The White List Portfolio ISA

A_Flock_Of_Sheep

In another thread someone mentioned The White List for people like myself seeking income and growth.

Basically it is a portfolio managed for you that appears to consist of a group of Equity Income Funds:

• Artemis Income
• Aviva Investors UK Equity Income
• Cazenove UK Equity Income
• Fidelity MoneyBuilder Dividend
• JO Hambro UK Equity Income
• Royal London UK Equity Income
• Threadneedle UK Equity Income
• Troy Trojan Income
• Unicorn UK Income

How is this a Balanced portfolio? My choice of funds in my thread of last week was criticised for being "unbalanced" and consisted of Equity Income funds as this product does. In this White List managed portfolio there are no bonds, property or emerging markets or Vanguard Life Strategy products.

redbuzzard

You're right. It's only balanced or diversified to the extent that the risk of the portfolio is a bit less than the average of the individual constituents.

Mattygroves2

You need to look at what shares are being held by each of the funds. If they all essentially hold the same shares then there is zero diversification and you might as well pick one fund and hold only that one.

If they actually hold different shares ie. one holds utilities, another is retail based etc then you could argue that that is diversification across sectors.

Even with a equities, bonds, cash split you haven't got diversification if all your equities are tesco shares or even a mix of Tesco, Sainsburys and Morrisons. If you haven't got enough capital to invest in a sensibly diversified individual share portfolio (at least 15 shares) then an income fund will effectively do that for you but it is still important to understand what they invest in and whether you're happy with that.

A_Flock_Of_Sheep

These funds appear to invest in pharma and bp. There is a range of shares though. Tesco is in one of the funds. In the good times the growth potential is quite impressive.

Interestingly they have dumped invesco high income from the latest list.

dunstonh

Any solution that picks UK equity income only is gambling on UK equity income being the best place to be every year going forward. How likely is that?

You also have to ask yourself why you need to hold so many funds in UK equity income. Either you dont have the courage of you convictions or you are trying to make yourself look more important than you are.

In the good times the growth potential is quite impressive.

You would expect a high risk solution like that to be. 100% UK equity would be risk 9 on our 1-10 scale. So, you would need to compare it with other options in that risk area. You tend to find most high risk options do well when you get a growth spurt.

A_Flock_Of_Sheep

I am surprised that this scheme has nothing to balance it even slightly. With regards to bonds how do they balance a portfolio. The noise I keep hearing are bonds are in a bubble; avoid bonds at the moment; bonds are becoming unpopular.

What is this bond bubble and how much downside could it manifest? Surely this bubble people speak of make bonds risky?

dunstonh

With regards to bonds how do they balance a portfolio. The noise I keep hearing are bonds are in a bubble; avoid bonds at the moment; bonds are becoming unpopular.

Conventional bond funds with income excluded are only around 20% up on their values 10 years ago. They had lost around 20% in the 5 years before their gain period. They dropped a fair bit during the credit crunch when people thought so many bonds would fail to be repaid. So, a lot of the growth that followed that "could" be the recovery from a position that was too low. There is too much money in bonds and over time there will be a reduction from that. Whether it is a steady decline or a quick one is impossible to tell. The income they generate will offset a fair bit of that. If and when a "crash" comes it won't be on the scale of the equity markets when they crash. There are issues with bonds but the point of them is to reduce the volatility. If you can accept the volatility that goes with 100% UK equity then you don't need bonds. If you can't (and most cant) then you need them.

grizzly1911

A_Flock_Of_Sheep wrote: »

.

Interestingly they have dumped invesco high income from the latest list.

Are they going on return performance now rather than long term trends?

Trustnet is currently showing IPHI in quartile 3 for performance over 1 year but quartile 1 over 3 years. It isn't following the higher risks right now.

A_Flock_Of_Sheep

It is interesting that in a speech earlier this month Warren Buffet was of a view that currently Bonds are a bad idea. Not to say I guess to move into bonds when the weather changes later

A_Flock_Of_Sheep

grizzly1911 wrote: »

Are they going on return performance now rather than long term trends?

Trustnet is currently showing IPHI in quartile 3 for performance over 1 year but quartile 1 over 3 years. It isn't following the higher risks right now.

Not sure but when you chart that collection and look into the top ten holdings they are all quite similar.

A_Flock_Of_Sheep

Whoever devised The White List scheme hasn't read Smarter Investing by Tim Hale