10k investment funds portfolio advice needed

VernSW

Hello,

Earlier this year I started putting my money into investment funds for the first time and I currently have a total value of £10k invested. My goal is to over a 5-8 year period maximise return, in order to save for a deposit on a property. I plan to keep adding money on a monthly basis to funds (£600 every month) and I will not need access to this money again during this period.

I'm willing to take a wholly adventurous approach to risk and in the funds and sectors I choose. Below is a breakdown of the funds I have currently invested in.

I’d appreciate if people can advise or give their opinion on how to better invest my money by choosing the right type of funds/sectors/percentage breakdowns that would be more in line with achieving my goal.

1. Artemis Strategic Bond (Class MI – Income)
Invested: £1500
Sector: GBP Strategic Bond

2. AXA Framlington Managed Balanced Inclusive (Class R – Accumulation)
Invested: £2000
Sector: Mixed Investment 40-85% Shares

3. CF Woodford Equity Income (Class Z – Accumulation)
Invested: £3000
Sector: UK Equity Income

4. Marlborough Multi Cap Income (Class P – Accumulation)
Invested: £2500
Sector: UK Equity Income

5. TM Sanditon European (Class F – Accumulation)
Invested: £500
Sector: Europe Excluding UK

6. Newton Global Higher Income (Class W – Accumulation)
Invested £500
Sector: Global Equity Income

Thanks a lot.

dunstonh

I’d appreciate if people can advise or give their opinion on how to better invest my money by choosing the right type of funds/sectors/percentage breakdowns in order to achieve my goal.

You dont appear to be using any identifiable investment model. You are mixing and matching multi-asset funds and single sector funds. The use of single sector funds breaks the allocation researched by multi-asset funds. So, what research have you done that makes you think you can do a better job with your allocations?

And to be blunt, having 6 funds with £10,000 is overkill. Why not a single multi-asset fund? Maybe one that has multiple variants to allow you to reduce your risk as you get closer to withdrawal.

VernSW

dunstonh wrote: »

You dont appear to be using any identifiable investment model. You are mixing and matching multi-asset funds and single sector funds. The use of single sector funds breaks the allocation researched by multi-asset funds. So, what research have you done that makes you think you can do a better job with your allocations?

And to be blunt, having 6 funds with £10,000 is overkill. Why not a single multi-asset fund? Maybe one that has multiple variants to allow you to reduce your risk as you get closer to withdrawal.

Thanks for the reply.

I'm a novice investor, and as such my allocation wasn't specifically to try and do a better job than the existing models. The funds I chose were based on what the service provider highlighted as good ones.

I'm struggling with what approach to take and specifically which funds to invest in.

dunstonh

The funds I chose were based on what the service provider highlighted as good ones.

You do realise that platforms get prices based on them agreeing to do so much business with that fund house in that fund (or combined funds). This can lead to platforms promoting funds for their own interests and not yours.

If a platform genuinely positioned funds as being good for you then this would be classed as advice (some already think that some DIY options break into advice incorrectly).

I'm struggling with what approach to take and specifically which funds to invest in.

Hence a multi-asset solution with options for reducing risk each year (starting from next year)

Linton

5-8 years is short term in investing. Below 5 years and the recommendation would be to keep the majority, if not all, of your money in cash. How would you feel if in year 4 the prices dropped to below what you started with? This is quite possible - it happened in 2004-2009.

You say you are adventurous as regards to risk. That would normally mean that you could accept a temporary major reduction in prices, not that you are unconcerned about whether you meet your objective at all.

Fortunately your current portfolio isnt "wholly adventurous", quite the reverse. My main concern with it is that it is highly focussed towards the UK in general and UK equity income in particular. With potential votes to leave the EU happening within your timescale I would advocate a broadly global approach.

Also you have a high % in bonds whose future in your time frame is unclear. If the global economy finally recovers from the crash interest rates will rise which will cause the price of bond funds to fall. How significant this effect will be is unclear, but it is a risk.

