Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Jeems
    • By Jeems 18th Jun 17, 11:25 PM
    • 152Posts
    • 94Thanks
    Jeems
    Help with my portfio
    • #1
    • 18th Jun 17, 11:25 PM
    Help with my portfio 18th Jun 17 at 11:25 PM
    Hi all,

    I realise I cant even spell portfolio properly, my bad.

    I'm quite new to the investing game. I have a small amount in VLS80 as I was just keen to get in the market, but as I've read and learned more over the past 6 months, I feel my own portfolio may be better in the long term. One of the reasons I'm not a fan of all in ones is because a lot of their funds overlap and you end up with higher % of the same big company's.

    I'm in my early 30's, own my own property and fairly comfortable financially. After transfer of old ISA (pending) I'll have around £50k in there. I dont need to touch this money at all, so going down the 100% equities route. I'm aware of the risks and am prepared to lose a significant chunk of it if it were to happen. Thinking of something like this to replace my VLS80

    - Vanguard Developed World ex UK
    - Vanguard FTSE UK All Share
    - Fidelity Index Emerging Markets

    I'd like to add a small cap fund in there too, can anyone make any recommendations?

    In the near future (maybe when I add this years ISA allowance), I may look at more specialist funds (industry or country specific, to be decided)

    I dont want to go overboard, 4-5 funds I'll be happy with. I'd appreciate advice to see if this is diversified enough, or what may be missing
    Last edited by Jeems; 18-06-2017 at 11:28 PM.
Page 1
    • coyrls
    • By coyrls 18th Jun 17, 11:40 PM
    • 793 Posts
    • 784 Thanks
    coyrls
    • #2
    • 18th Jun 17, 11:40 PM
    • #2
    • 18th Jun 17, 11:40 PM
    One of the reasons I'm not a fan of all in ones is because a lot of their funds overlap and you end up with higher % of the same big company's.
    Originally posted by Jeems
    You don't need to worry about overlap in any of the individual underlying funds, you just need to look at the overall asset allocation.
    Last edited by coyrls; 18-06-2017 at 11:46 PM. Reason: Made a mistake in my first answer
    • AnotherJoe
    • By AnotherJoe 19th Jun 17, 1:13 AM
    • 6,839 Posts
    • 7,262 Thanks
    AnotherJoe
    • #3
    • 19th Jun 17, 1:13 AM
    • #3
    • 19th Jun 17, 1:13 AM
    Hi all,

    I realise I cant even spell portfolio properly, my bad.

    I'm quite new to the investing game. I have a small amount in VLS80 as I was just keen to get in the market, but as I've read and learned more over the past 6 months, I feel my own portfolio may be better in the long term. One of the reasons I'm not a fan of all in ones is because a lot of their funds overlap and you end up with higher % of the same big company's.

    I'm in my early 30's, own my own property and fairly comfortable financially. After transfer of old ISA (pending) I'll have around £50k in there. I dont need to touch this money at all, so going down the 100% equities route. I'm aware of the risks and am prepared to lose a significant chunk of it if it were to happen. Thinking of something like this to replace my VLS80

    - Vanguard Developed World ex UK
    - Vanguard FTSE UK All Share
    - Fidelity Index Emerging Markets

    I'd like to add a small cap fund in there too, can anyone make any recommendations?

    In the near future (maybe when I add this years ISA allowance), I may look at more specialist funds (industry or country specific, to be decided)

    I dont want to go overboard, 4-5 funds I'll be happy with. I'd appreciate advice to see if this is diversified enough, or what may be missing
    Originally posted by Jeems
    A bit like the FTSE all share which is mostly about 20 very large companies in a very restricted set of sectors ?
    • bostonerimus
    • By bostonerimus 19th Jun 17, 1:25 AM
    • 504 Posts
    • 248 Thanks
    bostonerimus
    • #4
    • 19th Jun 17, 1:25 AM
    • #4
    • 19th Jun 17, 1:25 AM
    If you want to over weight certain sectors or regions then you might buy some funds to compliment your VLS80. However, over thinking an asset allocation is a common mistake and can make it's management more difficult than necessary.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 19th Jun 17, 8:24 AM
    • 7,957 Posts
    • 7,758 Thanks
    Linton
    • #5
    • 19th Jun 17, 8:24 AM
    • #5
    • 19th Jun 17, 8:24 AM
    Diversified asset allocation is very important but buying more funds doesnt necessarily provide it.

