that reason I can't see the logic of investing in Berkshire Hathaway (which doesn't pay dividends)Wisdom Tree Japan Hedged Equity Fund and SPDR S&P 500. Forecast gross income for these 3 is $798.00NZ on an outlay of $58409.00NZ. Go fgure!

The New Zealand Financial Services sector leads the way in the provision of robo-advice.

It seems that the customer is asked to complete a questionnaire to establish their "risk profile". The results of this are used to determine which of the adviser's standard model portfolios the customer should be shoe-horned into.

Shoe-horning the customer into a generic model portfolio generates a list of investments which it is suggested/recommended that the customer should buy. The process is pretty well automatic, except that the customer's paying human rates for robot advice. This, I believe, is called "tailoring". . .

I suspect that a highly-trained, highly-qualified professional has come up with a "solution" which is precisely "tailored" to your needs.

[herbert240]

Cheers to everyone who offered advice/comments. We had a visit with financial adviser during the week and taking into account the above viewpoints and our own thoughts we have decided to stay largely with existing portfolio and a much smaller global exposure than proposed. Thanks again...it has been a valuable learning exercise.