Portfolio plan critique

viola_brandywine

I currently have investments in 3 funds but am planning to extend this to 8-10. I will be investing money I won't need access to any time soon and I am willing to take a risk. I have already built up some cash savings (and will continue to) and hope to have my mortgage paid off soon. I feel now is the right time to increase my higher risk investments.

I plan to drip feed the investments by £20-50 per month (totalling £200 per month, rotating between funds) but I will be starting the investment by splitting an existing one. I am 29 and married but no children yet. The investment is for the long term to help us out with our family in the future.

This is my plan. It will be split between my current Hargreaves Lansdown ISA and a new Interactive Investor ISA for my husband. His will be trasferred from the Nationwide tracker.

AXA Framlington Global Technology (HL) - 10%
HSBC FTSE All-share Index (HL) 25%
Invesco Perpetual High Income (HL) 15%
Aberdeen Emerging markets (HL) 10%
HSBC American Index (iii) 15%
HSBC Pacific Index (iii) - 10%
HSBC European Index (iii) - 10%
HSBC Japan Index (iii) - 5%

All accumulation shares where applicable. I may swap HSBC trackers for L&G equivalents. I am also considering Artemis Strategic Assets or a UK special situations fund.

I am going for geographical spread and a reasonable spread of risk. I already have £1400 spread between the HSBC FTSE All-share tracker, L&G FTSE 100 tracker (through nationwide) and the Invesco. I plan to split the FTSE 100 tracker between the other HSBC trackers. I may also increase the investments in the future if my disposable income increases.

Comments welcome!

masonic

I think you'll find the charges on the HSBC funds are lower (at least at HL they are), so I would stick with them where possible. You may want to consider getting some more exposure to smaller companies - this is something you may be able to get with the special situations fund you are considering.

viola_brandywine

Thanks masonic. I did think about a small companies focused fund so will look more into that. I am also wondering about the L&G emerging markets tracker as an alternative to the Aberdeen fund.

I'm just wondering what else I may have missed or if I have any overlap.

masonic

I've looked at that L&G fund one but the charges are quite high - not that much lower than a managed fund. Personally, I think emerging markets is one place a managed fund makes sense.

You've covered the main geographic markets and there isn't much scope for overlap in most of the funds you have chosen. Obviously Invesco Perpetual High Income will have a lot of overlap with the UK tracker, but that can't really be avoided. Your approach looks very reasonable to me in terms of the core of your portfolio, and what you choose to spice things up (e.g. Technology), is mostly a personal decision. You'll be able add more in the way of specialist funds as the portfolio grows. It's best to keep things simple in the beginning so that you aren't tempted to invest too much in the more high-risk areas.

mr_fishbulb

viola_brandywine wrote: »

Thanks masonic. I did think about a small companies focused fund so will look more into that. I am also wondering about the L&G emerging markets tracker as an alternative to the Aberdeen fund.

My view on trackers is they are good for mature markets (i.e. UK or US), but personally I'm willing to pay the extra for a managed fun in more immature/volatile sector such as Emerging Markets. That said I'm not expecting much growth in this area this year.

I hold the Baillie Gifford and the Schroder Emerging Markets funds.

Totton

With choosing so many funds from the HSBC stable I wonder why you don't just use their Global fund and save yourself the hassle of determining geographical weightings. it may be that you want to avoid the additional 1% or so that would entail but then you have the IP and Axa funds which charge similar. My concern would be that 65% is sitting with the one investment house and consequently most likely reliant on them getting it right.

I hold the Artemis fund, it isn't doing badly but neither is it doing what it sets out to do in a falling market. Littlewood is likely to come good though so not a bad choice. I'd suggest taking a look at the L&G UK Alpha Trust, I gather it favours mid to smaller cap but either way it is a solid performer in the UK arena. I don't hold it myself but it is on my short list of future purchases.

Best Wishes,
Mickey

Richard_DandR

L&G UK Alpha has a very wide spread - you'd be looking at an immediate loss of about 5%.

masonic

Totton wrote: »

With choosing so many funds from the HSBC stable I wonder why you don't just use their Global fund and save yourself the hassle of determining geographical weightings. it may be that you want to avoid the additional 1% or so that would entail but then you have the IP and Axa funds which charge similar. My concern would be that 65% is sitting with the one investment house and consequently most likely reliant on them getting it right.

I'd be interested in hearing more about this as I have been forced to do the same as the OP with regard to the HSBC index trackers. The only HSBC global fund offered by HL is a very pricey fund of funds. Is it another fund you are referring to? I'm also not sure about your comment about the fund house 'getting it right'. I'll assume you are aware that these are index trackers and therefore there is no active management by the fund manager. Do you mean something else by your comment?

Edit: I should also comment that now I have chosen my own geographic weightings, I'm quite happy to stick with them, so I ask purely out of interest.

masonic

Richard_DandR wrote: »

L&G UK Alpha has a very wide spread - you'd be looking at an immediate loss of about 5%.

Very true, and despite this I hold it! I guess I console myself with the fact that over the long term that will become less and less important.

viola_brandywine

Thanks for all the reponses - it is very helpful to hear some other opinions. I did think that I preferred a managed fund for emerging markets which is why I chose the aberdeen. Being fairly new to this I wasn't sure if I was right to feel this way. I think I will stick with it. Also a good point about all the HSBC trackers - I hadn't really thought about the implications of having lots with the same house. I do want to keep the geographical areas seperate though so I can't rebalance if I feel I need to.

SteveSilva

Aberdeen Emerging markets seems to be a popular choice, are they a truly consistent performer, although there are supposed to be cheaper alternatives just as good?