Critique My Fund Portfolio - Don't Be Shy

jabbahut40

Hi All,


I would welcome critique/comments on my fund portfolio which I started 8 years ago and has built up nicely. Looking to hold for another 10+ years with a view to maximise growth and prepared to accept higher risks for reward.


Portfolio % Fund
8.7 Fidelity UK Smaller Companies
18.0 First State Asia Pacific Leaders
12.7 Franklin UK Mid Cap Fund
13.1 Ignis EU Smaller Comp
5.9 Invesco Perpetual High Income
6.5 Lazard Emergng Markets Institutional
11.9 Marlborough Multi Cap Income
12.8 Marlborough Special Situations
10.4 Schroder US Mid Cap


Any critique or comments welcomed.


Jabba

masonic

I think you should tilt your portfolio more towards smaller companies.

kidmugsy

Why not tell us the total charges on each fund?

Linton

In my view you could have much better diversification...

Much too high a % and too much duplication for UK smaller cap
- Fidelity UK SC
- Franklin midcap
- Marlborough multicap has significant non FTSE100 - guess 50%
- Marlborough Special Situations is an SC fund

Total about 40% of your portfolio, UK in general is over 50%

Given where you are now, you could reduce the UK smaller cap holding to 10% releasing 30%. Put 5% into IP High Income to add more UK large cap and then put the remaining 25% into nonUK investments. Other than increasing your geographic funds you could consider some largely nonUK themed funds such as Technology, Health, Biotech, Raw Materials etc etc.

I too favour smaller companies but believe your % is much too high. I suggest for any geography you hold a majority of larger companies.

If you are prepared to replan the whole portfolio I suggest you decide on a portfolio asset allocation and then find funds to satisfy it. Having decide on the allocation you can then occasionally rebalance so partially selling off the higher priced funds to buy more of the lower priced ones.

Linton

kidmugsy wrote: »

Why not tell us the total charges on each fund?

If the OP is investing in the wrong things does it matter what the charges currently are?

Totton

That portfolio is too high risk for me but if you hold your nerve then you could end up doing very well in the long term. 6% to IP High Income seems out of place :-)

jabbahut40

Thanks all for the responses. I didn't realise the level of small cap and UK overlap in my portfolio and will look to make some changes.


After some research I am considering the following funds to help diversify my portfolio.


Threadneedle Latin America RDR new holding +5%
Fidelity Global Technology Fund new holding +5%
M&G Japan Smaller Companies new holding +5%
Invesco Perpetual High Income increase holding +5%


Any thoughts?

Totton

The Summer portfolio has a good indicator of sector percentages for the longer term portfolio - this may be worth a look http://www.johnbaronportfolios.co.uk

bowlhead99

With the new mix, at a quick glance, you still don't seem to have any significant largecaps in the major global markets of Europe, Japan and US/Canada (ok, your FSAP Leaders does have 2% in Japan equating to 0.36% of your portfolio...).

We all know some markets are relatively high by historic measures but the US for example has some pretty decent GDP growth forecast (almost as much as some emerging markets like Brazil which makes up most of your Latam fund, and probably greater than others like Russia) which goes some way to explaining valuations. Arguably having a little bit in only the midcap arena within the largest market in the world is not much of a balance for the long term. What particular metric or statistic are you waiting for that will allow you to invest in largecap companies in the markets you're currently shunning? I suppose the tech fund is mostly US largecap like Apple, Microsoft, Cisco etc but that's only a pretty small bit of the total market over there. Do you believe largecap tech to be a particularly undervalued sector compared to the rest of US stocks?

Also on the subject of the tech fund, it performed pretty much the same as the IMA technology and telecoms sector average during the credit crunch that started 7 years ago and through to summer 2010, but has lagged ever since. It is similar to the average over the last year (13.8%), but would be a worse performer over 10 years, or 7 years, 6 years, 5 years, 4 years. Only over 3 years does it look a bit better than the average because it excludes the time it was heavily lagging and includes the last 6 months when it's done 11% vs 2% for IMA. Buying something that has just shot up is never a great plan but shouldn't necessarily put you off. Is the recent outperformance due to some clever strategy that you know, understand, and expect to make it a keeper over the longer term from now?

For Latin America - OK so that fund is mostly Brazil largecap with some Mexican. Is there a particular reason you want to go to that continent for EM exposure rather than more global EMs? Brazil is already the biggest component of the Lazard EM fund that you hold, which only has 10% in China/HK - my own view would be to add a bit more China (perhaps just with another global EM fund but one who favoured that part of the world a bit more, like Templeton), but Lazard probably think they know what they're doing, so who am I to judge!

As you seem to like high risk funds I would throw another one out there for a 10-20 year view - Advance Frontier Markets, an investment trust fund-of-funds. Emerging Emerging Markets But I couldn't in all seriousness suggest to buy it ahead of some simple largecaps in the regions you're currently missing them.

Azza_1

Do you small cap?

jabbahut40

Hi All,

Many thanks for your comments. I've submitted some changes to my S&S ISA and my new makeup looks like:

Previous Allocation
18.0% First State Asia Pacific Leaders
13.1% Ignis EU Smaller Comp
12.8% Marlborough Special Situations
12.7% Franklin UK Mid Cap Fund
11.9% Marlborough Multi Cap Income
10.4% Schroder US Mid Cap
8.7% Fidelity UK Smaller Companies
6.5% Lazard Emergng Markets Institutional
5.9% Invesco Perpetual High Income

New Allocation
18.0% First State Asia Pacific Leaders Acc
12.8% Marlborough Special Situations Fd P Acc
12.7% Franklin UK Mid Cap Fund
12.0% Invesco Perpetual High Income Acc ( +6.1% )
10.6% Fidelity Index US Fund P-Acc ( +10.6% )
10.4% Schroder US Mid Cap Acc
6.5% Lazard Emerging Markets Institutional Acc
4.8% Fidelity Index Europe ex UK Fund P-Accumulation ( +4.8% )
4.4% Fidelity UK Smaller Companies A-Acc ( -4.3% )
4.3% M&G Japan Smaller Companies ( +4.3% )
3.5% Ignis European Smaller Comp Acc ( -9.6% )
0.0% Marlborough Multi Cap Income ( -11.9% )

Hopefully this is less focussed on UK small caps and a little more balanced. Comments welcomed.