We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

All Star Manager Portfolio

Options
FATHEROFTWO_2
FATHEROFTWO_2 Posts: 241 Forumite
in Savings & investments
ALL STAR MANAGER PORTFOLIO

THIS IS MY FIRST POST SO HELLO TO ALL.

INITIALLY when I posted I put the word "ADVICE" in the title.
This is perhaps the reason why I received No response.

I am not looking for "advice" just an opinion of the Funds selected and porfolio allocation and risk element.

I was also looking for comments on the bonds chosen with comments on which are high yield .
I was hoping to get an opinion in my investment theory of following managers who consitently perform.
I have edited the Title appropriately I have been researching this board for some time evaluating opinions and hoped that some of the seasoned posters like Dunstonh,Edinvestor JamesD and many others would comment.

Ok here goes again.
I have 50K to invest and I am a bit of a novice with Funds and have a little knowledge in standard investing so I read a book called “Fundology” that recommended that you follow the manager rather than the fund.

I found it very interesting and read it twice.

I tried to develop an investment strategy base on Fund Managers that had performed consistently over many years preferably in the same fund.
I also looked at the top performing funds over a reasonable period and excluded the Funds that appeared to outperform the market on one off occasions .The fund managers I stuck with were the vastly experienced managers such as the woodford and Frosts of the investment world.
The Managers who have stayed through the difficult investment periods.

I have spent a considerable amount of time looking at “alpha”
“ R squared” “betas” put each sector into the Morningstar Portfolio X ray and cross checked each other with what I would call the fundamentals .Checking the fund managers position with the fund position and real value returned to the investment.

The investment manager who stands out the most to me is Neil Woodford hence me being overweight in his funds. Some of the weightings in the split between sectors shows my faith in the respected managers to manage them effectively .I have tried to diversify in each sector hence why I have picked multiple funds to allow for the underperformance of a single Fund Manager.

The managers were always my main indicator and I was swayed by that in most of my decisions although I was tempted sometime to sway away from it.

My sources of information were:

Citywire fund manager compare
Citywire Fund compare
Trustnet
Morningstar fund compare tools
Best invest where I sourced my risk profile as Balanced managed although i`m leaning towards the Cautious due to market conditions at present.

I have sufficient income from my salary to manage my affairs I am mortgage free.

Ideally I would like to generate extra income from the funds to Fund extra holidays and general luxuries.

I used the 10 percent tariff as the maximum amount I would like to lose
I tried to use sector allocation and bearing all that i`ve said tried to avoid funds that have a large exposure to the financial sector at the moment although most have some but tried to average it out at about 10 percent financials over the spread of Funds

My initial selection of funds were whittled down in each sector from up to 7 funds per sector down to on average of 4 funds per sector depending on percentage invested.

UK EQUITY INCOME (£14000)

As an example I initially selected the funds listed below after sifting using my investment strategy and fine tuned it to the chosen list below .
I did this with each sector.

Artemis Income
Axa framlington (George Luckcraft Non Rated)
F&C Stewardship (Ted Scott Non Rated)
Rathbone Income ( Carl Stick Non Rated)
Invesco Perp High Income (
Jupiter Income
Neptune income

All the above fund managers were all highly rated and some apparently have lost their ratings.

From the above for example I finally went with

Artemis Income £2000 (Adrian Frost AAA)
Invesco Perpetual High Income Inc £7000(Neil Woodford AAA)
Jupiter Income £2000(Anthony Nutt A)
Neptune Income £3000 (Robin Geffen AAA)

Uk All Companies ( £8000)


Old Mutual Uk Select Mid Cap £3000(Ashton Bradbury AAA)
Saracen Growth Fund Alpha £2000(Jim Fisher AAA)
Artemis UK special situations £1500(Derek Stuart was Citywire rated)
Axa Framlington Uk Select Opps £1500(Nigel Thomas was citywire rated)

SMALL CAPS

Decided to avoid AT PRESENT due to volatility

European Funds (£4000)

Neptune European Growth Opps £2500 (Rob Burnett AAA)
Artemis European Growth Opp £1500 (Philip wolstencroft/Saacke AA)

USA (£2000)

Martin Currie North American £1000 (Tom Walker AA)
NeptuneUS opportunities £1000 ( Felix Wintle AAA)

CHINA (£1500)

Either /Jupiter China or Gartmore China
But tend to favour Gartmore due to recent performance. £1500 (Jupiter Philip Ehrmann non rated or Charlie Awdry Non Rated

BONDS ( £18000)

Invesco Perp Corporate Bonds £2000 (Paul Causer/Reid A)
M&G Corporate Bonds £2000 (Richard Woolnough Non Rated)
New Star Sterling Bond £2000 (Philip Roantree Non rated)

Invesco Perp Euro High Yield Inc £3000 (Paul Causer/Reid A)
Threadneedle High Yield Bond £3000 (Barrie Whitman Non Rated)

Invesco Perp Monthly Inc £3000 (Neil Woodford AAA)
Artemis High Income £3000 (Adrian Frost AAA)

SPECIALIST ( £2500)

Considering

JPM Natural Resources £2500 (Ian Henderson AA)

Trying to avoid Property Investments at present


This gives me the following Breakdown and sector allocation

STOCK 61 %
BOND 32%
CASH 5%
OTHER 2%
PROPERTY NIL (trying to avoid at present)


STOCK BREAKDOWN SECTOR ALLOCATION

UK 69 %
EURO 13 %
NON EURO 3 %
EMERGING EURO 1 %
US 9 %
ASIA 5 %

I’m not too sure what the complete breakdown is between the bond allocation as Morningstar does not show what the high yield Bonds are amongst the Bond selection but I guess it is the Bonds amongst the selection that states “HIGH YIELD” in their title.

I haven’t factored in the SPECIALIST SELECTION to the Morningstar Portfolio but it will be approximately 5% which will reduce the sector allocations percentage slightly but not much.

I welcome any comments on my selection and appreciate that no advice can be given.

If seasoned contributors could comment on my selection or criticise it I would be obliged.
«134567…12

Comments

  • FATHEROFTWO_2
    FATHEROFTWO_2 Posts: 241 Forumite
    Post and Title amended appropriately.
  • Ian_W
    Ian_W Posts: 3,778 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    I'm certainly no expert but as you're currently on p2 with no takers as yet I'll let you have my two pennoth, for what it's worth. At least it will bump your post.
    I tend to use the same sort of method by looking at the managers performance but I also like to take a chance on a few new funds if I fancy where they're invested and their objectives. But that's my choice and may not suit you. When you say:
    I used the 10 percent tariff as the maximum amount I would like to lose
    Does that reflect your attitude to risk, that you would be uncomfortable with more more than a 10% drop? If so I think you're way above that level if there is a serious market crash. In 2000/02 I think UK shares were down around 40% and I'd hazard a guess on your selection you'd be down around half to 2/3rds of that. Whilst the Bonds may give you some downside protection Funds like Artemis High Income and IP Monthly Income + also have a 15-20% equity element.
    You're also ratcheting up your risk [and of course potential reward] using a single country China found for your Asia coverage.
    Hope that helps and attracts other more knowledgeable posters - but without being unfriendly in any way using the very large type may put folks off reading what is quite a long post anyway.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Part of the Furniture Combo Breaker
    Welcome to the club!

    I am not able to comment on specific funds, but I will say that your selection seems a tad UK heavy.... Just my opinion of course.

    £50k is a lot of money to play with, and I would suggest that you consult an IFA. Whatever you decide on in the end, I wish you the best of luck - May the markets be with you..... always!:money:
  • FATHEROFTWO_2
    FATHEROFTWO_2 Posts: 241 Forumite
    Hi thanks for your reply.
    I appreciate your take on it.
    I dont think anybody would like to lose money and I just factored in the 10 percent but it is only an approximate guide.
    Im looking to invest for more than 5 years and shouldnt need access to the cash but would like additional income from it although its not essential.

    I tried to introduce a fair quantity of Bonds into the portfolio but could adjust it up if the equity portion was slightly high.
    Im here to learn and listen to opinions.I didnt want to invest in places I dont understand and I think I can see that china over the next few years will see considerable growth.

    Ive created a portfolio on the iii site and ran it for the past few weeks since the big dip and am down about 3 percent .

    I understand the equity side of it reasonably well and have spent weeks of my time going through all the bumph.
    Im only trying to get my head round the Bonds especially the corporate and high yield bonds and what the risk is compared to gilts.
    Im presuming that whatever the yield that you buy the bonds at is FIXED and the value of your investment is the factor that varies.By that token the Bonds look quite atractive just now and once the price falls it might be a buying opportunity ?

    I will try and change the typing as I prepared my post on microsoft word.
    Thanks for replying.
  • meester
    meester Posts: 1,879 Forumite
    FATHEROFTWO wrote: »
    ALL STAR MANAGER PORTFOLIO

    THIS IS MY FIRST POST SO HELLO TO ALL.

    INITIALLY when I posted I put the word "ADVICE" in the title.
    This is perhaps the reason why I received No response.

    I am not looking for "advice" just an opinion of the Funds selected and porfolio allocation and risk element.

    I was also looking for comments on the bonds chosen with comments on which are high yield .
    I was hoping to get an opinion in my investment theory of following managers who consitently perform.
    I have edited the Title appropriately I have been researching this board for some time evaluating opinions and hoped that some of the seasoned posters like Dunstonh,Edinvestor JamesD and many others would comment.

    Ok here goes again.
    I have 50K to invest and I am a bit of a novice with Funds and have a little knowledge in standard investing so I read a book called “Fundology” that recommended that you follow the manager rather than the fund.

    I found it very interesting and read it twice.

    I tried to develop an investment strategy base on Fund Managers that had performed consistently over many years preferably in the same fund.
    /quote]

    Interesting, but all research shows active funds underperform passive ones due to their charges. I am not aware of any evidence to the contrary (although most data I have seen relates to the US - does someone have something for the UK).

    And in choosing a good manager, you will often be choosing randomly:

    i.e. if you have 20 funds, then over 5 years some will consistently outperform, but this is statistically inevitable. The problem is the NEXT 5 years. The return over the subsequent 5 years is statistically NOT correlated with the previous 5 years, so you might as well have stuck a pin in it.

    You might be able to identify a small handful of superstars, in which case it's arguable that you should entrust them with more of your money, but again hindsight is 20/20. Having identified that Manager X is a genius, he's already attracted £1b of capital, and for the next 5 years he underperforms.

    Whereas with an index you CAN be certain that you will not underperform (except for the costs, which are of course much lower).

    Regarding what you buy, whatever it is will work out fine PROVIDING you leave it long enough.

    Personally I would say you are overweight in UK Equities. Diversifying will reduce volatility because markets can move in opposite directions balancing things out.

    Your China fund is high risk IMO - Chinese stocks are highly illiquid and are basically in a Nasdaq-type bubble that will burst at some point. Although it is a small part of your portfolio. An emerging markets or BRIC fund would be better diversified and lower risk. Obviously both are far more volatile than the UK small caps and property you risk.

    You don't have anything in Eastern Europe/Russia. Quite good markets IMO.

    I think you have selected too many funds. 7 bond funds seems grossly OTT - many of the funds you select are 99% correlated with each other, and the fund manager has already taken away the risk of defaults etc. in the fact any of the funds will be highly diversified in the first place.

    Is there any need for four UK equity income funds? Are you certain that all four of those managers perform better than good be attributed to chance?

    With just £50k there's no need for so many - it just creates extra work for you. I would slim down, add some more emerging markets, and don't forget that you need to HOLD, for at least five years, so you have to make the right decision now - it's very rarely a good idea to sell when prices have fallen!
  • meester
    meester Posts: 1,879 Forumite
    FATHEROFTWO wrote: »
    Hi thanks for your reply.
    I appreciate your take on it.
    I dont think anybody would like to lose money and I just factored in the 10 percent but it is only an approximate guide.

    Nobody does.

    That's why you get paid to take on risk (except when you participate in the lottery, but that's a different story).

    The higher risk, the higher the expected return.

    Obviously you need to select within that sensibly as well.

    Just learn to live with the risk.
  • dunstonh
    dunstonh Posts: 119,605 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    The current high yielding bonds are in the UK Other Bonds sector. Funds like Baille Gifford High yield bond and JPM Global High yield bond are just two examples. If you find those, you should be able to find the sector.

    Remember that bond funds are not all the same level of risk and that picking bond funds can be one where you focus on current yield rather than past performance. This can mean that funds that have had poor recent performance are the more desirable ones.... subject to their risk level.

    Earlier this week, New Star called what it thought was the bottom of the property share drop. Other highly regarded managers without a self interest in that sector have suggested there is value there now.

    You have diversified a lot in the same sectors in some areas but that will just create a lot of overlap. However, in others (such as specialist and asia) you havent diversified at all. The higher risk end really needs more diversification than the lower risk end.

    You are also missing some money market funds which could be valuable at the moment. For example, M&G real yield. Whilst it will never set the world on fire it gives valuable downside protection and when used with a rebalancing portfolio you could yield real benefit from it.

    There is a GEB available at the moment from Premier Asset Management that bucks the negative trend on GEBs that most of the forum members have here. That may well be useful for the UK segment of your portfolio as the potential is "possibly" more than individual funds. Plus it has downside protection to a degree.

    For compliance reasons I have to repeat what you have already acknowledged and say that the above is not a recommendation. It is purely discussion and comment.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • meester
    meester Posts: 1,879 Forumite
    FATHEROFTWO wrote: »
    Im here to learn and listen to opinions.I didnt want to invest in places I dont understand and I think I can see that china over the next few years will see considerable growth.

    China will, but China is not its stockmarket. Chinese GDP grows at what, 10% PA, tops? How much has the stockmarket grown? Up to 100% in a year.

    Yield is low, and price/earnings in China are sky high. Fundamentally the reason to invest is to get income - if I plant an apple tree I can get apples off it, which I can sell to give me income, if I buy an office block, I want to get rent from it. If I only get £1,000/year rent on an office block worth £100k, it's fundamentally overpriced. Of course the argument is that rents (and yields) will keep rising to justify things.

    But basically the fundamentals aren't there, just as they weren't with the tech stocks in 2000.
  • FATHEROFTWO_2
    FATHEROFTWO_2 Posts: 241 Forumite
    Meester
    Thanks for your reply.I take your point on China.I know it is easy to get sucked into a bubble as many did with the Tech bubble of 2000.I may reduce my exposure to China and find another area to diversify into but the question is where.......India,Russia Africa or somewhere else.I want my High Risk Funds to be a small portion of my portfolio

    Dunstonh
    Thanks for your reply.
    I presume with Bonds the Yield you get stays the same and it is the value of the Bond fund that fluctuates ?
    Its finding a high Yield Bond paying a constant Rate with companies that are not going to default on their loan.I suppose the loans are diversified within the fund to allow for Default and it is unlikely that all the Debtors are goin to default within the fund.I suppose you are receiving a premium yield to reflect the extra risk you would get from the standard Bank rates ?
    I know that Gilts are almost 100 percent guaranteed as they are backed by the treasury but cant see the reason why they would seem attractive to someone with anaverage risk profile.
    Are Global Bonds any riskier than UK high yield/corporate bonds?

    Which areas have I diversified a lot in.In presume you mean UK equity/all share funds ?

    In presume it doesnt cost any more to have 4K in 4 funds than have 4K in one fund ? from a management fee point of view and it is only keeping track of them that is the drawback ?

    I wasnt at all sure about the specialist /asia investments but reasearched Ian Henderson of JPM natural recources and it seemed a good story.

    I also thought of property from the point of view that it may be a good buying opportunity if the market was distressed but need more opinions on it before I decide on that sector.

    Re the GEB I have read back on these and didnt think the experienced posters thought very highly of these !

    Any thoughts are appreciated
  • dunstonh
    dunstonh Posts: 119,605 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I presume with Bonds the Yield you get stays the same and it is the value of the Bond fund that fluctuates ?

    With funds the yield will fluctuate due to the nature of changing the underlying investments. However, the biggest difference will be the running yield. If the unit price goes up 25% then then yield against the current unit price will be low. If you compare it to the original buying price you paid, it will still be high. With fixed interest funds it is often worth reducing your holdings when the yield gets below cash rates.

    I know that Gilts are almost 100 percent guaranteed as they are backed by the treasury but cant see the reason why they would seem attractive to someone with anaverage risk profile.

    Because they can offset the risk of the funds which are higher risk. Plus when you rebalance the portfolio each year you can use the lower risk funds to protect the gains during good periods and reinvest during bad. Effectively selling high and buying low.
    Are Global Bonds any riskier than UK high yield/corporate bonds?

    Yes. Currency fluctuation comes into play.
    Which areas have I diversified a lot in.In presume you mean UK equity/all share funds ?

    In presume it doesnt cost any more to have 4K in 4 funds than have 4K in one fund ? from a management fee point of view and it is only keeping track of them that is the drawback ?

    Yes. you are heavy on the mix there. Nothing wrong with that but you dont want to go over the top.
    I wasnt at all sure about the specialist /asia investments but reasearched Ian Henderson of JPM natural recources and it seemed a good story.

    Is that down to the fund manager or the area the fund invests in? How does it compare against similar funds? - hard to say as there are not many similar funds. That is just being devils advocate a bit as it is a good fund. However, it is a high risk fund (9 out of 10 on the risk scale). This is the risk area to diversify as these are the funds which can do plus/minus 50% a year.
    Re the GEB I have read back on these and didnt think the experienced posters thought very highly of these !

    We dont. Retail GEBs are generally quite rubbish and I havent seen a decent retail GEB since 1995. However, this one is an institutional GEB and the terms have surprised many of the regulars (including myself) as it actually seems to offer good potential compared to direct investment.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.8K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.8K Work, Benefits & Business
  • 598.6K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 257K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.
Update Your Picture