Tim Hale based plan- comments please?
baj25
Posts: 48 Forumite
Any comments on the following portfolio I’m considering? (The left hand figure is % of total)
2 Vanguard FTSE UK All Share Index Unit Trust
20.5 Vanguard FTSE Dvlpd World ex-UK Equity Index Acc
7.5 Legal & General Global 100 Index I Trust Acc
7.5 Vanguard Global Small-Cap Index Fund GBP Acc
7.5 Vanguard Emerging Markets Stock Index Acc Hedged
5 BlackRock Global Property Securities Equity Tracker D (Inc)
15 Vanguard UK Government Bond Index Fund GBP Acc ???
15 Vanguard UK inflation linked gilt Index Fund GBP Acc ???
20 Cash isas paying 2- 2.4% until 2020
Context: mid 50s, all in ISAs, enough other income now/ future pensions to cover basics, this pot c.240K and aim to start taking income from it in a year or two at earliest.
I’m basically aiming to follow Tim Hale, I’ve long been a believer in passives. I’m not sure about L&G global 100, which tracks S&P global 100- Morningstar classify it as large cap value, which is what I want it for, it maybe feels a bit ‘narrow’ with only 100 stocks and it isn't clear how the $/£ conversion is done. I don’t feel great about gilt prospects with interest rates only going one way, but just don’t know of alternative. Am I correct in going for (mostly) Acc units, with plan to shift to Inc when I start drawing? TIA, Brian
2 Vanguard FTSE UK All Share Index Unit Trust
20.5 Vanguard FTSE Dvlpd World ex-UK Equity Index Acc
7.5 Legal & General Global 100 Index I Trust Acc
7.5 Vanguard Global Small-Cap Index Fund GBP Acc
7.5 Vanguard Emerging Markets Stock Index Acc Hedged
5 BlackRock Global Property Securities Equity Tracker D (Inc)
15 Vanguard UK Government Bond Index Fund GBP Acc ???
15 Vanguard UK inflation linked gilt Index Fund GBP Acc ???
20 Cash isas paying 2- 2.4% until 2020
Context: mid 50s, all in ISAs, enough other income now/ future pensions to cover basics, this pot c.240K and aim to start taking income from it in a year or two at earliest.
I’m basically aiming to follow Tim Hale, I’ve long been a believer in passives. I’m not sure about L&G global 100, which tracks S&P global 100- Morningstar classify it as large cap value, which is what I want it for, it maybe feels a bit ‘narrow’ with only 100 stocks and it isn't clear how the $/£ conversion is done. I don’t feel great about gilt prospects with interest rates only going one way, but just don’t know of alternative. Am I correct in going for (mostly) Acc units, with plan to shift to Inc when I start drawing? TIA, Brian
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Comments
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I’m basically aiming to follow Tim Hale, I’ve long been a believer in passives.
Yet you are making a number of management decisions with your selection. So, that believe isn't quite as strong as you suggest.
e.g. Gilts as your fixed interest selection rather than other types of bonds which have no exposure in your portfolio. High risk property share instead of bricks and mortar funds. Selection on the amount of small cap and large cap etc.
Does the portfolio volatility range fit with your attitude to investment risk, knowledge and behaviour and capacity for loss?Am I correct in going for (mostly) Acc units, with plan to shift to Inc when I start drawing?
Does your platform support share conversions? Or would it be a fund switch which could create a CGT liability?
Why not go Inc units from the start? (i always go inc where inc exists. Much cleaner).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.0 -
Some brief and not terribly considered observations. 2% UK equity seems too little in your home country, especially for income. It's less than £5K, what job is it doing? Why so much UK sovereign debt? Maybe as an alternative to cash but you have cash already. It's not much use for income, maybe consider corporate bonds, high yield bonds etc and look wider than the UK. That aside it looks like it's profiled for long term growth (apart from all the gilts) but I wouldn't like to rely on it if for income unless I had another source which you say you have. Are you saying the £240K is already in an ISA? If not you need to consider the tax implications0
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Why not go for a Vanguard LifeStrategy product for a one stop solution instead of the individual indexes?Any comments on the following portfolio I’m considering? (The left hand figure is % of total)
2 Vanguard FTSE UK All Share Index Unit Trust
20.5 Vanguard FTSE Dvlpd World ex-UK Equity Index Acc
7.5 Legal & General Global 100 Index I Trust Acc
7.5 Vanguard Global Small-Cap Index Fund GBP Acc
7.5 Vanguard Emerging Markets Stock Index Acc Hedged
5 BlackRock Global Property Securities Equity Tracker D (Inc)
15 Vanguard UK Government Bond Index Fund GBP Acc ???
15 Vanguard UK inflation linked gilt Index Fund GBP Acc ???
20 Cash isas paying 2- 2.4% until 2020
Context: mid 50s, all in ISAs, enough other income now/ future pensions to cover basics, this pot c.240K and aim to start taking income from it in a year or two at earliest.
I’m basically aiming to follow Tim Hale, I’ve long been a believer in passives. I’m not sure about L&G global 100, which tracks S&P global 100- Morningstar classify it as large cap value, which is what I want it for, it maybe feels a bit ‘narrow’ with only 100 stocks and it isn't clear how the $/£ conversion is done. I don’t feel great about gilt prospects with interest rates only going one way, but just don’t know of alternative. Am I correct in going for (mostly) Acc units, with plan to shift to Inc when I start drawing? TIA, Brian0 -
Thanks, speedy replies.
I read Hale to give a range of ideas for the reader to use according to their thoughts, not prescriptive as such.
Gilts vs other bonds is straight out of Hale, if I understand correctly, corporate bonds tend to follow stock markets so more volatile.
I believe it fits my profile etc (I did the Fiametrica tests via IFA friend to get a better understanding).
Inc vs Acc, I am on Charles Stanley, so I think I can switch, I'll double check.
UK is picked up in some of the other funds, so it is somewhat higher.
Yes, all in ISA already.
I have previously looked at VLS and thought they were too UK for me. I'm not as optimistic about brexit as some.
Thank you again, so useful to get a variety of angles. Brian0 -
, if I understand correctly, corporate bonds tend to follow stock markets so more volatile.
In most scenarios the exact opposite. Also, corporate bond is a very wide area. Most active allocations have decreased their gilt allocations and increased their high yield bond allocations. Of course, a book cannot be fluid with what it writes as it is out of date the minute it is printed.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.0 -
Diversifying the bonds and seeking some additional yield seems an attractive option. Whether you're being well rewarded for the risks currently is a question though. As dunstonh says, a lot of money has gone into high yield but spreads have fallen and are currently low enough to question whether you're being well rewarded for the additional risk.
A straight forward option would be to just add a UK investment grade corporate bond allocation for sterling income, a slightly higher yield and some diversification from the gilts. It's not going to set the world alight at current yields but you can readily do it passively.0 -
I've a large portfolio (in relation to the portfolios posted in this forum, and considerably more than yours) in a similar set of funds and percentages. I'm perfectly womfortable with it and have been for years. Not sure what that l&g thing is though, where did that come from? I've a Value tilt, doesn't look like you have one.
Like you, I hold uk funds in a separate fund but at global weighting to reduce costs.
Like you, I don't buy a single fund of funds, which is more expensive than buying individual indexes.
Like you, I'm not much into corporate bonds. But I do hold some p2p.
The crowd on this forum are largely active-management and financial-advice aficionados, so doubt you'll get much love. You can try to educate them, but old dogs, new tricks, and all that.0 -
A strange portfolio; too little in domestic equity, too many funds, too much cash. Here's what I might do working within your fund selection.
40% Vanguard FTSE UK All Share Index Unit Trust
20% Vanguard FTSE Dvlpd World ex-UK Equity Index Acc
20 Vanguard UK Government Bond Index Fund GBP Acc ???
15 Vanguard UK inflation linked gilt Index Fund GBP Acc ???
5 Cash isas paying 2- 2.4% until 2020
Substitute some of the equities or bonds with maybe 10% emerging markets if you must and want a bit more risk/excitement. If you worry about the UK economy then maybe have a bit less. If you are worried about interest rates going up then maybe lose some of UK bonds and increase the cash ISA and set up a savings bond ladder. Corporate bonds are conspicuous by their absence.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Thanks again, need to study bonds and alternatives more I think. I've not used bonds at all previously.
The L&G thing is intended as a value tilt. Any suggested alternatives? I have a PP with a Dimensional value fund, but I can't access their products as an individual, this L&G fits same Morningstar category and is cheap.
I'm not looking for excitement. I feel we have enough to see us out so don't need to squeeze the pips out.0 -
bostonerimus wrote: »A strange portfolio; too little in domestic equity, too many funds, too much cash. Here's what I might do working within your fund selection.
40% Vanguard FTSE UK All Share Index Unit Trust
20% Vanguard FTSE Dvlpd World ex-UK Equity Index Acc
20 Vanguard UK Government Bond Index Fund GBP Acc ???
15 Vanguard UK inflation linked gilt Index Fund GBP Acc ???
5 Cash isas paying 2- 2.4% until 2020
Substitute some of the equities or bonds with maybe 10% emerging markets if you must and want a bit more risk/excitement. If you worry about the UK economy then maybe have a bit less. If you are worried about interest rates going up then maybe lose some of UK bonds and increase the cash ISA and set up a savings bond ladder. Corporate bonds are conspicuous by their absence.
Can't agree with that.0
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