    I cant see what buying an all world ex UK index fund and a UK index fund does for you. OK, you can play with the balance between UK large companies and foreign large companies but those two sectors are highly correlated anyway. For example as we have seen after the Brexit vote the price of a UK global oil company is going to be primarily set by the global oil market just like all other major oil companies. The performance of the UK economy is pretty irrelevent.

    If you want better geographic diversification you do need to look towards small companies. Investing in small companies globally is made more difficult in that US small companies appear to follow the main all share market much more closey than is the case in the UK, Europe or Japan.

    So for a 100% equity portfolio I would suggest a full world tracker rather than VLS100, and managed funds for UK, Europe and Japanese small companies. You could try some dummy portfolios with Trustnet to see the effect.
    • bowlhead99
    • By bowlhead99 19th Jun 17, 9:02 AM
    • 6,472 Posts
    • 11,445 Thanks
    bowlhead99
    • #6
    • 19th Jun 17, 9:02 AM
    • #6
    • 19th Jun 17, 9:02 AM
    I'm quite new to the investing game. I have a small amount in VLS80 as I was just keen to get in the market, but as I've read and learned more over the past 6 months, I feel my own portfolio may be better in the long term. One of the reasons I'm not a fan of all in ones is because a lot of their funds overlap and you end up with higher % of the same big company's.
    Originally posted by Jeems
    The people building the all-in-one funds are not idiots. If the goal is to have a globally diversified allocation and to get to their particular target allocation for USA or Japan they happen to use a US or Japan index overlaid on top of a developed world ex-UK index, what does it matter to you? Yes they have Apple via two sources (world index and US index) and Sony via two sources (world index and Japan index) but ultimately they only end up with the "correct" amount exposed to US and Japan and Apple and Sony with respect to their target. How is your (different) target better than theirs?

    If the eventual country allocation is in line with a mix that you'd be comfortable with, and ends up with the in-country allocations between companies being done via cheap index funds (which you seem to be a fan of), then what's the problem? If they end up with £9.95 in Apple because they got £7.16 of Apple via fund A and £2.79 of Apple via fund B, is that really "Doubling up" compared to how you would do it, getting £10 of Apple buying fund A only and not taking any fund B?

    . I dont need to touch this money at all, so going down the 100% equities route. I'm aware of the risks and am prepared to lose a significant chunk of it if it were to happen. Thinking of something like this to replace my VLS80

    - Vanguard Developed World ex UK
    - Vanguard FTSE UK All Share
    - Fidelity Index Emerging Markets ,
    Ok so you want to go all equities and eliminate bonds. How will the proportions of those three funds differ from what you would get in any of the 100% equities global funds on the market (Lifestrategy 100 is only one example of such a fund), and why will your target asset allocation be a better mix than the professionally constructed funds?

    I'd like to add a small cap fund in there too, can anyone make any recommendations?
    Global or region-specific? Developed world or emerging markets or both? Actively managed or tracker? If tracker, ETF or OEIC?

    If you decided, say, you wanted a tracker covering both developed and emerging markets, you would struggle for cheap and liquid options.

    In the near future (maybe when I add this years ISA allowance), I may look at more specialist funds (industry or country specific, to be decided)
    That gives you quite a range as there are probably 40-60 countries to choose from (depending how many emerging and frontier markets you include). If you go by industry sector there's 10-20 major ones. You might want to break them down further to get a more specific industry (e.g. to get 'biotech' out of healthcare).

    But then you will get extra concentration in individual regions and it will make a mockery of your stated intention not to want to "double up". For example in the biotech space: Amgen, Celgene, Gilead are all US listed and valued in the $80-120billion dollar range. While in the UK, we only have five companies on the entire stock exchange valued higher than $80bn.

    I dont want to go overboard, 4-5 funds I'll be happy with. I'd appreciate advice to see if this is diversified enough, or what may be missing
    If you want to go industry by industry or country/region by region and set specific allocations you will need a lot more than 4-5 funds. How will you pick them (as good as or better than the professionals)?
    Last edited by bowlhead99; 19-06-2017 at 9:54 AM.
    • Jeems
    • By Jeems 20th Jun 17, 12:12 PM
    • 152 Posts
    • 94 Thanks
    Jeems
    • #7
    • 20th Jun 17, 12:12 PM
    • #7
    • 20th Jun 17, 12:12 PM

    If you want to go industry by industry or country/region by region and set specific allocations you will need a lot more than 4-5 funds. How will you pick them (as good as or better than the professionals)?
    Originally posted by bowlhead99
    The plan really is to have as much global diversification as possible. The 4-5 fund's figure isn't set in stone. I'd like to stick to cheaper, passive tracker funds for now. After reading all this, I'm thinking it may be better just to stick with VLS + add a couple of funds in sectors I feel its a bit light or I'm keen on (in this case, small cap + EM). All in one's aren't always seen as popular among more experienced investors, but if someone like me is going to be fairly passive anyway...
    • Jeems
    • By Jeems 20th Jun 17, 12:13 PM
    • 152 Posts
    • 94 Thanks
    Jeems
    • #8
    • 20th Jun 17, 12:13 PM
    • #8
    • 20th Jun 17, 12:13 PM
    If you want to over weight certain sectors or regions then you might buy some funds to compliment your VLS80. However, over thinking an asset allocation is a common mistake and can make it's management more difficult than necessary.
    Originally posted by bostonerimus
    Is that a good idea? VLS + an EM fund + smallcap fund? I'm just thinking in future as I diversify more and purchase more funds then there'll just be more and more overlap.

    So for a 100% equity portfolio I would suggest a full world tracker rather than VLS100, and managed funds for UK, Europe and Japanese small companies. You could try some dummy portfolios with Trustnet to see the effect.
    Originally posted by Linton
    I'd previously looked at the Fidelity Index World fund but its 59% US which seems a little high. Yes definitely keen for smallcap as I mentioned in my OP. So you suggest a smallcap fund for those regions, rather than something like Vangaurds Global Small Cap on its own?
    • bostonerimus
    • By bostonerimus 20th Jun 17, 12:42 PM
    • 504 Posts
    • 248 Thanks
    bostonerimus
    • #9
    • 20th Jun 17, 12:42 PM
    • #9
    • 20th Jun 17, 12:42 PM
    Is that a good idea? VLS + an EM fund + smallcap fund? I'm just thinking in future as I diversify more and purchase more funds then there'll just be more and more overlap.
    Originally posted by Jeems
    I've never been a fan of buying "more and more funds" when you can have a perfectly well diversified portfolio using a multiasset fund or a few index trackers. If you want to have a tilt towards a particular region or asset class different from VLSxx then you can buy another fund to emphasis that. ie if you want more US equity than is in VLSxx you buy a US equity fund. You could also buy asset classes not included in VLSxx.

    Implementing a "slice and dice" approach with individual funds has never appealed to me, too much effort, too much time and too much crystal ball gazing. But there are many advocates and companies like Dimensional Funds base their whole model on it. Here is a good discussion.

    https://www.bogleheads.org/forum/viewtopic.php?t=205302
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 20th Jun 17, 12:54 PM
    • 7,957 Posts
    • 7,758 Thanks
    Linton
    ......
    I'd previously looked at the Fidelity Index World fund but its 59% US which seems a little high. Yes definitely keen for smallcap as I mentioned in my OP. So you suggest a smallcap fund for those regions, rather than something like Vangaurds Global Small Cap on its own?
    Originally posted by Jeems
    I see 4 problems with the Vanguard Gobal Small Cap Index fund:

    1 - it will also have a large US allocation, not very different to the Fidelity World Index fund.
    2 - apart from the US being larger than you want the other concern is that the performance advantage of small cap appears less marked for the US than elsewhere.
    3 - Being capitalisation weighted the MSCI World Small Cap index is dominated by the largest small companies. If you believe smallness is a desirable characteristic, why would you want to invest preferentially in the largest small companies?
    4 - These largest companies in the index have a market capitalisation of just under $9Bn. This would put them in the bottom 40% of the FTSE 100. So not necessarily that small.
    • Linton
    • By Linton 20th Jun 17, 1:03 PM
    • 7,957 Posts
    • 7,758 Thanks
    Linton
    ......
    Implementing a "slice and dice" approach with individual funds has never appealed to me, too much effort, too much time and too much crystal ball gazing. But there are many advocates and companies like Dimensional Funds base their whole model on it. Here is a good discussion.
    https://www.bogleheads.org/forum/viewtopic.php?t=205302
    Originally posted by bostonerimus
    You dont need any crystal ball gazing, just a target allocation. I would agree that it makes sense to achieve that allocation with as few funds as possible, but it cant be done with fewer than that. as in the curent discussion where the OP would like a lower allocation to the US than provided by a global tracker but alse wants to include small companies.
    • JohnRo
    • By JohnRo 20th Jun 17, 1:44 PM
    • 2,354 Posts
    • 2,086 Thanks
    JohnRo
    I've never been a fan of buying "more and more funds" when you can have a perfectly well diversified portfolio using a multiasset fund.
    by bostonerimus
    If you really want to hold more elements in your portfolio and the effect of doing so is cost neutral, which is something that clearly does matter, then I fail to see why it's a problem or wrong.

    As long as you're prepared to manage it, apply some logic and reason to proceedings and maintain the expanded selection, then just go for it but always be clear about why you're doing it.

    I'm holding thirty investment trusts which I imagine many would just shake their heads at, I could whittle that down to about ten but have chosen not to. I don't feel it's any more difficult to deal with or manage than ten would be and I quite enjoy messing about with the spreadsheet I use to try making things even easier to manage.
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • Linton
    • By Linton 20th Jun 17, 2:47 PM
    • 7,957 Posts
    • 7,758 Thanks
    Linton
    One reason not to hold more funds than are required to implement your strategy is that you gain no benefit and it leads to extra work. Lets give a simple example. Say your strategy is to follow VLS60 and you decide to do it by holding equal values of VLS100 and VLS20. After one year the prices of VLS100 and VLS20 have changed to a different extent. So you need to rebalance to ensure your portfolio is equally split between the two funds.

    In your portfolio of 30 ITs you must be holding several that try to do the same job in the same sector. The more popular ITs tend to be conviction funds in that the manager chooses the underlying investsments on the basis that he believes that they will outperform. And you choose the fund because you trust his judgement. Why have another fund of this type in this sector? Perhaps you dont trust his judgement that much?

    By having two conviction funds you end up overall with a strategy that doesnt follow either manager's instincts but some strange mixture of the two. Why do you think that will perform any better? If you carry on buying further ITs in the sector you will presumably end up with a pretty random overall allocation - you may as well just buy a tracker.
    • JohnRo
    • By JohnRo 20th Jun 17, 3:20 PM
    • 2,354 Posts
    • 2,086 Thanks
    JohnRo
    If in say ten years time the performance has been no better than a global tracker then I'll accept it probably wasn't worth the effort, although it hasn't been much effort to manage.

    Plugged into trustnet, the 5 year reinvested profile is very similar to the FTSE World profile, which shouldn't really be a big surprise. but it's still relatively early days and some holdings aren't currently being included so who knows how that might change when they eventually are.

    So far it 'feels' to have been a worthwhile endeavour, being able to realign some niche areas has certainly delivered some decent results and the option to simplify in future is always there.
    Last edited by JohnRo; 20-06-2017 at 3:25 PM.
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • bostonerimus
    • By bostonerimus 20th Jun 17, 4:32 PM
    • 504 Posts
    • 248 Thanks
    bostonerimus
    If in say ten years time the performance has been no better than a global tracker then I'll accept it probably wasn't worth the effort, although it hasn't been much effort to manage.

