Wots your current portfolio spread ?

Browntrout_2 · 14 January 2008 at 4:42PM

http://www.investorsolutions.com/v2content/book/ch23/ch23.cfm

Type of Investors;

Fat, Dumb, and Happy
Clearly, many investors are unaware of their peril. We might classify them as "fat, dumb, and happy." In their minds they don't have a problem so there is nothing to be fixed. In the real world, investors are barraged by other demands for their time and attention. Many of them will develop a nagging sense that all is not well with their investment plans, causing them to set about fixing it in a business-like manner. Hopefully, they will come to this realization before it is too late to make a meaningful impact.

The Control Freak

A few individuals realize how important their investments are to their future but simply can't give up control of their finances. Either they have trouble delegating things in general, or money is such a personal, powerful, and emotional part of their existence that they reserve that activity for themselves alone.

The Hobbyist

Some investors enjoy the hobby of investing so much that it becomes its own reward. They join clubs, pour over the Wall Street Journal and Barons, faithfully follow Wall Street Week, make charts, build spreadsheets, subscribe to newsletters, surf the internet's newsgroups, and never let their eyes stray far from a scrolling ticker tape. For these types, investing isn't only the means to achieving a comfortable and secure life, it is their life.

The Gambler

Closely related to the hobbyist is the gambler. Gamblers are hooked on the excitement of the trade. Win, lose, or draw, it's the action that counts. Mutual funds rarely satisfy their need for action, and buy and hold to them is a foreign concept. Many start with a few trades in individual stocks, then like junkies, graduate to the hard stuff: options, commodities, and futures. Even if they understood that the odds are strongly rigged against them, they are just junkies.

The Loser

Many gamblers are losers. They enjoy their role as poor souls, not happy unless they receive their daily dose of disaster. No scheme is too dumb or far-fetched for them. They know when something is too good to be true, but do it anyway. Swindlers love to see them coming. They take their losses gracefully but still come back for more. Con artists prey on losers, and boiler rooms buy and circulate lists of proven marks. The person who loses a small fortune in an ostrich farming venture will happily invest in a "private" options pool. Losing fills a perverse need.

wot r U?

munk · 14 January 2008 at 6:04PM

I would say I'm a control freak/hobbyist mix (I'm not an IFA though!).

My portfolio currently looks like:

Fund                                    Weight (%)
Allianz RCM BRIC Stars A Acc            11.04
Artemis High Income                     7.68
BlackRock UK Absolute Alpha P Acc       8.2
Cazenove European Fund B Acc            8.24
First State Global Listed Infra A Acc   7.16
Invesco Perpetual High Income Acc       7.98
Invesco Perpetual Monthly Income Plus...7.91
M&G Global Basics X Acc                 7.92
Neptune European Opportunities Fund A...8.31
Neptune Global Alpha A Acc              7.48
Premier Absolute Growth GBP Acc         8.08
Threadneedle China Opp Ret Net GBP Acc  10

I think I'm going to switch out of some of the more defensive funds like Artemis High Income and IP Monthly Income Plus over into something like global resources or another global fund because they're dragging the portfolio back a bit especially right now with the situation in the UK. Also probably consolidate the euro funds into one or maybe look at emerging europe.

China seems to be flat right now and can imagine it being less profitable over the next year as US demand for consumer goods slows, might move to another BRIC type fund or even an EMEA fund (emerging europe, middle east). We shall see.

waiting_to_exile · 14 January 2008 at 8:38PM

My pension is full of safe, boring, and currently not performing investments, but I don't like to play with that too much. My "hobby" portfolio based on initial purchase is:

15% IJPN (bit of a punt considering the general outlook and Japan's recent performance)
17.5% PHAG Silver ETC
17.5% NGAS Natural Gas ETC
25% AIGA Agricultural ETC
25% HOC Hochschild Mining

I'm looking to put a lot more effort and money into trading this year as I'm not about to buy property and I have a good level of "rainy day" savings. I'll be chuffed with anything over 10% return, which seeing as I've managed 5% in about a week, I may just achieve as long as I manage to jump at the right time!

meester · 15 January 2008 at 12:26AM

My allocation is:

UK 20.4%
Western Europe (ex UK) 11.3%
Japan 6.6%
Russia 6.4%
Eastern Europe 10.2%
BRIC 10.6%
Asia Pacific 10.6%
Natural Resources and Commodities 18.8%
Global Special Situations 4.4%

So about 40% in emerging markets of one kind or another, 20% UK, 10% Europe, 20% Commodities, 5% Global General, 5% Japan.

zardon · 15 January 2008 at 9:51AM

munk wrote: »
I would say I'm a control freak/hobbyist mix (I'm not an IFA though!).

