What do you think of my asset allocation?

TheTracker

Ryan_Futuristics wrote: »

Absolutely - and this is where UK fund managers tend to really deviate from the index

What do the indices track, if not these fund managers?

Ryan_Futuristics

TheTracker wrote: »

What do the indices track, if not these fund managers?

UK active and passive fund managers accounted for just 8.8% of UK share ownership as of 2010/11

One day you will win a point against me - but you'll have to either start getting up earlier, or doing a bit of research

MrMartyn

Hi All,

Thanks for all of your replies since my previous post. It's been fascinating to read all your comments and has given me some things to think about. It's all helping to increase my knowledge and it's good to have my ideas challenged and criticised so that I can learn more and consider things that I may otherwise have overlooked.

I probably should have said: I am willing to consider actively managed funds although I'd still want to put the majority of my monthly ISA contributions into passive index-tracker funds. My inclination is to look at the charges and the yield. I'm always suspicious of any fund that has charges (including platform charge) that are greater than the yield, because presumably that means that the share price(s) would need to grow just to break even on the charges?

Thanks for the suggestions of particular funds. I've searched for them on the platform I'm using and have had a look at the details. I'm not sure whether I should invest in them, and so I think I'll stick with the 7 funds I originally listed, for now. I might re-consider in future. I'm still learning this stuff. For example, I've got a rough idea what price-to-earnings ("PE") and cyclicly-adjusted-price-to-earnings ("CAPE") are, but I don't know what price-to-book means. I've still got a lot to learn but I think I know enough to get started and I think the funds and weightings I've chosen are a reasonable choice (for me in my circumstances) involving some risk but not wildly reckless (I hope!).


Once again, thanks for all your comments.

Disclaimer: I am not an expert. My comments are my opinions only and should not be taken as advice. Any information I post may or may not be correct, and should therefore not be relied upon as fact. If you act on anything I post here you do so entirely at your own risk. I do not accept any liability.

Drp8713

MrMartyn wrote: »

but I don't know what price-to-book means.

A price to book ratio is basically the share price over the net assets per share.

Lets say the share price for company X is £1 per share, its assets less its liabilities are £100, and it has 100 shares issued. That means its price to book ratio is 1 as its share price per share (£1) is exactly equal to its book value per share (£1). If the P/B is under 1 then you are buying he shares at a discount to what they are worth.

Although, like anything, you shouldnt at look at this method in isolation, as a. some companies might have intangible assets and b. just because a share is cheap doesnt mean it will perform well in the short term, as per my Sainsburys holding which has a P/B of 0.86.

Linton

MrMartyn wrote: »

......My inclination is to look at the charges and the yield. I'm always suspicious of any fund that has charges (including platform charge) that are greater than the yield, because presumably that means that the share price(s) would need to grow just to break even on the charges?

......

There is no link between yield and charges. The yield is the % paid as dividend. Whether a fund pays dividends is up to the manager and the type of shares in which the fund is invested. There are many higher charged funds funds that pay no dividends at all that have achieved very high growth. Have a look at AXA Framlington Biotech for example which has tripled in value in the last 3 years.

Ryan_Futuristics

Drp8713 wrote: »

A price to book ratio is basically the share price over the net assets per share.

Lets say the share price for company X is £1 per share, its assets less its liabilities are £100, and it has 100 shares issued. That means its price to book ratio is 1 as its share price per share (£1) is exactly equal to its book value per share (£1). If the P/B is under 1 then you are buying he shares at a discount to what they are worth.

Although, like anything, you shouldnt at look at this method in isolation, as a. some companies might have intangible assets and b. just because a share is cheap doesnt mean it will perform well in the short term, as per my Sainsburys holding which has a P/B of 0.86.

and @ MrMartyn

One of many ways of approximating what your £ buys you - each with its own strengths and weaknesses

Where P/B can be quite useful is in emerging markets, where companies can misreport earnings (leading to incorrect P/Es and CAPEs), and where accounting practices may be a little more 'flexible' than over here

JPMorgan recently published this chart, showing that on historic P/B values, and against a backdrop of generally expensive global asset prices, it looks like a pretty good time to buy emerging markets



Although things could get cheaper before they pick up

In principle, it may make sense to build up your desired portfolio slowly, buying what's cheap when there are good opportunities ... e.g. I see US equities as some of the best long-term holdings, but I'd be hesitant to buy at present valuations, as historically they've not done well from this point

In 2014 I was mostly buying Europe and the cheaper parts of Asia

Ryan_Futuristics

Linton wrote: »

There is no link between yield and charges. The yield is the % paid as dividend. Whether a fund pays dividends is up to the manager and the type of shares in which the fund is invested. There are many higher charged funds funds that pay no dividends at all that have achieved very high growth. Have a look at AXA Framlington Biotech for example which has tripled in value in the last 3 years.

I must admit I prefer a fund where the dividend covers the fee and platform charge - if only for psychological reasons

I suppose in sideways markets it's preferable to know your money's achieving something just being in-the-market - but then AXA Biotech and First State Asia Pfc Ldrs have been two of my better performing funds recently