Asset Allocations Between Pension and ITs

TCA

gadgetmind wrote: »

My SIPP uses Vanguard trackers, bonds ETFs, a strategic bond fund, a few infrastructure funds, some property companies, and about 5% labelled "themes" aka "it seemed like a good idea at the time". The latter is mainly populated with ITs etc. that were on deep discounts due to a variety of factors.

I'm quite interested in Vanguard's new Emerging Markets ETF. Also their All-World ETF. Looks like a good way to get some "passive" exposure to these areas. One concern of mine is that I don't have the expertise to scrutinise every "active" investment I make, so these could be a good portfolio addition.

gadgetmind

TCA wrote: »

I'm quite interested in Vanguard's new Emerging Markets ETF. Also their All-World ETF. Looks like a good way to get some "passive" exposure to these areas.

I use their trackers rather than ETFs, but agree regards passive global exposure.

TCA

TCA wrote: »

My pension FL Balanced Indexed Enhanced Fund of Funds:

FL BLACKROCK UK EQUITY INDEX (AQUILA HP) 32.96%
FL BLACKROCK US EQUITY INDEX (AQUILA HP) 12.01%
FL BLACKROCK EUROPEAN EQUITY INDEX (AQUILA HP) 10.30%
FL BLACKROCK FIXED INTEREST TRACKER 7.02%
FL BLACKROCK OVERSEAS BOND INDEX (AQUILA LIFE) 5.33%
FL BLACKROCK CASH (AQUILA HP) 4.56%
FL ENHANCED CASH 4.56%
FL F&C STRATEGIC BOND RET INC 3.84%
FL BAILLIE GIFFORD JAPANESE EQUITY PN 3.51%
FL BLACKROCK PACIFIC RIM EQUITY INDEX (AQUILA HP) 2.90%

Totton wrote: »

...but if it were me then I'd be wary of being too heavy in UK holdings, perhaps get that down 10-15% as you add further holdings.

Further more recent detailed analysis of my above pension shows the following split:

UK 36%
UK Fixed Interest 8%
UK Corporate Fixed Interest 3%
Global Fixed Interest 10%
USA 12%
Europe ex UK 12%
Asia Pacific ex Japan 4%
Japan 3%
Cash 10%
Other International Equities 2%

At this point I'd be interested to know what kind of geographic bias my fellow investors have for their equities?

My thinking now is to add some unwrapped Vanguard trackers or ETFs as core holdings to reduce my UK holdings percentage. Perhaps FTSE Developed World ex-UK Index Fund and/or FTSE Developed Europe ex-UK Equity Index Fund. A combination of these two funds could be utilised to even up the monies in each of UK, Europe and the US but I'm wondering on the logic of this given a fund following the UK FTSE will invest in companies who may derive only a small proportion of their income from within the UK, but that's where they're listed. Is currency risk a big factor and that's why some of us go for a UK bias?

Also the fact that a developed world or all-world ETF or index fund will presumably focus on the very largest mid and large cap companies from whichever country and that may actually increase specific country risk.

Obviously people will invest where they think they'll benefit most, but as I don't have a crystal ball, I'm wondering what kind of equity split everybody goes for, including Asia Pacific, Japan and Emerging Markets?

For the latter three I think I'll either use further trackers or maybe dabble with some investment trusts, as stock-picking (by someone in the know) might prove more fruitful than following indices. Not sure. And I'd want some small company coverage too, so maybe Vanguard's Global Small-Cap Index Fund or something like Aberforth Smaller Companies Trust and Aberdeen Asia Smaller Companies Trust.

Anyway, what geographic split does everybody work on? Assuming you do that is!

dunstonh

The fund you have is a structured portfolio if index trackers and a couple of managed funds. If you start introducing your own signle sector funds into the equation then you are breaking the asset allocation to create your own management. In effect your portfolio becomes your own managed fund.

Are you willing to give it the time and effort to review, tweak and rebalance as well as understand the economic situation of the time and possible future to build your own asset allocation?

Anyway, what geographic split does everybody work on? Assuming you do that is!

I use actuarial supplied allocations based on a range of risk profiles and timescale adjusted. I dont have the knowledge or data to do my own.

TCA

dunstonh wrote: »

Are you willing to give it the time and effort to review, tweak and rebalance as well as understand the economic situation of the time and possible future to build your own asset allocation?

I was hoping my taking a balanced passive approach with index trackers or ETFs would preclude me from too much dabbling. As it stands that pension mentioned above is static as I no longer qualify for the tax breaks as non-resident, so won't be contributing there.

So that leaves unwrapped investments products or I leave my £200k in the bank. Are you suggesting that the default pension selected for me by my employer 15 years ago should just be replicated because it's such a good mix or should I be using actuarial supplied allocations based on a range of risk profiles and timescale adjusted?

dunstonh

Are you suggesting that the default pension selected for me by my employer 15 years ago should just be replicated because it's such a good mix or should I be using actuarial supplied allocations based on a range of risk profiles and timescale adjusted?

There is no guaranteed that an actuarial supplied asset allocation will beat one supplied by another actuary or one chosen by yourself. It is all about opinion. As long as you have reasons for investing a certain way that are logical and well thought out then that is all that matters. You may be right but you may be wrong. You wont know until later and there is nothing you can do about it then.

So, have your reasons, avoid fashion investing and stick within your capacity for loss as well as your tolerance for loss.