Allocation for a 30 year old

FatherAbraham

Perelandra wrote: »

Are you sure? I thought the indexes were based on market cap, so if one region fell by (say) 50%, it would make up 50% less in the index- same number of units, but each one worth less, so the total is worth less.

Rebalancing would *increase* the number of units held, so that the overall share stayed the same.

A global fund which has a stated split, such as the Blackrock Aquila 40:60 will, of necessity, automatically rebalance between "home" and "away".

One needs to look at how the global-ex-UK index part is constructed to see whether it's a genuine global index, or fixed percentages of "regional" indices, to see whether automatic ("contrarian") rebalancing will take place.

Even if there is only automatic rebalancing between UK and non-UK, this will give most of the benefits of asset-class rebalancing the OP is looking for, with far, far less hassle.

Warmest regards,
FA

FatherAbraham

marathonic wrote: »

I think we're on the same page... Basically, I think bonds are overpriced at the moment and, even if they weren't, I wouldn't want to invest in them over a 30+ year timeframe.

I assure you that we aren't on the same page. You're attempting to time the market, which is distinct from forming an asset-allocation strategy.

The reason why people here are talking about your using bonds is because you claim that your risk tolerance is 20% loss per year. In order to achieve that, you need to be less than 100% in equities. That's what asset allocation is all about; matching the portfolio's asset classes to the risk appetite.

You are very keen to control the geographic distribution of your equity assets, but your overall asset allocation is not matching the risk level you've claimed.

marathonic wrote: »

For real estate, I'll be investing directly and outside the pension wrapper..

Well everyone has accommodation need, and might consider owning his own home, nothing wrong with that.

However, investing in real estate in order to achieve an appropriate asset allocation is a different matter. From an asset-allocation point of view, directly holding real estate outside the pension wrapper is a terrible idea. Individual real-estate assets are lumpy and illiquid. It's incredibly expensive to deal, and profoundly hard to rebalance the overall portfolio -- unless one buys a property fund, in which case why on Earth wouldn't you do that within the pension wrapper?

marathonic wrote: »

With the long term returns on bonds being a couple of percentage points below equities, I'm going to steer clear of those too. With 20%+ falls in the price of equities, my intention would be to pump up my contributions to take advantage of the lows - as I done in the past few years.

From what you've said overall, it looks to me that you're not really interested in asset allocation. You're avoiding all the asset classes which would help you mitigate the equity risk in your portfolio to match your stated risk appetite. Your stated reason is that returns on those assets are too low. Please stop what you're doing and listen to what people here are saying to you. Either accept more risk (and look carefully at the possible consequencesof that), or reduce your equity holdings, for the two things are incompatible.

If all you want is lots of risk, for the chance of high return, perhaps you should consider gearing the portfolio to increase it even further?

Warmest regards,
FA