asset allocation

inflationiscoming

My time horizon is 30 years, aiming for retirement. My current asset allocation across pensions and ISA is currently:

UK SMALL CAP 7.2%
OVERSEAS DEVELOPED 30.2%
UK MID-LARGE CAP 25.8%
EM 22.0%
EM BOND 1.0%
CORPORATE BOND 2.2%
INDEX LINKED 2.1%
PROPERTY 8.9%
CASH 0.2%
GLOBAL BOND 0.3%
natural resources 0.2%

I am high risk in my attitude towards investments

Welcome views, especially do I need the bonds or shall I shift more to equities (currently 86%)? Ignore the cash as I am just holding that to drip feed and have more cash outside of the portfolio to drip feed in

Views on holding EM bonds for the long-term, my view is the majority of return potential is from relative currency appreciation

InvestInPoker

My view is if you have a 30 year term and a high risk attitude to investments (and really do have the mindset to cope with this) then drop the bonds and go 100% equities until you have <20years. Just giving up returns otherwise.

dunstonh

I am high risk in my attitude towards investments

Or very high as the case is. On a 1-10 scale you would be looking at about 9 with that spread (Subject to fund selection and the underlying asset make up which does not always quite reflect the sector allocation).

You have about 50-60% loss potential in 12 months. However, 30 years dilutes the risk as long as you dont suffer from behaviour risk (panic when it does drop 60% and then pull out on a low)

inflationiscoming

Thanks. What is the historic probabilty of a 50 - 60% loss of 12 months?

My understanding of the evidence, is that equities return approx. 4% in real terms over approx. The last one hundred years. Is that correct?

Jsscmm

On average maybe 4 or more percent growth... Check 2000 or 2008 for less than average.

No idea when the next growth acceleration or plunge might be. 2015 could be a new record... In either direction.

dunstonh

My understanding of the evidence, is that equities return approx. 4% in real terms over approx.

Yes. But periodically there will be market crashes. In the last 15 years, you have had two where you would have seen the value drop by around 40-60% in with that asset mix.

You have to average out the ups and downs but you need to be prepared for a big shock periodically with that asset mix.

inflationiscoming

How would I reallocte to bring the risk level to 7/10?

Thanks for the input

dunstonh

I would use software with actuarial provided allocations. You dont have that so you could do with brining in property and bonds to 30-40% (so 60/70 equity) and playing from there.