Portfolio Advice

Hooloovoo

Linton wrote: »

I dont care whether a manager is talented or not.

You should. You're paying them enough.

However that is not the only option.

I never said it was. I have no idea. I don't think anyone does, to be frank. I only discuss my opinions at the time based on the facts I have at my disposal.

When I look at the potential core I feel that it is rotten, or at least smells dubious, so why have one? Why not have a portfolio of satellites,

I agree with gadgetmind here. It's not rotten. It's a solid foundation. That's not necessarily right or wrong, because there is no right or wrong.

IronWolf wrote: »

It's easy to identify sectors, or funds that 'outperform' after the event has happened, a lot harder to do it before hand.

This, for me, is the reason not to have a "portfolio of satellites". If anyone else thinks they can identify sectors that are about to outperform, then good luck to them.

Linton

My point on the core is this...

The theory of core and satellites AIUI is that the core provides a safe but unspectacular return whereas the satellites are riskier but possibly far higher return. If you look at the data over the past 5 years the "solid core" FTSE AllShare & FTSE 100 , including dividends, fell by a higher % than the "risky" average EM fund, Tech fund, or Asia Pac exc Japan fund during both of the two years of the credit crunch crash 27/4/2007-27/4/2009. Admittedly UK Smaller companies is more volatile.

But during the good years of course the "risky" sectors generally perform very much better than the broad indexes.

Under those circumstances which is the riskier strategy?

gadgetmind

Linton wrote: »

Under those circumstances which is the riskier strategy?

My core isn't FTSE All Share, though that is part of it, but yes, the FTSE All Share is lower down the risk scale than EM funds. That doesn't mean that over certain periods EM won't out-perform, but you can't deny that it's higher risk.

My passive core contains global equities, UK equities, value equities, Pacific equities, EM equities, with a boost to both mid and small cap. Doesn't that seem like a reasonable core to you, particularly given the weighted TER of sub 0.3%?

BTW, have you read the PWC document in detail?

Hooloovoo

Linton wrote: »

the "solid core" FTSE AllShare & FTSE 100

I'm going to give up now.

I don't know how many times myself and many others have said that a passive portfolio does not consist of purely a FTSE All Share fund.

Good luck with your investments

thelawnet

Linton wrote: »

My point on the core is this...

The theory of core and satellites AIUI is that the core provides a safe but unspectacular return whereas the satellites are riskier but possibly far higher return. If you look at the data over the past 5 years the "solid core" FTSE AllShare & FTSE 100 , including dividends, fell by a higher % than the "risky" average EM fund, Tech fund, or Asia Pac exc Japan fund during both of the two years of the credit crunch crash 27/4/2007-27/4/2009. Admittedly UK Smaller companies is more volatile.

Rather misleading.

Peak to trough in a developed market is, generally, less than an emerging market.

The FTSE All Share fell by less than 50% from 2007 peak to 2009 trough. The RTS in Russia fell from 2498 in May 2008 to 498 in January 2009. That's an 80% fall.

Of course you can diversify, but nobody's suggesting otherwise. In general though, any given single foreign market is riskier than the UK Market, for a UK citizen.

sabretoothtigger

^^ Normally that might be true but we have the case of duplicating risk here. Every UK person owns shares in the banks via their tax bill, you carry that already. To double up and say thats less risky dont seem right to me

UK has recently engaged in more QE then any other nation comparatively. Many foreign nations have both good trade balance and a reserve of gold, we have neither. We are one of the largest holders of USA debt, thats our security for the future
It seems less risky to counter your existing UK liability with ownership of foreign interests & trade

To get a Russia tracker instead of ftse would be quite perverse. I think they are mostly related to Oil
Getting a variety around asia instead is not such a stark contrast. BP gets about 30% profits from Russia anyway, its listed as UK but I dont think their UK profits make up near to 30%

2007 peak to 2009 trough

We should include currency falling in that time too. Surprisingly Russia didnt really fall that much ?

Hooloovoo

Oooh my initial payment has been processed.

My funds are now worth £999.98!!?:eek:

Maybe I need to go and post in the 2p thread [:rotfl:]

Perelandra

Hooloovoo wrote: »

Oooh my initial payment has been processed.

My funds are now worth £999.98!!?:eek:

Maybe I need to go and post in the 2p thread [:rotfl:]

Thanks for the update. I'm still surprised it's let you do this!

I've actually looked more into Cavendish since you started this thread, and am surprised at how cheap their cost structure is. Particularly as I understand from speaking to them that on their ISA they also don't charge to transfer "out" if you do deide to move the funds (hopefully that will still be true post-RDR, in case they are not so attractive then).

Seems to be too good to be true... if only they'd add Vanguard!

I'm starting to see a trend with these 2pences... could this be the new approach- skimming off 2p from extra transaction to buy the shareholder bubbly at the AGM?

amictus

Thanks for letting us know how you decided to play it eventually. I look forward to future updates!

Hooloovoo

I have finally got access to the Fidelity Portfolio X-Ray service. It has been showing 0.00 holdings for the last two weeks. Apparently it can take up to 14 working days for the transactions to "settle" before they show up on the X-Ray. !!!!!! is all that about? 14 working days?!? Oh well, it's on now.

My first monthly purchase will be going through in the next few days. My initial £1k investment is now worth £946.55.

Why did no one tell me investments can go down as well as up?!? [:rotfl:]

Anyway, here is how my new portfolio is broken down:

World Regions

35.85% - Greater Europe

18.24% - UK
10.29% - Western Europe - Euro
4.72% - Western Europe - Non Euro
1.24% - Emerging Europe
1.36% - Middle East / Africa

41.19% - Americas

38.09% - US
0.01% - Canada
3.09% - Central and Latin America

22.96% - Greater Asia

8.77% - Japan
3.36% - Australasia
5.54% - Emerging 4 Tigers
5.30% - Emerging Asia - Ex 4 Tigers

Stock Sectors

17.45% - Information

2.50% - Information
6.03% - Hardware
2.23% - Media
6.69% - Telecommunications

37.17% - Services

8.35% - Healthcare
6.21% - Consumer Services
3.44% - Business Services
19.17% - Financial Services

45.38% - Manufacturing

14.75% - Consumer Goods
15.95% - Industrial Materials
11.08% - Energy
3.61% - Utilities

Top holding at the moment is Apple Inc at 1.62%.

How does this look? As someone pointed out to me earlier on in this thread, the portfolio is a bit light on Tech. Can someone recommend a good low-TER tech fund? I think I would like to push that up a bit to hit the middle of the Information/Services/Manufacturing triangle.

Thanks for any comments!:beer: