Company SIPP, Asset Allocation and the Paradox of Choice

dunstonh

Agree on it missing Japan but a portfolio x Ray indicates nearly 30% in Asia. I'll probably switch the emerging Asia fund into a japan specific one.

Thats due to the types of fund used rather than correct sector allocation. i.e. using asian funds for emerging markets. Your allocation to emerging markets is high. So, actually splitting that so x% covers asian and x% covers emerging may be a better way of doing it.

I would be very wary of Japan and much prefer to ensure the investments are in Taiwan/S Korea/China etc. The two markets are very different, Japan hasnt provided any real growth for many years.

Japan is generally all or nothing. As a buy and hold its been dire but in rebalancing portfolios that volatility (without really going anywhere) can work well.

jamesd

Your allocation doesn't look unreasonable but I'll make some personal comments on my own views. I think that the gilts and high quality corporate bonds are over-valued at the moment so I'd be inclined to halve the holdings of them, or even eliminate them entirely until there's been a major correction after an increase in interest rates and inflation. Then the percentage you have now would look OK for some nice rebalancing at a low purchase price.

Aberdeen Emerging markets does very well, you might consider moving some of your regional emerging market money into that to tackle the concentration. You don't have a mention of Latin America and that may be worth doing, though the Aberdeen Emerging Markets fund has a lot there and natural resources funds are also likely to have a lot. This section is where I'd shift the gilt and bond money, mostly into Aberdeen Emerging Markets.

You have more in the UK than I would and do have, personally I look to keep UK below 25%. but that's for a long term view that the UK isn't where the greatest growth lies.

These changes would increase the risk level of the portfolio, but by moving out of a potential bubble in high quality bonds and gilts iI think it wouldn't be a bad thing overall. You might also consider using a strategic bond fund instead if you want to keep the risk level lower than the changes I've mentioned would.

All comments in this post are for someone with at least high risk tolerance plus many years, ideally decades, to go until retirement, or at least a plan not to buy an annuity within the next ten years. They also reflect a view that we're in the fairly early stages of a long term economic recovery and would need rejigging later in that process as equity markets shift to become over-valued. The mixture I'm writing about would probably not be sensible three to five years from now.

JamTomorrow

Thanks for all the comments which have helped develop and challenge my thinking and I've now determined my final allocation that will be put into action later today.

Final Allocation

Portfolio X-Ray

I'm halving my exposure to Bonds/GILTs and will re-assess in 12 months if this should be stepped up to 20%.

I've decided to get some direct exposure to Japan and Asia without it being emerging through the First State Asia Pacific Leaders and Schroder Tokyo Fund.

I've also got my LatAm exposure up to just above 5%.

Enjoyed the process of doing this myself and saved some cash in the process.