Views please on £280k investment portfolio

13567

Comments

  • Rollinghome
    Rollinghome Posts: 2,674
    Name Dropper First Post First Anniversary
    Forumite
    When I search the web on how to put together an investment portfolio, it says little beyond a) diversify, be risk aware and rebalance, and b) here are 25 or 100 funds we like.
    TBH a) is pretty good advice. You might add to be both risk aware and very conscious of the level of risk you can sensibly take on. Guidance on that can be the most useful advice an IFA can give. And keep costs to a minimum unless higher costs are sure to increase net returns. (They rarely do).

    b) is less useful as there's little evidence for persistently predicting future out-performance of funds. A safer approach may be to use tracker funds until you are confident you need and can select active managed funds that could do better.
  • aroominyork
    aroominyork Posts: 2,802
    Name Dropper First Post First Anniversary
    Forumite
    Just buy VLSxx for the equity allocation
    Um, what is VLSxx please?
  • Audaxer
    Audaxer Posts: 3,506
    First Anniversary Name Dropper First Post
    Forumite
    Um, what is VLSxx please?
    Vanguard LifeStrategy funds - there are 5 funds depending on what percentage assets to bonds you wish, e.g. if you want 60% equities and 40% bonds, you would buy a Vanguard LifeStrategy 60 fund. They are very straightforward and cheap at a 0.22% ongoing charge. Don't think because they are cheap they are not very good - they are well diversified and an excellent choice in the opinions of many investors on here.
  • bostonerimus
    bostonerimus Posts: 5,617
    First Anniversary Name Dropper First Post
    Forumite
    edited 5 July 2017 at 9:26PM
    aroominyork's questions and troubles are an excellent example of how people can be confused by the volume of opinion, advise and funds available.......you just can't see the wood for the trees. Most people should keep things simple and if they do that they simply won't need an IFA to manage their money and they can save on those fees. So buy multi-asset funds to get the equity percentage you want.....most people in the accumulation phase are going to be 80% to 60% in equities.......or use a global equity and a global bond tracker to do the same.

    So you end up with a portfolio with one, two or maybe three funds that you can easily track. There's no need for an individual emerging market fund, you'll own some of that in your global equity or mulit-asset fund. You might be able to do better with 10 or more active funds in particular sectors......but you might do worse and seriously who wants the bother of managing all those funds and I'm not going to pay an IFA 1% to do it.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • aroominyork
    aroominyork Posts: 2,802
    Name Dropper First Post First Anniversary
    Forumite
    bostonerimus got it right in saying you start not seeing the wood for the trees; it is good advice to keep it simple, minimising stress levels as much as for any other reason! My starting point in this thread was to base the portfolio on multi-asset funds (which I wrongly called managed funds), adding other funds where I want to be overweight (India and possible Europe) and then balancing with bonds. The way I was going about it was too complex and my expectations too high, though I think the weighted FE scores do give some useful pointers so long as I am aware of the limitations bowlhead pointed out.

    Re multi-asset funds, how sound is it to compare performance based on the last five years? That is all that seems available other than for funds in Hargreaves Lansdown’s Wealth 150 (which traces the fund manager back further although sometimes to funds with different briefs).

    I’d appreciate views on a few options I have looked at, partly to help me decide what levels of fees to accept. I know past performance in no guide to the future, but it is difficult to overlook say 2% better annual performance even if fees are a full percent higher. I am aware of course that in a flat market higher fees become more important as they erode your capital.

    I am in the middle of transferring my funds into Hargreaves Lansdown. I know the criticisms but HL suits me for now; once I have a settled strategy I can decide whether to move some or all the portfolio to a platform with lower fees.

    1. Vanguard’s fees are low and five year performance was 61% on 60/40 equity/bond and 77% on 80/20.

    2. HL’s Portfolio+ Balanced was (in April) 68% for Balanced, which includes 69% equities; Adventurous returned 86% performance with 95% equities. I find it curious that the latter comprises 80% in HL’s multi-manager special situations; I doubt HL has the ‘unloved and undervalued’ approach as say Fidelity Special Situations.

    3. HL’s Master Portfolios are the hybrid offer where name about six funds and you can adjust the default weightings. It’s impossible to assess five year performance in the Balanced option because too many of the funds have only been running two or three years. In the Adventurous, five year performance with the default weightings is around 15.5% BUT… I’ve no idea which funds they were suggesting in previous years so they could have included dogs they subsequently removed.

    4. That takes me to multi-asset funds from the wider market (by the way, I downloaded data on 8 June). The following are a cross-section based on strategy and equity component; interestingly, they follow three different models. The first model is investing mostly in its own funds, eg Baillie Gifford Managed with 86% performance based on about 70% equities (FE 77, 0.45% fee). The second model is a stock picker, eg Royal London Sustainable World with 113% performance based on about 83% equities (FE 83, 0.78% fees). The third invests mostly in funds from across the market, eg Premier Multi-Asset Distribution with 65% performance from 50% equities (FE 44, 1.36% fees); or Hawksmoor Vanburgh Fund with 58% performance from 37% equities (FE 32, 1.61% fees).

    It seems a case could be made for all of them so before I tie myself in more knots I would appreciate others’ views. (All I am sure of is that I would limit exposure to Royal London as I would have one man investing all my money with over 30% of my funds in just ten companies.)
  • bostonerimus
    bostonerimus Posts: 5,617
    First Anniversary Name Dropper First Post
    Forumite
    I stopped worrying about performance a long time ago..........no jokes now........by just choosing to follow broad indexes and looking for the cheapest way to do that. In my case that turned out to be Vanguard. I've basically owned the same 3 funds for the last 20 years and I'll probably own them for the next 30 as well. I don't bother with active funds and I stick to straight market cap weighted indexes. This removes the paralysis of too much choice.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Eco_Miser
    Eco_Miser Posts: 4,708
    Name Dropper First Post First Anniversary Combo Breaker
    Forumite
    I've done that with a 3 fund portfolio for 30 years and it has allowed me to retire at age 52 with a net worth large enough that I'll never need to spend any of my pension pot.
    Very good ... but is that result due to the growth of the funds or the amount that you invested over those 30 years?
    Eco Miser
    Saving money for well over half a century
  • bostonerimus
    bostonerimus Posts: 5,617
    First Anniversary Name Dropper First Post
    Forumite
    Eco_Miser wrote: »
    Very good ... but is that result due to the growth of the funds or the amount that you invested over those 30 years?

    Well a bit of both.....obviously an 8% annual return isn't exactly right as it's made up of some big gains and a few big loss years....still 8% for 30 years would see 10k grow into 100k. I saved aggressively for those 30 years too, around 20% of salary early on, but higher percentages after I paid off the mortgage. When you combine compounding with regular saving things start to multiply quickly.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Thrugelmir
    Thrugelmir Posts: 89,546
    Name Dropper Photogenic First Anniversary First Post
    Forumite
    .still 8% for 30 years would see 10k grow into 100k.

    That's a statement not a fact though. Suggest an investment that offers that potential rate of return currently.
  • aroominyork
    aroominyork Posts: 2,802
    Name Dropper First Post First Anniversary
    Forumite
    edited 7 July 2017 at 9:53AM
    All of Vanguard's four LifeStrategy funds - from 20/80 through to 80/20 equity/bond allocation - returned between 10.5% and 11.5% in 2015/16 when most multi-asset funds struggled to produce a positive return. What does that tell us about their strategy and how it will (edit - might) play out in future equity downturns?
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards