The Windfall Diary

gadgetmind

BlackRock UK Dynamic UT 6960 units £9,926
Cazenove UK Growth & Income OEIC 5328 units £10,193
Standard Life UK Equity Growth OEIC 4737 units £10,090

Three UK funds.

Fidelity American OEIC 612 units £11,016
JPM US OEIC 2623 units £11,100
M&G American (share class X) OEIC 1027 units £10,629
Threadneedle American OEIC 9879 units £11,256

And four US funds.

I'm not much of a user of active funds myself, so I'd appreciate it if anyone who is could explain why so many overlapping funds have been used and what each one brings to the portfolio? I'd have guessed that they differed in cap size, but there is also "Schroder US Mid Cap" in there.

fairleads

jamesd wrote: »

Though please do note that unlike your IFA and dunstonh I'm not in any way professionally qualified in this field, 1)just a decent learner... 2)I'm generally happy with what your IFA has been suggesting, except just the investment trust bit and some lower priority items like pension recycling which may just be on the to do list to avoid overwhelming you both at the start.

1)Thats the problem, its no substitute for the retirement experience.
2) Does that make it right though?

fairleads

WindfallWinnie wrote: »

This is the spread of funds for the pension, values as of yesterday. Bear in mind that IFA asks hubby for his attitude to risk in form of a questionnaire 1-2 times/year. Last time he did it his attitude was 7/10 & the funds selected reflect this.

Aviva Property Trust UT 9320 units £12,237
BlackRock UK Dynamic UT 6960 units £9,926
Cazenove UK Growth & Income OEIC 5328 units £10,193
Fidelity American OEIC 612 units £11,016
Fidelity MoneyBuilder Income OEIC 24385 units £7,813
Fidelity SE Asia OEIC 981 units £6,204
First State Asia Pacific Leaders OEIC 1820 units £6,168
Henderson Strategic Bond OEIC 6884 units £7,842
Invesco Perpetual Japan OEIC 2812 units £5,617
JOHCM Continental Europeean OEIC 3876 units £7,744
JPM US OEIC 2623 units £11,100
M&G American (share class X) OEIC 1027 units £10,629
M&G Property Portfolio (share class A) UT 21249 units £15,548
M&G Recovery (share class X) OEIC 5922 units £10,660
Schroder European Alpha Plus UT 7816 units £7,902
Schroder Tokyo UT 4310 units £7,440
Schroder US Mid Cap UT 9363 units £5,344
Standard Life UK Equity Growth OEIC 4737 units £10,090
Threadneedle American OEIC 9879 units £11,256

(all figures rounded)

Total pension fund value: £175,000 approx

ISA invested in similar funds: £24,500 approx

Now that I've been through that I might find a program/app that lets me track the various funds...

Weighted average annual return on this portfolio has been 3.45% p/a for the past 4.4yrs. So you'd have been better off in cash. And this return for 30 yrs would definitely negate all of the 20% taxrelief and probably the 40% as well. When you deduct the IFAs fees its possible you'd have obtained a better outcome sticking the cash under the matteress.

gadgetmind

fairleads wrote: »

Weighted average annual return on this portfolio has been 3.45% p/a for the past 4.4yrs

4.4 years? Why not 4.6 years, or 4.3 years? What's so special about 4.4? Why did you pick this exact time period and please do give a very full answer as I find this an intriguing issue and am happy to spend considerable time to bottom it out.

fairleads

gadgetmind wrote: »

4.4 years? Why not 4.6 years, or 4.3 years? What's so special about 4.4? Why did you pick this exact time period and please do give a very full answer as I find this an intriguing issue and am happy to spend considerable time to bottom it out.

I've taken the shortest period of continuous management. Aviva and M& G property funds both have short manager history. Not the best test of returns, especially when some of the best returns in this portfolio come from funds managed by managers with more than 10 yrs experience.

The more info i have on this particular portfolio the more accurate, and more representative of a true life situation, the result will be. It would be a help if info such as purchase dates, number and price of units purchased etc were available. But i won't hold my breath waiting. Interesting is that this portfolio is a classic case of diversity diluting returns. A sure sign that the IFA is doing no more than hedging their bets, rather than providing a balanced or, should i say, a more focused portfolio. Focused on producing, over the long term, an inflation beating return that is. We both know its not rocket science. Unfortunately we're often distracted/spoilt for choice so to speak, which can be counter productive.

gadgetmind

fairleads wrote: »

I've taken the shortest period of continuous management. Aviva and M& G property funds both have short manager history.

So what? Studies have shown the managers count for little, so backtest further.

Interesting is that this portfolio is a classic case of diversity diluting returns. A sure sign that the IFA is doing no more than hedging their bets

Agreed. A high fee closet tracker.

jamesd

WindfallWinnie wrote: »

Hubby has shares in the company he works for & it was suggested that he reduce (sell) part of his holding up to the value of his CGT allowance on an annual basis.

I agree. His income is already tied to the future of the company and diversifying away from it with his investments makes sense.

WindfallWinnie wrote: »

The returns generated by the structured investment plans in my name could potentially produce in excess of my CGT allowance.

Possible, but you're not generally forced to sell funds, so you can time your sales based on whether you did or didn't use the allowance. Main forcing factor for fund sales could be change of economic situation that makes it undesirable to hold a particular fund.

Glad there's a reason for the IT use, still don't think it's a really good idea, though.

For the investments, remember that from periods including early to the end of 2008 most investments have barely if at all beaten cash. That doesn't make investments that would have done well during that whole period the best ones to be using today. The main reservation I have about the investment selection is Japan, but maybe Japan will eventually do well - it's certainly cheap.

gadgetmind

jamesd wrote: »

The main reservation I have about the investment selection is Japan, but maybe Japan will eventually do well - it's certainly cheap.

Japan is complicated. I've visited the country over 30 times over the years, and I still can't get my head around it. However, I actually think Japan *likes* people to think they are weak and have major problems, but they are in reality pretty well placed regards infrastructure, education, social cohesion, and technological and industrial base.

I'm slightly over-weight Japan via my holding in Ruffer IT.

jamesd

Yes, complicated is a good word for Japan. Two other good words are demographically challenged, re the aging population and what that may imply for sustained selling pressure on domestic asset prices. So far it's been a really great example of a value trap but maybe that'll change. I'm pretty underweight, hold it mostly via my global tracker investments, mainly Vanguard. Has been doing interestingly this year so far. But then so have many other things. Can't really fault an IFA for taking a positive view on it after the strife it's had recently, I've been tempted myself.

gadgetmind

jamesd wrote: »

Can't really fault an IFA for taking a positive view on it after the strife it's had recently, I've been tempted myself.

Whenever I feel like going over-weight on Japan, I go and read a few articles by Spike Japan. Warning: he does go on a bit!

http://spikejapan.wordpress.com/2012/01/15/spiked-eamonn-fingleton/