Help, My portfolio below, I need to to put me straight!

thedon313

Hi ppl
Hope this is the right area to put this, I started investing in Feb/March this year as i looked at the maket and thought that this is a once in a lifetime opportuity (luck for me I suppose). The thing is if someone could have a look at my Portfolio and let me know where it is lacking (as i know it is)
I use Funds Direct for my ISA as it is handy and they are pretty quick with the buys and sells. I use H and L for my resarch.

Bear in mind I have just sold HSBC Asian Growth R Accumulation.
I also am thinging of changing my JPM Emerging Markets A Inc to ACC
I also am thinking of changing my Invesco Perpetual High Income Accumulation to INC as they seem to be doing slightly better. Any suggestions/Critisisms welcome. (bear in mind i only had limited funds to invest and the great thing about Funds Direct is you can invest well below the minimum the funds specify.

Since i started my portfolio is up over 15%


Direct Property (10.50%)Aviva Investors Global Property 1 IncomeGBP High Yield (7.19%)Investec Monthly High Income A IncGBP Strategic Bonds (34.09%)Invesco Perpetual Monthly Income Plus IncomeGlobal Emerging Markets (16.31%)JPM Emerging Markets A IncUK Equity Income (29.61%)Invesco Perpetual High Income AccumulationCash (2.30%)

Thanks all. I would like more ASIA cover and maybe some FTSE250 cover ??


Direct Property (10.50%)
Aviva Investors Global Property 1 Income

GBP High Yield (7.19%)
Investec Monthly High Income A Inc

GBP Strategic Bonds (34.09%)
Invesco Perpetual Monthly Income Plus Income

Global Emerging Markets (16.31%)
JPM Emerging Markets A Inc

UK Equity Income (29.61%)
Invesco Perpetual High Income Accumulation

Cash (2.30%)

Lokolo

If you change frm Acc to Inc what will you do with the income?

I have never seen the point in mix matching with Acc and Inc, stick to one.

thedon313

Basicaly i just re-invest the income plus some extra every month. I haven't invested enough yet for the imcome to be of much use in giving me extra per month. It was just that i didnt quite understand the difference in the begining.

jon3001

What are your objectives for this portfolio?
What kind of timescales are you looking at?
How much risk are you willing to take; what kind of losses would you accept in trying to achieve higher gains?

thedon313

Risk: I am not unhappy taking high risk, i am prepared to take the hit for the longer term gain. so i would say High to Meduim Risk - I would like to think that over 30 to 40% losses would be acceptable but obviously not welcome. at the moment invesco perp monthly income is my higheat return with over +21%

My objective is to have enough saved over the next 5 to 7 years to setup my daughter, she is off to university this year. and to make some improvements to our house in France.

MY current investment totals around 5+k but i hope to increase that via monthly investments and any winfalls that come along the way.

I am also up over 19% in JPM shares and am just wondering how much longer Asia can sustain the levels they are at (althought they seem to they are on the way back to previous Levels *(12000+) according to Reuterns anyway.

Please excuse the spelling guys

jon3001

I must admit that I’m not sure what role high-yield bonds have in a growth portfolio unless it was for tactical reasons. I can see them being useful in an income portfolio. I’m happy for other forum members to share their thoughts on this.

In fact, aside from the emerging markets allocation, you’re portfolio looks very much geared toward income with its bonds, property and equity income allocations.

Given that you’re prepared for a 30-40% hit I’d make a couple of basic comments:

1. Your cash and investment-grade bond holdings amount to over 36% (I’m ignoring the high yield stuff). You can trim this down to 30% or even 20% to make room for higher risk investments.

2. Your appetite for risk suggests that you can include asset classes such as:

• UK Small Company Stocks (along the lines of your FTSE-250 idea)
• International Small Company Stocks
• Resource Stocks
• Commodity Futures

I think you’d be right to include developed markets such as Asia. Japan, Europe and the USA would also balance out the developed market allocations.

I like that you already have a solid allocation to alternative assets such as property. Other alternatives include the commodity/resource exposure I mentioned.

