Rebalancing a portfolio

Mortgage_&_debt_free

Hi all

Just going through a tortuous rebalancing exercise and would appreciate any comment anyone has.

A bit about me. No debts, mortgage paid off & in FS Local Govt Pension Scheme. With this in mind I think I can be adventurous in investment, but would like to know if others think the following reflects this;

I'm probably going to rebalance my current fund as follows;

UK All Co's 24.5%
Schroder Mid 250, Invesco UK Aggressive, Fid SS

UK Equity Income 13.7%
Invesco Perp High Income, SL High Income
UK Small Co's 9%
Standard Life UK Smaller Co's

Europe Exc UK 15%
Schroder European Alpha, Artemis European, Fidelity European
Emerging Markets 5%
Invesco Emerging Countries
Allianz BRIC

Asia Exc Japan 9%
First State Investments Greater China Growth, Invesco Perp HK & China & Newton Oriental

Japan 2.5%
Schroder Tokyo, Cler Med Japan Fund, Stand Life Japanese Pension One Fund
USA 6.2%
GAM North American Growth, Cler Med North American Fund, Stnd Life Pension N American Fund

Global 3%
Fidelity Global Sec Sit

Specialist 2.7%
First State Global Resources

Commercial Property 9.7%
Stand Life Pension Property One Fund, Stand Life Select Property Pension One Fund

Future monthly investments this year, I'm thinking along the lines of;

UK All Co's 18.92
UK Equity Income 16.40
UK Small Co's 9.46
Europe Exc UK 18.77
Emerging Markets 6.16
Asia Exc Japan 12.31
Japan 1.89
USA 6.16
Global 6.16
Specialist 0.00
Commercial Property 3.78

Followed by rebalancing this time next year.

I would be interested in any comment, particularly if you want to pick holes in it (yes, I'm looking for some reassurance it's not contradictory, suicidal, etc).

Cheers

dunstonh

I cant give you a longer response right now as I am off out shortly but you should note that the Std Life property one fund is bricks and mortar but the select property fund is share based. The latter should really fall into specialist rather than property given the risk differences.

Mortgage_&_debt_free

dunstonh wrote:

I cant give you a longer response right now as I am off out shortly but you should note that the Std Life property one fund is bricks and mortar but the select property fund is share based. The latter should really fall into specialist rather than property given the risk differences.

Thanks for the tip Dunstonh, I'll have a closer look at it.
Any other comments you've got later would be much appreciated.

EdInvestor

Blimey how much money is involved here? You've got 24 funds there.:eek:

Sounds like a lot of hard work.

Why the "rebalancing"?

carnet

Mortgage_&_debt_free wrote:

I would be interested in any comment, particularly if you want to pick holes in it (yes, I'm looking for some reassurance it's not contradictory, suicidal, etc).

Well, as you're asking, out of the 24 funds mentioned, IMHO only 4 or, at most 5, are worthy of serious consideration and, of those, only 3 make it into my current portfolios.

Mortgage_&_debt_free

About £40k.

One of the issues is that all but £4k I am rebalancing is in my Final Salary AVC fund which is currently in a balanced managed fund that I want to come away from, so there are limited funds available, although I don't think there's a problem splitting them over the various funds if it comes to that.

Carnet, I would be interested in which funds (4 or 5) you think are better than the others. It may be that these are only available in my ISA fund, which I can invest into going forward, but can't transfer my AVC funds into.

I will probably cut down some of the funds when I've done some more research, but I'm beginning not to see the wood for the trees. As for the research I'm using a combination of HL 150, Best Invest Fund Manager, and (unfortunately) what's available via my AVC funds (CM & SL).

Any tips on research techniques would be really useful.


Any other comments welcome.

Cheers

EdInvestor

https://www.citywire.co.uk/Funds/Home.aspx.

Call up the top 10 funds in your chosen sectors over 10 years and check that they perform over 1,3 and 5 as well for consistency.

BTW as I understand the concept of "rebalancing", it relates to setting up an asset allocation and then making sure the constitutent parts of the portfolio stick to the percentages they have been given.Thus if one fund goes up a lot you would sell some units and reinvest in a fund that had become "underweight".

I am unconvinced personally that there is any need to do this except in very extreme cases which normally take some time (years) to develop.In some circles "rebalancing" might be seen as another word for "churning".

It doesn't sound as though what you are doing is actually rebalancing.

Mortgage_&_debt_free

EdInvestor wrote:

https://www.citywire.co.uk/Funds/Home.aspx.

Call up the top 10 funds in your chosen sectors over 10 years and check that they perform over 1,3 and 5 as well for consistency.

BTW as I understand the concept of "rebalancing", it relates to setting up an asset allocation and then making sure the constitutent parts of the portfolio stick to the percentages they have been given.Thus if one fund goes up a lot you would sell some units and reinvest in a fund that had become "underweight".

I am unconvinced personally that there is any need to do this except in very extreme cases which normally take some time (years) to develop.In some circles "rebalancing" might be seen as another word for "churning".

It doesn't sound as though what you are doing is actually rebalancing.

Hi Ed, probably my misuse of grammar, but as I have decided to come away from the balanced managed funds I need to sort out where it's going, so perhaps it's balancing rather than rebalancing!

Point taken about the frequency of it, I suppose the best thing is to see how it all looks at the end of the year.

Thanks

Mortgage_&_debt_free

Done a bit more to whittle down, now have an indicative current fund split of:

Schroder Mid 250 24%
Invesco Perp High Income, SL High Income 15%
SL UK Smaller Co's 10%
Schroder European Alpha 16%
Aberdeen Emerging, Allianz BRIC 4%
First State Greater China Growth 10%
Schroder Tokyo 3%
GAM North American Growth 7%
SL Pension Property One Fund 11%

Any thoughts?

Chrismaths

Edinvestor wrote:

www.citywire.co.uk/Funds/Home.aspx.

Call up the top 10 funds in your chosen sectors over 10 years and check that they perform over 1,3 and 5 as well for consistency.

BTW as I understand the concept of "rebalancing", it relates to setting up an asset allocation and then making sure the constitutent parts of the portfolio stick to the percentages they have been given.Thus if one fund goes up a lot you would sell some units and reinvest in a fund that had become "underweight".

I am unconvinced personally that there is any need to do this except in very extreme cases which normally take some time (years) to develop.In some circles "rebalancing" might be seen as another word for "churning".

It doesn't sound as though what you are doing is actually rebalancing.

Rubbish as usual. I've explained the reasons before and I can't be bothered again.

M&DF - you have put down "SL High Income" - Is this Standard Life Higher Income or is this Standard life UK Equity High Income? The Higher Income fund is a high yield bond fund, and is very different to equity income.

si1503

carnet wrote:

Well, as you're asking, out of the 24 funds mentioned, IMHO only 4 or, at most 5, are worthy of serious consideration and, of those, only 3 make it into my current portfolios.

I agree with carnet (yet again) on his opinions on that fund selection. Personally when choosing a fund, to maximise the efficiency of your fund selection you should be choosing funds with the best potential returns for their level of risk, given those choices and their sectors I feel there are better returns to be found from other funds within the same sectors, it just a case of research, research, research.

Some of the funds you've mentioned that I personally rate are the Invesco High Income, consistantly a top performer in the UK equity income sector. Schroders Mid 250, Std Life Select Property, and also the First State China and Gtr China, all have shown solid recent performance in their sectors. The others I probably wouldn't consider investing in right now personally, but that is not to put you off investing into any of those, they may well perform very well over the forthcoming months/years, it is impossible to tell.