Asset allocation mix

nxdmsandkaskdjaqd

Are there any generic models/rules of thumb for high risk all equity asset allocation by sector, ie:

1. UK equities
1.1 Large caps %
1.2 Smaller Companies %

2. US equities
2.1 Large caps %
2.2 Smaller Companies %

3. Europe equities
3.1 Large caps %
3.2 Smaller Companies %

4. Global Emerging Market equities %

dunstonh

There are various suppliers of such data. I buy mine with quarterly updates to take account of economic events and value. Most of the decent models are updated quarterly or half yearly. There are probably a number of "static" ones available on the net. The only thing you have to be careful of is that many seemed to be aimed at the US market which has different taxation issues to the UK and the US is generally inward looking (i.e. they tend to be US and rest of world whereas UK investors tend to be more global in outlook). If you look at your list you will see its missing a number of areas.

nxdmsandkaskdjaqd

dunstonh wrote: »

There are various suppliers of such data. I buy mine with quarterly updates to take account of economic events and value. Most of the decent models are updated quarterly or half yearly.

Would it be possible for you provide a typical model?

Reaper

There are a multitude of differing opinions. Here is one from a guy the Sunday Times asked for his opinion back in February:

Adventurous Model:
15% Fixed interest
10% Commercial Property
25% UK Equity
10% US Equity
10% European Equity
5% Japanese Equity
10% Asian equity
15% Emerging market equity

That is only one person's view, and my portfolio doesn't look much like that, but you asked for an example.

Californication

nxdmsandkaskdjaqd wrote: »

Are there any generic models/rules of thumb for high risk all equity asset allocation by sector, ie:

1. UK equities
1.1 Large caps %
1.2 Smaller Companies %

2. US equities
2.1 Large caps %
2.2 Smaller Companies %

3. Europe equities
3.1 Large caps %
3.2 Smaller Companies %

4. Global Emerging Market equities %

From the point of view of large vs small cap, the MSCI indices place stocks making up 85% of the market capitalisation in the main index, and the next 14% of market cap in the small cap index. (The missing 1% is for the really small, illiquid companies below the small cap.)

So if you want to create a mix that matches the whole market by cap weight, you'd put 86% in the main (includes large and mid cap) index and 14% in the small cap index. If you wanted more risk you could increase the amount in small caps.

There are various numbers for the proportion of emerging equities in the whole world index, but it's probably somewhere around 15%. So, to match the world by market cap you'd have 85% developed market stocks and 15% emerging. If you wanted more risk you could increase the amount in emerging market stocks.

--C

Linton

I am somewhat doubtful of the benefits of geographical diversification in the major western economies. Going for any broad fund in any mature western economy you end up being invested in similar major global companies that will tend to be closely correlated. Compare the Dow Jones, FTSE100 and the European indexes.

From that viewpoint you gain little by incurring the extra costs of foreign investment (even if it is via a UK fund).

Small companies are different; they will tend to be more influenced by the local situation.