How many funds should you have in your portfolio?

dunstonh

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).

Only the VLS20 qualifies to reclaim the tax back (of the VLS funds)

A downside to multi-asset funds like the VLS (but also others) is that the fixed interest component will not be able to have the tax reclaimed unless it is made up of at least 80% bonds. However, the upside is that the individual doesnt do the rebalancing (and most wont bother rebalance or they will use made up/random asset allocations which could lead to far worse outcomes).

I cannot remember the figure off the top of my head as to what qualifies to reclaim tax but I think it is a minimum of 80% bonds

A financial advisor told me that if you go about £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.

It also comes down to how you contribute. A monthly premium doesnt really matter where it invests until it gets to around £10k in value. The differences make very little difference to the value up to that point. 10 funds would cover all the major investment sectors. So, that figure is ok. However, doing that on 10k is massive overkill. The work required to run that properly is too much for the amount. I would put a figure at 70-100k but that is on professional terms. A DIY maybe at 50k as long as the person remains interested in the investments and keeps doing the work.

bowlhead99

dunstonh wrote: »

Only the VLS20 qualifies to reclaim the tax back (of the VLS funds)


I cannot remember the figure off the top of my head as to what qualifies to reclaim tax but I think it is a minimum of 80% bonds.

I think it's over 60% of the assets have to be bonds, so the 40% equity product wouldn't qualify because they wouldn't be able to say they expected over 60% of the assets to be bonds for most of the year, it's too borderline. While if it was only 20% or 30% equities they could say their distributions are interest payments which are tax deductible for them and have WHT recoverable for individual investors.

With bond yields pretty minimal at the moment for gilts and U.S. treasuries and investment grade corporate (at least vs historic levels), the inefficiency is perhaps not as big of a deal as it might be in other economic conditions. I've only used their 100% equity version myself, where it isn't relevant

tigerspill

stardust09 wrote: »

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.

Is that not strange advice? Maybe the FA didn't understand that the VLS is a fund of about 10 funds already?

stringer_bell

sorry to hijack

what sort of book keeping would be required to hold funds outside an ISA for CGT purposes? I heard somwhere that its a nightmare with acc units, but not income units. any ideas?

Thrugelmir

Maintain records on a spreadsheet. Easy enough to do. Do keep back up copies of the data though.

TedDeven

My wife and I work with an adviser who has invested our $2 million in savings in 17 different mutual funds. Do we really need that many funds?

Radiantsoul

TedDeven wrote: »

My wife and I work with an adviser who has invested our $2 million in savings in 17 different mutual funds. Do we really need that many funds?

This is a UK based site.

moneyfoolish

I've just looked at my Nutmeg portfolio and it's made up of 14 ETFs which seems to cover 9 distinct countries plus 9% in "Other" whatever that encompasses, 3 distinct continents plus 4% in "Other", 10 distinct sectors plus 3% in "Other". I have about 17% in bonds, 1% in cash and the rest in equities. 67% of the portfolio is split between UK and USA and there seems to be nothing in Property unless it's hidden somewhere in "Other". There seems to be a fair spread of things in there but I don't have the expertise to know how well balanced it is.

Linton

We currently hold about 40 funds. That's far too many for a single portfolio, but they are spread over 2 SIPPs and 3 ISAs (his & hers) each of which holds a well diversified portfolio. The objectives of each are not necessarily the same. If one has multiple tax free accounts where transfer between the accounts is a hassle one might as well hold different manager's funds in each, there is no disadvantage.

Borrowedtune

Does anyone else recall a Trustnet article 3-4 years ago where they claimed that (according to their research) the ideal number was about 8. However, I can't seem to find the offending piece.


Mark Dampier also pronounced 2-3 years ago that investors should not hold more than 20 funds, which raises the question why some of the HL multi-manager funds have at times had circa 25 funds included.


FWIW I hold 13 funds, 3 of which are soft closed (so I had to find inferior replacements to put my future money in).