Where should i invest £300K

dunstonh

This is very simply and sensibly expressed. I should be interested to read what others who understand - rather than just comment on - these matters think of your breakdown. (Particularly the third portion)

I would say its too simple and not as "low risk" as it is made out to be by some on here. Its misses out some key sectors.

Can I confirm once and for all that when you use the phrase Equity Income Funds you are basically referring to 'UK Equity Large Cap Value' Funds as described by, say, Morningstar - that is not Blend or Growth Funds. I am sorry to be so specific but differing terminology does cause me the occasional headache. Many thanks.

THere is no reason for an equity income sector fund to focus on large cap. The main sector name is UK Equity Income.

cheerfulcat

baldbloke wrote:

Can I confirm once and for all that when you use the phrase Equity Income Funds you are basically referring to 'UK Equity Large Cap Value' Funds as described by, say, Morningstar - that is not Blend or Growth Funds. I am sorry to be so specific but differing terminology does cause me the occasional headache. Many thanks.

Look under IMA Sectors rather than Morningstar Category.

nickyhutch

Don't bother with bald bloke - cowboys!! If you PM me, I'll pass on my bank details - problem solved!!:beer:

baldbloke_2

nickyhutch wrote:

Don't bother with bald bloke - cowboys!! If you PM me, I'll pass on my bank details - problem solved!!:beer:

Ah! But have you been recommended in the Sunday Sport GivUsYerMoney Guide?

I think not!

I rest my case.

Chancer!

nickyhutch

No, but I have an uncle in Nigeria who needs a british bank account..........

:-0

EdInvestor

baldbloke wrote:

Can I confirm once and for all that when you use the phrase Equity Income Funds you are basically referring to 'UK Equity Large Cap Value' Funds as described by, say, Morningstar - that is not Blend or Growth Funds. I am sorry to be so specific but differing terminology does cause me the occasional headache. Many thanks.Alan

Yes, that's correct. Size does matter when talking about low risk.

The gold standard for UK Equity Income funds is probably Invesco Perpetual Income.Have a look at the shares it holds, all large cap.

Other top performers are the AXA Framlington fund, which is a bit more varied. The Rathbone and Standard Life versions are both fairly classic.

You look primarily for large caps, a diversified portfolio ( not too many bank shares) some defensive shares ( fags,booze,food,phones,utilities) which do OK in a downturn, good dividends and low debt.

EdInvestor

Its misses out some key sectors.

For a good reason: the idea is to reduce risk.

However if you want to "spice up" the strategy a bit, just divert 5 or 10% of the cash allocation into something a bit racier such as (highest risk first):

#commodities funds
#UK small cap funds
#one country emerging market funds
#broader foreign funds
#tracker funds
#UK special situations/growth funds.


Many a low-medium risk investor will have held Fidelity Special Situations fund in his portfolio, for example, and will now be waiting to see if the Bolton magic will last under the new manager .....

Note that with foreign funds you are exposed to currency risk, and also that your Equity Income fund may have some big oil and mining companies in it, so that you don't need a separate commodities fund.

dunstonh

Including other sectors doesnt increase risk unless you start putting heavy percentages into them. The increased diversification also reduces risk a little and there are other low risk sectors you havent included.

For example, I risk rate portfolios on a "score" of 1 to 10. A risk 4 portfolio would have the following spread:
UK Fixed Interest 30.00%
International Fixed Interest 15.00%
Property 25.00%
UK Equity 10.00%
North American 5.00%
European 5.00%
Japanese 3.00%
Far East Ex Japan 2.00%
Emerging Market Equity 2.00%
Global Specialist 3.00%

It would have annual rebalancing as well to ensure that spread is maintained.

Chrismaths

@ Ed. The reason the top 10 of Inv Perp Income is invested in large caps is because Neil Woodford runs about £10 billion in equities!! To get into the top 10, he'd need to have >3.1% weighting. This is £310 million, which would buy you the entire company if it was small cap, or even at the lower end of the 250! If Woodford wants to get into or out of a stock it takes a long time - which makes his performance all the more impressive.

The AXA Framlington Equity Income fund has 'soft closed' - ie no discounts on front end load, to avoid this problem (at around £1bn), as Luckraft has always been more multicap.

Just thought it was worth pointing out.

cheerfulcat

dh, the OP stated that an income was required from this investment; this is why I ( and presumably why Ed ) suggested equity income and property. I suppose that you could argue that your selection of funds could be held in an insurance bond but we don't really want to go down that road again, do we?