    Plugged into trustnet, the 5 year reinvested profile is very similar to the FTSE World profile, which shouldn't really be a big surprise. but it's still relatively early days and some holdings aren't currently being included so who knows how that might change when they eventually are.

    So far it 'feels' to have been a worthwhile endeavour, being able to realign some niche areas has certainly delivered some decent results and the option to simplify in future is always there.
    Originally posted by JohnRo
    Here's where 90% of my money is invested. I'm in the US so the US equity shows some domestic preference and Vanguard keeps telling me to have more international bonds. My annual expenses were 0.06% total....no trading or platform fees at US Vanguard.

    Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) 50%
    Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) 20%
    Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) 30%
    Last edited by bostonerimus; 20-06-2017 at 4:35 PM.
    Misanthrope in search of similar for mutual loathing
    • pinkllama
    • By pinkllama 20th Jun 17, 5:38 PM
    • 82 Posts
    • 24 Thanks
    pinkllama
    Why not just get the Vanguard FTSE Global All Cap index tracker? It contains small and EM companies.
    • Thrugelmir
    • By Thrugelmir 20th Jun 17, 6:23 PM
    • 54,312 Posts
    • 47,102 Thanks
    Thrugelmir
    Here's where 90% of my money is invested. I'm in the US so the US equity shows some domestic preference and Vanguard keeps telling me to have more international bonds. My annual expenses were 0.06% total....no trading or platform fees at US Vanguard.
    Originally posted by bostonerimus
    With 20% of market activity in 2016 being companies buying back their own shares (with the assistance of cheap debt). Looking in from the outside. Is performance actually that good, i.e. actual company performance in terms of profit, cash generated etc across the whole market. Far too easy to get complacent.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • username12345678
    • By username12345678 20th Jun 17, 6:40 PM
    • 73 Posts
    • 31 Thanks
    username12345678
    There are clearly many ways to skin the asset allocation cat and I do wonder if sometimes solutions can be over-engineered in pursuit of an perceived ideal mix.

    To give a personal example...

    A good work mate came out of our DB pension scheme at the same time as me. We are the same age, discussed our risk profiles to death before meeting the same IFA and have got similar personal circumstances and target retirement date.

    The IFA put us with different WM's and our portfolios are hugely different - when I looked at his we didn't have a single fund/share/IT/ETF in common.
    • bostonerimus
    • By bostonerimus 20th Jun 17, 8:07 PM
    • 504 Posts
    • 248 Thanks
    bostonerimus
    With 20% of market activity in 2016 being companies buying back their own shares (with the assistance of cheap debt). Looking in from the outside. Is performance actually that good, i.e. actual company performance in terms of profit, cash generated etc across the whole market. Far too easy to get complacent.
    Originally posted by Thrugelmir
    Many numerological metrics show that stock markets are over valued....certainly way above historical averages. I expect another 20% decline at sometime, but who knows when. I'll do what I've done 5 or 6 times before and not panic.
    Last edited by bostonerimus; 20-06-2017 at 8:15 PM.
    Misanthrope in search of similar for mutual loathing
    • cashbackproblems
    • By cashbackproblems 21st Jun 17, 10:27 AM
    • 1,675 Posts
    • 640 Thanks
    cashbackproblems
    i am in a fairly similar position to you in terms of age, wealth and financial position. Own home (230k mortgage), 35k in S+S ISA, 5k in SIPP and a work non-contributory pension (current value about 25-30k).


    My general idea is to use tracker funds unless I want exposure to a sector not covered by trackers e.g. Latin America, Gold mining, Biotech, Asian Small companies, Frontier markets etc. I use VLS 100 for the SIPP as I don't want to be rebalancing and looking at that frequently.


    I also hold the Vanguard small cap tracker and tbh did not realise it is so heavily weighted in the US and this will be my next change possibly move to a more global small cap managed fund. My managed funds over the last 4/5 yrs have outperformed trackers.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,131Posts Today

7,065Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin