Critique My S&S ISA Selection

jabbahut40

Hi,

I would appreciate some critique of my S&S ISA selection and enclose a summary of my current portfolio. Any comments/feedback on my porfolio based on growth for the next 5-10 years. Thanks in advance,

Jabba

Holding Portfolio %
First State Asia Pacific Leaders Acc 18.8
JPM Natural Resources A Acc 18.7
Neptune European Opportunities Acc 10.4
Schroder US Mid Cap Acc 9.7
Gartmore China Opportunities Fund 9.2
Marlborough Special Situations Fund Acc 8.5
Aberdeen Emerging Markets Acc 7.6
M&G Global Basics Fund A Acc 5.1
Neptune Global Equity Fund Acc 5.1
Jupiter Financial Opportunities Fund 3.7
Invesco Perpetual High Income Acc 2.7
First State Greater China Growth Fund 0.4

Totton

Hi Jabba,
You don't say how much of a % this lot makes of your overall portfolio. Supposing that it is 100% then you have chosen a very high risk strategy that could do very well over 5-10 years. I've held 7 of those in the past but currently do not hold any of them as I took a lot of risk off the table and have only been adding it back during the recent 6 months or so. Mostly I have gone for close alternatives such as First State Global Emerging Mtk Leaders and Newton Asian Income which I think of as less risky than some they have replaced.

I would't be able to sleep soundly if the listed holdings were my entire portfolio but in essence they are all quality funds I'd be happy to hold at various times.

I tried to work out your core funds but it's not clear, they could be the 66% represented by the first five as listed but if so I wonder why you didn't put the Aberdeen Emerging fund above Gartmore China and Neptune European Opps.

Overall I'd say you've got nerves of steel if you stick with that selection as 100% of your portfolio, it could do very well though :-)

Regards,
Mickey

jabbahut40

Hi Mickey,

Thanks for your prompt response. The above funds are 100% of my S&S ISA portfolio which I have drip invested into over the last five years. This represents approx 1/3 of my overall portfolio with the remaining 2/3 held in Cash ISAs.

Out of interest which 7 funds did you previously hold and what did you switch to for each?

Jabba

chewmylegoff

jabbahut40 wrote: »

First State Greater China Growth Fund 0.4

personally i wouldn't bother with such a small holding, especially when you already have a chinese fund - what's the point of ths holding?

jabbahut40

Hi,

Good question. I bought a small holding in this fund with a view to expand later but subsequently changed my mind. As my fund platform provider (Fidelity) typically charges 0.5% I simply left it rather than transferring it into the Henderson/Gartmore fund and losing value.

Jabba

Linton

You are choosing the same type of funds that I hold in my growth portfolio and in some cases exactly the same funds:
JPM Nat Res
Aberdeen EM
Jupiter Financial Ops.

Two other areas which have served me well are UK Small Cap and Technology.

Although the choice looks high risk holding significant money in cash and near to cash ensures that there is no need to sell the funds at a bad time and so I did not find the credit crunch crash particularly stressful. Since I retired in June 2005 my growth portfolio has averaged 7.4% annual return compared with a FTSE-100 average annual return of 2.2%.

BLB53

Most of your returns will be going to the fund managers rather than you! I would seriously consider some cheaper investment options.

jabbahut40

Thanks Linton. Good to hear I am on the right tracks....

Would you be happy to share the list of funds in your current S&S fund portfolio? As a newbie its always usefull to see other fund growth portfolios to use a guide for refining my own.

Jabba

jabbahut40

BLB53 wrote: »

Most of your returns will be going to the fund managers rather than you! I would seriously consider some cheaper investment options.

Thanks. What would you suggest as an alternative?

Jabba

Linton

jabbahut40 wrote: »

Thanks Linton. Good to hear I am on the right tracks....

Would you be happy to share the list of funds in your current S&S fund portfolio? As a newbie its always usefull to see other fund growth portfolios to use a guide for refining my own.

Jabba

I am afraid there are many here who would say we are on the wrong track and should really be going for FTSE trackers. However I am more than happy with the returns.

My funds/proportions are:

JPM Natural Resurces:12%
Aberdeen Emerging Markets:10%
M&G Recovery:8%
Fidelity SE Asia:8%
Old Mutual UK Smaller Companies:8%
F&C Strategic Bond Income:7%
Henderson Global Tech:7%
Newton Real Return:6%
First State Asia Pacific: 6%
BlackRock European Dynamic: 5%
Treadneedle European Smaller Companies: 5%
First State India Subcontinent:4%
Investec Global Energy:4%
Jupiter Emerging European Opps:3%
Fidelity Emerging EMEA:3%
And some smaller holdings.

The Newton Real Return and the F&C Strategic Bond are there to provide some opportunity for balancing with rather less volatile funds although in practice the need hasnt really arisen.

The arguably excess number of funds arise from history, and the portfolio being split across two separate ISAs (me and the Mrs) making overall coordination a bit of a hassle because money cannot be moved from one to the other.

Aegis

BLB53 wrote: »

Most of your returns will be going to the fund managers rather than you! I would seriously consider some cheaper investment options.

I'd be interested to know how you worked that one out...

As an example, let's take the M&G Global Basic fund. 233% growth in 10 years, representing about 12.8% growth each year after deduction of charges. Assuming fund manager charges plus trail commission of 1.5% were discounted to zero, the total annual growth rate excluding all charges would be 14.3% and the total growth over 10 years would be 281%. This is, of course, assuming that the full annual fee is taken rather than using a broker that rebates a proportion (or even all) of the trail commission, in which case the total return is even higher.

Now, you might argue that if you hold such a fund for long enough, eventually your reduction in yield will eventually bring the returns to under 50% of the net figure (this will eventually happen to any portfolio where there is any form of ongoing or dealing fee), but the question to then ask is "could I have achieved the same returns over the same timescales using considerably cheaper investments?" and in most cases, the answer would be "no".

There are some areas where much cheaper investments can be used to enhance returns, but the only fund I'd look to get rid of for that particular reason in the list above would be the Schroder one in favour of a US tracker.