rebalancing my portfolio

dboswell

its about 6-months since I last looked at my portfolio (and valued). Should I reallocate?

currently it is as follows:

33% cash (various high street and internet accounts)
8% bonds (M&G corporate bond)
25% UK equities (M&G recovery, ETFs and self managed portfolio of 15 shares)
8% USA (ETFs)
8% Pacific - Mostly China (first state and ETFs)
5% in India, Brazil and a few others (ETFs)
3% in Europe ex UK (ETFs)
10% in commodities - gold, oil, silver, copper.

I am 38.

I would be interested in a canadian share ETF and FTSE all share ETFs. any ideas?

thank you.

xyy123

Well it all depends on what your objectives and requirements are really doesn't it?

If you're 38 and don't need any of the money for income or cash flow for the next 5+ years I'd say you're too cash heavy, so go for more equity. Also I don't like bonds - I always say to people if you're aiming for growth and you're attracted to a company's bonds, why not just buy the equity?

In terms of style, I think:

• Large cap will beat small cap.
• Growth will beat value.
• Financials will lag.
• Materials and resources will lead.
• Emerging markets will beat developed markets (I like South America).

You seem to have quite a bit in emerging markets - remember they account for less than 1% of global markets (I think) but if you're happy with that then thats fine. Although I wonder if it would make more sense using a global tracker like MSCI World iShares? That way you basically have exposure everywhere and pay less brokerage if/when you need to sell. Depends how much volatility you can handle really.

As for your commodities, I don't use them so don't know a lot about them. Again I simply say to people if they like gold, why not buy a gold mining company? I think commodity prices are a lot harder to predict than equity prices.

FATHEROFTWO_2

dboswell wrote: »

its about 6-months since I last looked at my portfolio (and valued). Should I reallocate?

currently it is as follows:

33% cash (various high street and internet accounts)
8% bonds (M&G corporate bond)
25% UK equities (M&G recovery, ETFs and self managed portfolio of 15 shares)
8% USA (ETFs)
8% Pacific - Mostly China (first state and ETFs)
5% in India, Brazil and a few others (ETFs)
3% in Europe ex UK (ETFs)
10% in commodities - gold, oil, silver, copper.

I am 38.

I would be interested in a canadian share ETF and FTSE all share ETFs. any ideas?

thank you.

I would say that you should start to drip feed
more of your cash into funds especially if you are in long term and I would look at increasing your european exposure considerable by investing into a fund such as Neptune european opps /gartmore euro select or similar

I would also increase my Bond allocation considerable.

Have a look at the bestinvest website and go to investments and asset allocation

bendix

So here we have it. Two replies and two wildly different responses which basically goes to show the futility of asking the question in the first place.

So far as I can make out, the OP is 33% in cash, 8% in bonds, 10% in commodities and 50%ish in shares, of which half is in UK shares.

Given that the OP is only 38 and at least 25 years to retirement, I would have thought pretty much any asset allocation around these levels would be ok. Personally, I'd want less cash and more in shares, but that's a personal thing. And isn't that the point - there is no ideal asset allocation because it is all to do with personal attitudes to risk, investment horizons and objectives etc etc.

Californication

bendix wrote: »

Given that the OP is only 38 and at least 25 years to retirement

But for all we know the OP is saving for school fees and needs the money next year... As you rightly say, we know nothing about his financial objectives, attitude to risk, or other assets or liabilities.

I think this website can be a bit dangerous in the sense that people who know very little (not referring to the OP in particular) come and receive very specific suggestions about how they should invest, from people who know nothing about their situations.

--C

jon3001

xyy123 wrote: »

I always say to people if you're aiming for growth and you're attracted to a company's bonds, why not just buy the equity?

Because having assets that are uncorrelated with the general stock market can be good.

xyy123 wrote: »

You seem to have quite a bit in emerging markets -

Because having assets that are uncorrelated with the general stock market can be good.

xyy123 wrote: »

Again I simply say to people if they like gold, why not buy a gold mining company?

Because having assets that are uncorrelated with the general stock market can be good.

xyy123

jon3001 wrote: »

Because having assets that are uncorrelated with the general stock market can be good.

When the market is going down as opposed to up, presumably?

By the way, in what way are emerging markets not correlated with the "general stock market"?

jcj

With the way the government is printing money I wouldn't want to be holding 33% of my portfolio in cash right now.

I'd look to decrease your cash position by putting it in something like a commodities etf as a hedge against inflation.

jon3001

xyy123 wrote: »

When the market is going down as opposed to up, presumably?

A diversified portfolio of uncorrelated assets produces better risk-adjusted returns. It's the basis of Modern Portfolio Theory.

xyy123 wrote: »

By the way, in what way are emerging markets not correlated with the "general stock market"?

Correlation coefficient. As long as they're not perfectly correlated you can reduce risk and increase return.

Browntrout_2

You have asked if you should re-balance after 6 months, this suggests you had a balanced portfolio when you set it up six months ago?

Your high use of ETFs and self select shares suggests you prefer DIY investing. You have therefore decided on the actual asset allocation that will best meet your needs and goals.

However if it was balanced previously a rise or fall in some of your portfolio components will take it out of balance.

If, for example, the proportion of one of the components increases, then it may be good to sell the increased component and use the money to restore the balance by investing in the other components. On the other hand, if you have some cash free you can use it to invest in the rest of the components to restore the balance.

This is a nice problem to have but difficult to manage over the long term, in fact most of us don't manage it. Buy High sell low being the norm.

I have a high proportion of my ISA/SIPP in Globally Managed Unit Trust Funds and actually need to stop tinkering as it is 'time in the market' not 'timing the market' that is the key to long term performance.

Rollinghome

Browntrout wrote: »

it is 'time in the market' not 'timing the market' that is the key to long term performance.

Doesn't that rather depend what you mean by long term? Some people might consider that 10 years was a long time but the FT All share is still 10% down on where it was 10 years ago. Someone who had drip-fed consistently throughout would be just below breakeven ignoring dividends. I bet it isn't a phrase much used in or of Japan.

It tends to be a useful to those trying to sell their products today rather than tomorrow but ignoring the timing of investment does seem to be a policy of despair. I wouldn't be too impressed by an investment manager who put much store by it. I wonder who coined it?