My portfolio currently looks like:
Fund                                    Weight (%)
Allianz RCM BRIC Stars A Acc            11.04
Artemis High Income                     7.68
BlackRock UK Absolute Alpha P Acc       8.2
Cazenove European Fund B Acc            8.24
First State Global Listed Infra A Acc   7.16
Invesco Perpetual High Income Acc       7.98
Invesco Perpetual Monthly Income Plus...7.91
M&G Global Basics X Acc                 7.92
Neptune European Opportunities Fund A...8.31
Neptune Global Alpha A Acc              7.48
Premier Absolute Growth GBP Acc         8.08
Threadneedle China Opp Ret Net GBP Acc  10
I think I'm going to switch out of some of the more defensive funds like Artemis High Income and IP Monthly Income Plus over into something like global resources or another global fund because they're dragging the portfolio back a bit especially right now with the situation in the UK. Also probably consolidate the euro funds into one or maybe look at emerging europe.

China seems to be flat right now and can imagine it being less profitable over the next year as US demand for consumer goods slows, might move to another BRIC type fund or even an EMEA fund (emerging europe, middle east). We shall see.

I'm interested in investing in funds, did you do it yourself online - or through a broker? How do you apply for funds? Many thanks.

ryandj · 15 January 2008 at 9:54AM

You can do it cheaply through an online place like Hargreaves Lansdown or Cavendish or something, theres an article here...

http://www.moneysavingexpert.com/savings/isa-discounts

But you may want to consider financial advice!

hyposmurf · 15 January 2008 at 9:57AM

Link below might be of use to you:
http://forums.moneysavingexpert.com/showthread.html?t=520017

zardon · 15 January 2008 at 11:48AM

Thanks a lot.

munk · 15 January 2008 at 5:12PM

zardon wrote: »

I'm interested in investing in funds, did you do it yourself online - or through a broker? How do you apply for funds? Many thanks.

Looks like ppl already provided some good links above for you. As it happens I just wrote something for my brother to help him get started investing in funds, below is a chunk of the info I wrote for him. It's part of a much longer 12 page document - most of that document is biased towards his investment objective but hopefully the info below is fairly generic, it's the section on the pros/cons of investing direct vs with an IFA vs going 'DIY':

How To Invest – direct, with a financial adviser or DIY/fund supermarket?

1. Go direct to the investment company and buy their funds
The investment companies - Artemis, First State, Fidelity, Invesco Perpetual, M&G, JPM, etc - all offer a wide range of funds. You can buy funds directly from the investment companies, but you usually pay over the odds because they charge full initial charges up front and full annual management charges which can be very costly.

Benefits:
None really!

Drawbacks:
Main drawback is the initial charge - you pay a full initial charge of around 3-5% direct to the investment company

You pay full annual management charges for each fund (usually between 1-1.5% pa)

Your investment portfolio is spread across lots of different investment companies so is hard to keep track of them all - if you have 8-12 different funds that's a serious headache!

2. Use an independent financial adviser (IFA) and buy the funds through them.
An IFA will help you plan a balanced and diversified portfolio suitable for your investment requirements. They can also offer lower charges on funds, because they can negotiate lower charges on the funds that the investment companies offer - this is worth it for the investment companies because the IFAs are bringing in business for them.

However, IFAs will also charge you for their services. Sometimes this is taken in 'trail commission' - the money they can get from the annual management charges from the investment companies to keep you with them - and other times this is in the form of an up front / one off charge. How they charge is up to them.

Benefits:
Have a wide range of funds to offer usually

Give impartial advice

Can do all the portfolio planning for you, takes the hassle out of choosing the right funds (if they do it right!).

Can let you know how all the funds in your portfolio are doing all in one single statement.

Drawbacks:
Will charge for the services they offer.

You pay full annual management charges for each fund (usually between 1-1.5% pa) - however importantly some IFAs may rebate part of the trail commission they receive so in effect you will pay 0-0.25% less on AMCs.

So many different charging structures that IFAs offer - some work on commission only, some on 'up front' charges only, some a combination of both.

Can be hard to find an adviser you get on with and trust.

3. Go 'DIY' and use a fund supermarket and a discount broker to buy the funds.
Fund supermarkets usually offer a huge choice of funds to invest in - usually around 2000 different funds. They also offer massive discounts both on initial and annual management charges - they can do this because they offer the investment companies a lot of business in bulk and so the investment companies offer huge discounts to the fund supermarkets.

Fund supermarkets are the cheapest option to use if you know what funds you want to invest in. Importantly though they do not offer any advice and you are expected to know what you want to invest in and understand the risks involved.

Benefits:
No initial charge on many funds.

Lower annual management charges on funds

All funds in your portfolio are in one place

Can view your portfolio 24/7 online as part of the service

Very easy to switch/sell/buy funds directly online 24/7

Some brokers offer portfolio tools to see online how your portfolio is performing over time, how it could be optimized, etc.

Drawbacks:
No financial advice given, you're expected to know what you want if you use a fund supermarket (although you can usually pay for advice if you want it).

Since no financial advice is given, protection by the Financial Ombudsman Service is limited (unless of course you pay for a discretionary portfolio management service whereby they do provide advice).

Worth saying though here perhaps that you should also check to see what compensation is offered in the highly unlikely event that the fund supermarket goes bust. For example with HL this total is £48k max compensation at time of writing.

Above all - never take financial advice from a high street bank on investments! This may sound counter-intuitive (what else do banks do if they don't give financial advice?), but the reason is that banks are primarily in business to make money from their customers. Banks invariably only offer a very limited range of funds through a 'tied' investment company and do not offer any discounted charges. Their aim is to make a large profit from their customers and this doesn't fit in with most investor's aim of making profit for themselves!

Fund Supermarkets In More Detail
There are a few fund supermarkets around - Fidelity's FundsNetwork, Cofunds, Interactive Investor, Skandia - but most of these guys either don't allow individual investors (you have to go via an adviser) or charges are higher if they do allow individual investors.

The exception to this is the fund supermarket Hargreaves Lansdown (HL) - http://www.h-l.co.uk/.

HL do provide an advisory service you can pay for although only for investments over £50,000 and the service can be expensive compared to an IFA. HL generally works out more cost effectively if you only require 'execution only' services. An execution only service implies that no advice is given - you just get access to 'execute' your own transactions (buying/selling/switching funds). Because no advice is given, charges are reduced.

HL discount the initial charges on most funds down to 0% - the maximum initial charge is around 0.25-0.5% for the majority of funds.

HL also refund part of the annual management charge back to you. Most investment companies charge up to 3% annually for their funds. If you use an advisor, part of that is usually paid to the adviser by the investment company (trail commission). However, HL actually rebate part of the trail commission to you which saves even more money.

In a nutshell, HL are the best option if you know what you want to invest in.

EDIT:
Goes without saying this does not constitute 'advice' in any way shape or form, just my personal opinion on the pros/cons of various methods of investing in funds from my own personal experience. I do not work for HL(!) and there are other discount brokers out there. I'm close to deleting this post - it was only really meant for private consumption! If anyone has a major problem with this post I'll rm it.

cloud_dog · 15 January 2008 at 11:43PM

As someone else said............... this threads too good to just wither on the vine (sic), sooooooooooo

All of you with a decent cash position are probably feeling a little bit smug and a little less stressed atm, what with the DOW tanking another 277+ points tonight and the probable knock on effects.

Of course those of you who may have done some 're-investing' recently might be starting to think things are getting a little bit 'volatile' and is there anywhere else that I could put my money - hmmmm let me think......... is there anywhere I've not put it yet............. hmmmm

cloud_dog

p.s. ok, so maybe this posts a bit churlish and pathertic but, hey its a slow day

Wots your current portfolio spread ?

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