On balance I agree with Dunstonh that your pot is too small for you to create a broad portfolio with worthwhile individual investments and that you should buy a single multi-asset fund which will do the job of providing diversification for you. You should also consider steadily transferring out of funds into cash as you approach your planned house purchase date to avoid a last minute shock.

mark13

I would reduce the number of funds you hold down to 2 or 3 .
My personal preference is to invest in chunks of 2-3k.

digannio

You could look at something like the Legal & General Multi-Index Funds. You can choose one of the funds that suits your risk profile. It will be well diversified geographically and in terms of assets and will be rebalanced for you going forward. The costs are at a reasonable level also.

Ryan_Futuristics

Personally I think it's fine to lay out your portfolio like that - once you're happy with your overall asset allocation, you can build it up together (benefiting from drip-feeding/cost averaging) ... If you're on Hargreaves, you've got free fund dealing, so you can have quite a bespoke portfolio without rebalancing worries

UK equity income (via Woodford and Marlborough) looks like a solid choice for the markets we're going into - both have potential to do well (and Woodford is run with a 5-year horizon), but very different investment styles and valuations, so you hedge against one approach under-performing

I'm cautious of bond funds too at the moment - I'd love to know how well strategic bonds cope with rising rates (if they even come next year) - so in a way equity income (with a bit of diversification) can be thought of as a bit of a bond substitute

I'd be inclined to have your equities 50% UK, 50% international ... You've got the two UK funds I'd probably have - you could consider an investment trust too (City of London, Edinburgh Investment Trust) - just because they've got a good history of outperforming OEICs in this region

I'd probably have more in Europe - Sanditon and Neptune Euro Opps are my chosen ways to target European recovery ... Europe's not as bad as some people think - it's not had all that stimulus the US has had pumped in recently - valuations in the right funds are low - and it may benefit from global inflation more than other regions ... Perhaps you're talking more an 8-year horizon than 5, but Europe's cheap now, and that makes it a great region to be buying at the moment

Emerging Markets may be worth considering too ... Double edged sword is they're cheap, but particularly vulnerable to drops in developed markets - so they could get cheaper ... They could be in a quagmire in 5 years time ... In the longer term, they're where global growth is likely to be - I'm about 30% emerging markets ... I like Lazard Emerging Markets and M&G Global Emerging ... On investment trusts, I quite like Utilico Emerging (UEM) - which is emerging infrastructure, quite a good allocation to China, and quite a high dividend

So some more European and Emerging would give you some more exposure to value stocks, and would mean you've got an income portfolio and a growth portfolio ... It's also a good time to buy abroad as the strong pound means you're getting more for your money


And the main reason (in my opinion) it's better to build a portfolio like this, rather than just using a global fund, is that you can buy the cheap bits when they're cheap ... Europe and Emerging are cheap now, so you could be buying them now, and if you wanted more US equities, you could wait until there's been a big drawdown before you buy there ... It depends how active you want to be ... When you buy is almost more important than where you buy (certainly on an 8-year horizon)

Here's global market valuations
http://www.starcapital.de/research/stockmarketvaluation

If you put the effort into monitoring where you should be buying, you'll be rewarded with a much more robust and rewarding portfolio

Thrugelmir

VernSW wrote: »

My goal is to over a 5-8 year period maximise return, in order to save for a deposit on a property.

I'm willing to take a wholly adventurous approach to risk and in the funds and sectors I choose.

Either save for a deposit or invest. There's an inherent danger that you'll miss both your objectives.

System

Personally in your position for a potential 5 year time frame I would save rather than invest, you may be in a position where you have lost money when you need it for a deposit.

Save to buy, invest to retire!

suebfg

In your position, I would have invested in low cost trackers for UK and US and saved the managed funds for Europe, Asia Pac and Emerging Markets.

I would have also invested in accumulation, not income funds,