A (really quite long) question about how to structure investments ...

cathybird

kidmugsy wrote: »

Porcupine's idea is also a cheap way to effect rebalancing between, for instance, bonds and equities. When they have diverged from the proportions you favour, use your new subscription to your ISA and new contribution to a pension to rebalance the total without (usually) any need to sell existing investments.

Thanks kidsmugsy, and you're right, it is. I'm certainly hoping to keep adding to the total to rebalance, rather than taking away, if I possibly can.

I've set up the S&S Isa now and will start building up some funds in it asap (as soon as the New Year is over), but I'm not going to fret too much about juggling things into some kind of perfect proportion for now - the main thing really is at this point just to get started.

Porcupine

cathybird wrote: »

They're really UK-heavy, in a way that is quite irritating. The UK is actually round about 8% of the world economy, if memory serves, so if about 10% of my overall holdings were UK, that would be about right to me, but it's almost impossible not to give it more weight than that, unless I go into the managed funds that are on offer, which I don't especially want to do.

I don't know what's available of course, but I'd be tempted to have a closer look at what managed funds you can access. This could be the case where you can make the failings of active management act in your favour. For example, imagine there's a US large-cap fund available at, say, 1%. US large-cap managed funds can often be closet trackers, because it's very hard to beat the market (not much way you can avoid owning Apple, Exxon, etc). You pay extra for that, but if you have no other easy way to access US funds then paying another 0.5% might be worth it. Generally the maxim is to get the asset allocation right first and then worry about the fees.

There's one managed fund, Jupiter Ecology, 1.2%, which invests in companies that show a commitment to the environment - it's relatively expensive but I like its aims and its focus is global rather than the UK so could be handy in order to diversify?

This was my first fund. I got rather fed up of it - didn't perform very well during/after the crash, and their idea of environmental investment didn't really match mine: I'm all for clean energy, but organic sausage producers? That was the biggest holding at the time (and still #3). Basically it's a small cap fund with a very limited scope in what it can invest in (because any investment must have some kind of 'green' credentials - something non-'environmental' like an insurance or internet company is right out). My other small cap funds without such restrictions, which invest in boring things like phone companies and estate agents, have done far better in comparison.

(I still haven't cracked how to do 'ethical' investing when using funds - though I'm leaning towards a fairly unrestricted buying policy followed by active engagement of the companies they do own. I don't know any funds that do this - many seem to have legalistic 'we don't buy alcohol shares' policies which aren't really my cup of tea).

cathybird

oh that's interesting, re Jupiter Ecology - thanks Porcupine - knowing someone who has invested in it is very helpful. I did come across some site that recommended it but that doesn't mean very much, of course. I am quite sure you are right that ecological ideals are somewhat tricky to translate into practice. Jupiter Ecology is 40% weighted towards the US though (22% Europe, 20%UK, 13% Pacific) - a point in its favour?

Re the other funds, apart from the passively managed funds for both bonds and equities, the Jupiter Ecology fund and the BlackRock Market Advantage fund, which I have already mentioned, there's a money market fund (don't feel I know enough about this to invest in it), FL Standard Life Inv Global Absolute Return Strategies, which is 40% "cash and derivatives" (again, something I don't quite understand) and apart from that a mix of global equities and fixed income, FL Schroder Life Intermediated Diversified Growth Pn which is split over quite a wide variety of asset classes but doesn't seem to really give much detail on regions, and MFS Meridian Global Equity, which is in fact 50% weighted towards US equities (10% UK though, 13% "international" and 24% French/Swiss/German equities). Maybe the last one would be a goer? ... The charge is 1%. All of the funds still seem to be at least 10% weighted towards the UK.

Probably the best thing I could do would be to accept that the pension will be overweight in the UK and avoid investing in UK funds in the Isa. I could concentrate instead on EM/Europe/US/AsiaPacific and maybe global property and/or small caps.