Replies to post #45279 on A.I.M. Users Bulletin Board (AIMUSERS)

[karw]

Hi ls7550,

the official PP holds domestic stocks

A possibility is the local country index, however living in a small country, that has an open economy, with a main index which does not include all sectors, maybe a european index(stoxx600)is better, or a euro-based index.

This PP will be used as the 'cash/insurance' component of a global world equity index. So the thought occurred to me to use the same equity for AIM and the PP. This makes trading simpler, equity moves from the PP to AIM and from AIM to the PP, no real transactions are done. Inside the PP rebalancing will take place, using a 20% deviation rebalancing threshold.

For me it was important to view the PP as a blackbox with a blackbox price. The same as any ETF, only this PP is a self-made ETF.

Now inside The PP there are gold ETFs, which are based in London and in the Swiss. For long term bonds are used a euro based 20+ year bond fund and a US 20+ year treasury fund of approximately the same size.

The cash component is the local cash used.

Will it be an efficient engine? I have no answer to this question, but the PP 'blackbox/cash/insurance' will be monitored and if necessary changes will be made. First of all it needs to provide the stability for AIMing purposes.

In case the PP is not stable enough(the PP has the possibilty of growth), also seperately cash is held.
Another seperate component is the world bond fund hedged to euro. In portfolio visualizer i saw that a world bond fund hedged vs the dollar did well from around 2000 till now. So I started to use this as an alternative to the PP and experience how it behaves.

and global currency (gold) diversification
This is also a possibility, use gold as 'insurance' and have no bonds at all. I have thought about it an played a bit with it. At the moment a world PP 'feels' better (highly subjective). (considering 'subjective' signals to have more truth value than a lot of 'objective' signals). If or when runaway inflation will be the norm, gold will become the asset of choice, I guess.

Regards,
Karw