Doing all this will leave you with a more unconventional portfolio. Your returns would be very different from the FTSE-100. But because different asset classes usually fall and rise at different times it would hopefully give good risk-adjusted returns.

I’ll not give fund examples in all cases but here are some sample allocations:

Portfolio 1 (Moderate Complexity)

• 20% GBP Bonds (Investment-grade)
• 16% Property
• 8% Commodities (e.g. Marlborough ETF Commodity Fund)
• 8% Resource Stocks (e.g JPMorgan Natural Resources)
• 16% UK Equity
• 8% UK Smaller Company Stocks
• 6% Emerging Markets
• 18% International Equity (developed, ex UK)

Portfolio 2 (Higher Complexity)

• 14% GBP Bonds (Investment-grade)
• 6% International Bonds (Investment-grade)
• 8% UK Property
• 8% Global REITs
• 8% Commodities
• 8% Resource Stocks
• 8% UK Equity Income
• 8% UK Equity (Blend)
• 8% UK Smaller Company Stocks
• 6% Emerging Markets
• 3% US Equity (Blend)
• 3% US Smaller Company Stocks
• 3% Euro Equity (Blend)
• 3% Euro Smaller Company Stocks
• 1.5% Japan Equity (Blend)
• 1.5% Japan Smaller Company Stocks
• 3% Asia-Pacific Equity (ex Japan)

If you need more background reading on building a portfolio then take a look at books by William Bernstein or Roger Gibson.

THE IMPORTANT BIT. When you’re within 5yrs of liquidation you’ll be looking to scale the risk back year-by-year. That basically means having a higher proportion of investment-grade bonds until you’re maybe as high as 90% bonds. The biggest complaint I seem to read from novice investors is that the portfolio slumped just as they need the cash.

Maybe take a look at my bond portfolio strategy to see where you might want to head.

ses6jwg

Hi all sorry to go off topic but what is the difference between ACC and INC funds was looking at the Blackrock UK Alpha on https://www.iii.co.uk but there is an ACC and an INC fund what is the difference?

jamesd

ses6jwg wrote: »

Hi all sorry to go off topic but what is the difference between ACC and INC funds was looking at the Blackrock UK Alpha on https://www.iii.co.uk but there is an ACC and an INC fund what is the difference?

Accumulation units keep any income and increase the capital value. Income units pay it out as income. You can see this in the price difference because the accumulation version will be higher.

thedon313

Jon

Thanks for the considered reply. I really appreciate all the time and input. I will certianly look into your recomendations.

Maybe go for the more moderate policy until i have more ro invest then start to spead the risk. I had a look at your portfolio, are you nearing the time for cashing in your portfolio or are you still looking at a few more years?

I will also look at getting one of the suggested books,

Thanks again
Grant

jon3001

thedon313 wrote: »

I had a look at your portfolio, are you nearing the time for cashing in your portfolio or are you still looking at a few more years?

Hi Grant,

I've got two main portfolios.

The bonds one I linked to is one I'll be potentially liquidating within 3 years so I'm looking to reduce the risk quite a lot on that one.

I'm 36 so my retirement portfolio will have a while to run yet. I'm currently investing along the lines I highlighted the 'higher complexity' sample portfolio e.g. significant allocations to commodities/resources, international small company stocks as well as the usual domestic and developed markets.

I've no allocation to property - I've shunned it in recent years since it looked overvalued. However its starting to look more attractive and I'll probably start building up a position from the next tax year.

The portfolio is spread over my pension funds, ISAs and taxable accounts. I'm some way off drawing from it yet so haven't really made any firm decision on how I'll adjust in 20-30 years. I expect to de-risk a 25% portion on any pension fund holdings (by moving the funds to bonds) since you can liquidate that tax-free. I would similarly de-risk any portion I expected to use for an annuity. The remainer will probably undergo a tranisition from a growth portfolio to an income portfolio (with a greater emphasis on: bonds (investment grade and high yield), property and equity income.