Fund managers

gadgetmind

Linton wrote: »

No, if you want a balanced core I would suggest you look elsewhere.

We appear to be more or less agreeing as I specifically said that >20% of a portfolio in the UK would need justification. As it happens, a lot of large FTSE companies do have good international exposure, but I tend to buy these directly, so I'm going to combine a few FTSE trackers to give me over-weighted exposure to the 250 and all share, and then add US, European, Pacific, EM and Japan alongside.

I'm really not sure what to do regards property, specifically global property. I must prefer close-ended vehicles for property to prevent the mad fire sale if/when the herd heads for the exits.

saveonarola

gadgetmind wrote: »

We appear to be more or less agreeing as I specifically said that >20% of a portfolio in the UK would need justification. As it happens, a lot of large FTSE companies do have good international exposure [...]

Sounds like justification to me Also, currency risk. (FWIW, Vanguard LifeStrategy 100% is 35% in the UK!)

gadgetmind wrote: »

I'm really not sure what to do regards property, specifically global property. I must prefer close-ended vehicles for property to prevent the mad fire sale if/when the herd heads for the exits.

Can you explain? I was thinking of going for (what I think is) the only property unit trust tracker, BlackRock Global Property Security Equities Tracker, because paying dealing fees doesn't make sense for the small amount I plan to drip-feed. Why would a closed-end fund perform better in a downturn?

gadgetmind

saveonarola wrote: »

(FWIW, Vanguard LifeStrategy 100% is 35% in the UK!)

How is that split between all share, FTSE 100, FTSE 250, etc.?

BTW, Investment Trusts seem to "pollute" the FTSE 250 IMO by causing other FTSE sector companies to be represented in the lower indexes - an argument against trackers in these areas?

Can you explain? I was thinking of going for (what I think is) the only property unit trust tracker, BlackRock Global Property Security Equities Tracker, because paying dealing fees doesn't make sense for the small amount I plan to drip-feed. Why would a closed-end fund perform better in a downturn?

At the first hint of a property downturn, people start to pull money out from the sector. An open-ended fund that owns property directly now has a problem as more people want their money back than it has cash. It has two choices, 1) start flogging property into a bad market as fast as they can, 2) close the fund so no-one can take out money. They frequently use a combination of these two.

A close-ended fund just drops in value, perhaps well down below its Net Asset Value. This is fine, as it gives those who rebalance a chance to buy a bargain, and more importantly, the property owned by the fund doesn't have to be sold at rubbish prices.

Even Mr Hargreaves says that you should hold property via a close-ended vehicle!

From the sound of that Blackrock tracker, it tracks the value of various global REITs, which are Real Estate Investment Trusts. As a result, you can perhaps think of that Blackrock fund as closer to close-ended.

Hargreaves Lansdown don't seem to have that Blackrock tracker - what's its TER? HL do have the First State Global Securities fund, whch also holds REITs, but it has a TER of 1.74%, and then the underlying REITs will have their own costs.

JamesU

saveonarola wrote: »

I was thinking of going for (what I think is) the only property unit trust tracker, BlackRock Global Property Security Equities Tracker, because paying dealing fees doesn't make sense for the small amount I plan to drip-feed. Why would a closed-end fund perform better in a downturn?

The fairly new Blackrock offering (approx 0.9%) follows the FTSE EPRA/Nareit global developed and would suit fine for low dealing cost purchases at HL. Tracks similar to ishare etf IWDP (approx 0.6%, replicated) and there are also the newer etfs db-xtracker XGLR (approx 0.6%, synthetic) and HSBC etf HPRO (0.4%, replicated).

Only high composition weightings above 2% in this index at present are Simon property (US) Sun Hung Kai (HK) Westfield (Australia) and Mitsubishi estates (Jp) in 2-4% range each, 390 global holdings in total so reasonable diversity overall including trusts and reits.

However using the Blackrock fund index or the etfs mentioned above, the index has 40% US in total, a positive or negative depending on preference and longer term views. Can be circumvented on the etf side rather than index fund side with say US ishare IFGL which is FTSE EPRA/Nareit global developed ex US, but may have difficulty to purchase this one depending on provider used.

JamesU

saveonarola

gadgetmind wrote: »

How is that split between all share, FTSE 100, FTSE 250, etc.?

It's all All-Share.

gadgetmind wrote: »

BTW, Investment Trusts seem to "pollute" the FTSE 250 IMO by causing other FTSE sector companies to be represented in the lower indexes - an argument against trackers in these areas?

Interesting point, but I guess most passive investors would get an All-Share tracker and then maybe a small cap IT or something like that if they wanted a little tilt in that direction. Personally, I'll be quite happy to go All-Share and leave it at that.

gadgetmind wrote: »

From the sound of that Blackrock tracker, it tracks the value of various global REITs, which are Real Estate Investment Trusts. As a result, you can perhaps think of that Blackrock fund as closer to close-ended.

Thanks - that's very helpful. I had read something about funds owning property directly, but having only looked at ETFs and the BlackRock fund I mentioned, I thought I was getting around that problem. It seems that I was right. Actually, I think the BlackRock fund invests in both REITs and the shares of individual property companies, but I guess it amounts to the same thing. No need for the fund to sell physical property.

gadgetmind wrote: »

Hargreaves Lansdown don't seem to have that Blackrock tracker - what's its TER?

HL do have the BlackRock tracker, although it's not on their website (I phoned to ask them): Class A (Acc) units (ISIN: GB00B670Q951); TER 0.88%; fully discounted initial charge; usual £1,000 min. lump sum/£50 monthly regular investment.

http://www.blackrock.co.uk/content/groups/uksite/documents/literature/1111136072.pdf
http://www.blackrock.co.uk/content/groups/uksite/documents/literature/1111134424.pdf

If you're interested in global property trackers, I did a preliminary (but reasonably accurate, I hope) round-up of the limited low-cost options in the comments thread of this article:

http://monevator.com/2010/10/19/9-lazy-portfolios-for-uk-passive-investors-2010/comment-page-1/#comments

gadgetmind

gadgetmind wrote: »

Hargreaves Lansdown don't seem to have that Blackrock tracker - what's its TER? HL do have the First State Global Securities fund, whch also holds REITs, but it has a TER of 1.74%, and then the underlying REITs will have their own costs.

HL will deal that Blackrock Property tracker over the 'phone. TER is 0.88%

They also now allow online dealing of HSBC UK Gilt Index with a TER of 0.26%

I forgot to ask them about the Blackrock EM tracker.

saveonarola

JamesU wrote: »

The fairly new Blackrock offering (approx 0.9%) follows the FTSE EPRA/Nareit global developed and would suit fine for low dealing cost purchases at HL. Tracks similar to ishare etf IWDP (approx 0.6%, replicated) and there are also the newer etfs db-xtracker XGLR (approx 0.6%, synthetic) and HSBC etf HPRO (0.4%, replicated).

Thanks. Posted my above reply to gadgetmind before reading your comment, so some info may be repeated. My post at Monevator linked to above covers the ETFs you mention.

Ark_Welder

Just a point to remember about property is that - like commodities - there are the physical items, and there are the shares of companies in that sector. A security that holds company and/or REIT shares is still an equities fund, just one that concentrates on a particular sector. So how to gain exposure might depend upon how you view the particular underlying asset class.

dunstonh

The class A blackrock trackers pay a commission to HL. The better Class D trackers do not.

saveonarola

dunstonh wrote: »

The class A blackrock trackers pay a commission to HL. The better Class D trackers do not.

It's not easy to get hold of Class D, though. Skandia offers Class D units of that property tracker for a TER of 0.2%, but Skandia is IFA only. If you use an IFA, great. But otherwise options are limited or non-existent, I think. It's hard enough to find the Class A units. (I'm going with Bestinvest, which uses Fidelity and Cofunds, neither of which offer that fund. Bestinvest are finding out for me if they can add the fund, but if not the only option would be to nominate them as broker and get it from BlackRock. Bestinvest would discount the initial charge, but I wouldn't be able to subscribe to any other funds for that tax year, so it's too restrictive.)

Edit: To clarify, I wouldn't be able to subscribe to any other funds within an ISA for that tax year, or I would have to hold the BlackRock fund outside the ISA, which would mean a Bed&ISA later, with associated costs, unless the fund was added to the platform, in which case BlackRock would re-register it without charge. But to hold the BlackRock fund outside the ISA means slightly complicated admin, with forms going back and forth rather than everything through the website.