Hey everyone,

This week: why I stopped using a robo-advisors’ custom-built portfolios once my holdings crossed $100,000, an easy way to earn more KrisFlyer miles on spend you're already making, and why I'm not overweight REITs right now despite what a lot of readers keep telling me.

Let's get into it.

A few of you asked about Vanguard's new ETF drop, which, I'll admit, is the sort of thing I get excited about nowadays!

Vanguard just launched three new UCITS ETFs, including the FTSE Global All-Cap ETF, with the ticker “VALL”, at an incredibly cheap 0.07% a year expense ratio.

There’s actually some differentiation here from VWRA, and not just on the fee side. VWRA only holds large- and mid-cap stocks, around 3,700 of them, and covers close to 95% of the global investable universe.

Meanwhile, VALL is a true all-cap fund, and will hold roughly 7,000 stocks, with around 10% of the ETF in small-caps, that VWRA simply doesn't have. VALL will give you exposure to 99% of the global investable universe.

Same rule (as always) applies if you already hold VWRA though: don't sell to switch. The savings will easily get eaten by trading costs, and VALL doesn't support fractional trading yet on most brokers.

The upshot? You can't automate monthly buys into it the way you can with VWRA. Once it does, then I think VALL will likely become the new default choice for an all-in-one global equity ETF.

Where it does make sense right now is new money, especially if your broker doesn't support fractional trading on European exchanges. VALL trades at around US$5 a share, while VWRA trades for close to US$195.

That price gap alone makes VALL far more accessible if you're investing without fractional support (it also makes manual buys at this price point a lot easier).

Here's my honest take on the small-cap tilt, though: with the VALL weighting, it doesn’t move returns all that much.

On a 3- and 5-year annualised basis, the FTSE Global All Cap and FTSE All-World indices have tracked pretty closely, since both are still dominated by the same US mega-caps regardless of that slice of small-cap exposure layered on top for the FTSE Global All Cap.

If you actually want small-cap exposure to matter, I'd rather hold a VWRA/ACWD as the core and run a small-cap sleeve separately. Then you’d be able to size it deliberately as a percentage of your overall equity allocation, not as an automatic 10% position tucked inside a primarily large- and mid-cap ETF.

Vanguard's new global small-cap UCITS ETF, at 0.22% p.a., could be a cheap way to do exactly that.

Anyway, definitely food for thought but, at the end of the day, lower fees and more choice are things to celebrate for all of us as investors!

This week's video: the exact ETFs I'd buy in Singapore right now, and the ones I'd tell you to stop buying immediately.

On the buy list: my two picks for a global core, a Singapore exposure pick, gold, and the one fund I'd use inside SRS.

On the skip list, I explain why robo-advisors stop making sense once your portfolio crosses roughly $100,000. And I use Interactive Brokers for exactly this reason.

Once you're past the size where a robo-advisor's fee starts to meaningfully matter (remember, fees compound like wealth does), IBKR gives you global access to the ETF building blocks - allowing you to rebalance nearly the same portfolio yourself for a fraction of the cost. Open an account here.

I also cover the mistake I see constantly: people in Asia buying US-listed ETFs like VOO or QQQ, US Estate Tax traps, and why I’m not switching to the new VWRA competitors.

If you're in the miles game in Singapore, you're almost certainly earning KrisFlyer miles already. The question is whether you're leaving easy ones on the table.

Kris+ is a free app, download it from the App Store or Google Play, link it to your KrisFlyer number, and you can earn up to 9 miles per dollar on a range of dining, retail, and leisure partners.

Some of those partners also give you a discount, sometimes 10% to 15%, just for paying through the app.

Two things worth knowing before you use it:

This only takes 10 minutes to set up and it's free money for spend you're already making. This is not sponsored, but I just think it's one of the easiest wins available if miles matter to you.

I keep hearing the same thing from readers: they want to be overweight REITs right now.

Before I get into why I don't agree, quick context if REITs aren't familiar. A REIT lets you own a slice of real estate; whether that’s malls, offices, or data centres, and collect a share of the rental income, without buying property yourself.

Because REITs are required to pay out at least 90% of their taxable income to unit holders, and that income comes as fully tax-free dividends in Singapore, they've built a reputation as a reliable income vehicle.

The traditional portfolio guideline is to cap REITs at 10% of your overall portfolio, though plenty of local investors run well above that. Being "overweight" just means holding more of something than a balanced portfolio normally would.

It’s a deliberate bet on the asset/sub-asset class, which is exactly the bet a lot of readers are asking about right now.

Interest rates have stayed elevated longer than a lot of people expected, and I don't think they're coming down meaningfully anytime soon. In fact, I’ve said this before, but I believe we’re going to be in a structurally higher rate environment in the next 5-10 years.

And at the latest Federal Reserve (Fed) gathering in Jackson Hole on Friday, comments from new Fed Chair Kevin Warsh made it clear that the Fed is intent on bringing inflation down towards 2%.

Indeed, the market is now pricing in a 55% to 60% chance of an interest rate hike in September, up meaningfully from the 35% odds before the Jackson Hole speech.

This higher-than-expected rate environment hits REITs from three directions at once:

A lot of REITs already cut distributions after the 2022 rate hikes, and I don't see a clean path back to sustainable growth for at least another 12 to 18 months (or until there’s a less hawkish Fed).

Of course, this is all “generalised” because there will be select REITs that can still grow, and have grown, their distributions even with higher rates. All in, though, size matters more than usual here. If you're going to hold REITs at all in this environment, “bigger is better” in my view.

Smaller REITs face more uncertain revenue visibility, a harder time refinancing debt, and a harder time getting out of a tough position if they need to. A large, well-capitalised REIT can better absorb a rough rate environment.

My take: REITs definitely aren't broken, and I'm not saying avoid them entirely. But "overweight REITs" as a strategy right now is going against the actual rate environment, not working with it.

If you already hold REITs, I'd personally lean towards the bigger, blue-chip names, don’t stretch for yield, and temper expectations on distribution growth until the rates picture looks like it’s actually going to either stay flat or ease.

1. Investing Made Simple: A self-paced course that walks you through building a proper investment portfolio from scratch. ETFs, allocation, brokers, and the mindset to stay consistent. Everything you need to start and keep going. Join here.

2. Miles Made Simple: A strategy guide for earning and redeeming KrisFlyer miles the right way. If you're flying out of Singapore and not optimising your credit card spend, you're leaving a lot on the table. Get the guide here.

3. Got a question? Submit it here and I might answer it in a future edition.