How many funds should you have in your portfolio?

enthusiasticsaver

I have just read an article on how many funds the average investor holds in their portfolio and it suggests 10-16. Now I am investing in the VGLS 60 which is obviously meant as an all in one portfolio comprising 10 index funds and wondered if I should stick to this solely or invest in other funds as well? What are the arguments for diversifying further.


Once I have transferred a cash isa into my VGLS 60 next month I aim to have approx. £48-50k by the end of the 2015-2016 tax year including my monthly drip feeds into the fund. This is about 15% of my total assets, property amounts to 65% and cash and fixed term cash isas, index linked national savings are 20%. Should I just stick to the Vanguard funds or is it advisable to introduce other funds into the mix?

Kendall80

I currently have 11 funds - with approx. 95% equities as I've 20-25 years to go yet.


In terms of overall proportions the above ISA currently only comprises 20% with the majority in property and current accounts (@ 4/5% ).


The proportions are slowly being shifted in favour of the ISA by monthly drip-feed.


You seem to be well diversified and the VLS60 will give you significant bond exposure too. I guess if you are feel you can perhaps increase risk a little you could try contrarian options such as Russia, Africa or maybe natural resources.

enthusiasticsaver

Thanks Kendall and I am open to slightly more risk but am new to investing so trying not to run before I can walk. Bearing in mind that the VG is a passive fund I was considering investing a small proportion of my total portfolio (maybe 10%) in active funds like the Woodford Equity Income or the Lindsell Train Global equity. I am not sure about Russia or Africa but am open to explore that.

Kendall80

enthusiasticsaver wrote: »

Thanks Kendall and I am open to slightly more risk but am new to investing so trying not to run before I can walk. Bearing in mind that the VG is a passive fund I was considering investing a small proportion of my total portfolio (maybe 10%) in active funds like the Woodford Equity Income or the Lindsell Train Global equity. I am not sure about Russia or Africa but am open to explore that.

If you are looking for a global active fund you could take a look at the Baillie Gifford Global discovery. Its small cap and lower cost than Lindsell Train I believe. I did consider Lindsell Train as my global fund as its geographical sector allocations fitted in well with my plans.


I hold the Woodford fund and its among my top performers to date. Being an 'income' fund it also pays a decent yield. This is something I always consider in choosing active funds in comparison with their OCF.

enthusiasticsaver

Kendall80 wrote: »

If you are looking for a global active fund you could take a look at the Baillie Gifford Global discovery. Its small cap and lower cost than Lindsell Train I believe. I did consider Lindsell Train as my global fund as its geographical sector allocations fitted in well with my plans.


I hold the Woodford fund and its among my top performers to date. Being an 'income' fund it also pays a decent yield. This is something I always consider in choosing active funds in comparison with their OCF.

That is useful to know and I will certainly look at Baillie Gifford. Have you chosen mainly active funds rather than passive?

Kendall80

enthusiasticsaver wrote: »

That is useful to know and I will certainly look at Baillie Gifford. Have you chosen mainly active funds rather than passive?

3 passives, 8 actives.


Initially, my aim was to opt for region specific index trackers from the likes of Vanguard or Blackrock. However, after following Monevators passive portfolio I came to the conclusion that I required a few % pa more to reach my targets. With that in mind I spent a significant amount of time comparing the trackers to various active funds, reading up on allocations etc and eventually settled on a portfolio that is mostly active. However, overall its still below trustnets fe100 risk ratio.

dunstonh

I have just read an article on how many funds the average investor holds in their portfolio and it suggests 10-16.

I would have thought the average investor holds one or two. The most popular method of investing in the UK is multi-asset funds.

Now I am investing in the VGLS 60 which is obviously meant as an all in one portfolio comprising 10 index funds and wondered if I should stick to this solely or invest in other funds as well? What are the arguments for diversifying further.

The VLS is a portfolio. It is built with Vanguards idea of a spread that matches given risk profiles. if you want to build your own portfolio you need to build it to match your risk level and select funds and allocations and carry out your own due diligence and research.

The argument for it is that you can pick and choose your funds. mix and match passives and managed. Maybe focus sectors on certain areas depending on the economic cycle etc. The argument against it is that you almost certainly do not have the knowledge, time or information available to match that of a fund house.

Should I just stick to the Vanguard funds or is it advisable to introduce other funds into the mix?

That would break the asset allocation, change the risk profile and bring in management decisions. Do you think you can do better?

kidmugsy

dunstonh wrote: »

The VLS is a portfolio. It is built with Vanguards idea of a spread that matches given risk profiles.

Does that mean that it incorporates, for instance, separate equity and bond funds? I ask because it seems to me best to hold your bonds, or bond funds, separately so that you get the interest payments tax-free (if in an ISA or pension).

Doshwaster

I've currently got 9 funds (2 trackers, 7 active) plus 3 shares and that feels about right to me. Any more and I wouldn't be able to keep track of them.

stardust09

I have only got a very small sum in my S&S ISA so far and have it split between the VLS 60, Woodford Equity Fund and the Vanguard Small Cap. A financial advisor told me that if you go above £10,000, he'd expect me to diversify into more funds (approx 10 in total!), like property and emerging markets, to spread the risk. I still have 25 years investing ahead of me before retirement.

bowlhead99

kidmugsy wrote: »

Does that mean that it incorporates, for instance, separate equity and bond funds? I ask because it seems to me best to hold your bonds, or bond funds, separately so that you get the interest payments tax-free (if in an ISA or pension).

The Lifestrategy product invests in separate equity and bond funds- it's a fund-of-funds. However, if you have it in your portfolio, you don't literally have the multiple components in your own personal basket. So, as a non taxpayer this could perhaps be inherently inefficient, unless you are in the 20% equities one where the distribution is characterized as interest or the 100% one where there's no underlying interest anyway.

But that is probably no different from any other multi asset funds, which as dunstonh mentioned are the most popular type of fund out there, right?