Portfolio critique requested

sg1000

I would appreciate it if people could give me an idea if my portfolio is on track to do ok.

I started investing in First State just under five years ago at £50 a month. I have gradually increased my monthly savings to £250 and diversified. The £250 will continue to be drip fed for the forseeable future.

I am with HL and happy with their service and charges. I know that I could, perhaps, get cheaper but the last time I used a FA, I was charged £500 on a £3000 holding before we even discussed platform fees (total newbie).

I do not have a vast amount of money invested, but currently have an increase (over the five years, considering small amounts invested to start with) of 23%.

I have read numerous websites including HL, themselves (I appreciate the bias they may have), Trustnet and Morning star, but still don't feel that I really know what I am doing.

Investment term would be at least another ten years, but thoughts would be appreciated.

The end goal is nothing in particular...either to pay the deficit of the mortgage endowment (yes, I was convinced to do that too), or to just have a generally easier life!


Current investment and percentages:


1 First State Asia Pacific Leaders Class A 35.1% Asia Pacific Excluding Japan

2 Woodford Equity Income Class Z 25.6% UK Equity Income

3 Aberdeen Fund Managers UK Smaller Companies Equity Class A 11.0% UK Smaller Companies

4 Jupiter US Small & Mid Cap Companies Class I 8.8% North American Smaller Companies

5 Neptune Russia and Greater Russia Class C 7.2% Specialist

6 Marlborough Nano-Cap Growth Class A 7.2% UK Smaller Companies

7 First State Asia Pacific Leaders Class B 3.7% Asia Pacific Excluding Japan

8 FP Argonaut European Enhanced Income Class R 1.3% Europe Excluding UK 9 Cash 0.1% [N/A]

Thanks for any advice offered. If your view is that loads of these type of questions are asked, that's fine, just let me know if it is inappropriate

SG

masonic

This is very high risk, which may or may not be your intention.

Is there any reason why you have such a high bias to Asia and hardly any European exposure?

I'm not familiar with the First State Asia Pacific fund, but I assume this is developed Asia, meaning that Russia is the only emerging market you have significant exposure to?

mark13

Does seem to be loaded towards Asia, not a problem if you are getting good returns.
Do you rebalance / review the performance . ?

sg1000

The reason for the high bias to Asia is that I concentrated totally on First state for the first three years of investing...all drip feeding between £50 and £200 per month. Whether this was the right or wrong thing to do, it has worked out ok (up 43% in total for that fund).

I have only recently started to drip feed into Europe, via the Argonaut fund and have a mandate to buy more each month, although realise that I am probably top heavy with Mr Woodford.

Current allocation, per month is:

£100 Woodford
£100 Argonaut
£50 Neptune

Thinking of swapping Woodford for some Brazil / South American funds to try to get a spread across the board. Building up in Europe (excluding UK), will continue,

I realise that it is high risk, but I am ok with that....until it crashes and burns :-)

Thanks for the input,

SG

Kendall80

masonic wrote: »

I'm not familiar with the First State Asia Pacific fund, but I assume this is developed Asia, meaning that Russia is the only emerging market you have significant exposure to?

It has significant Indian, Australian exposure aswell as some chinese. Morning star records a 34% exposure to asia emerging markets.


The 24% exposure to India was a clincher for me when deciding my ISA composition.

bowlhead99

Yes there are loads of these How to look at it? Lots of ways to look at it, plenty of ways to skin a cat. Overriding principle is that none of us know what is coming next, so invest in everything.

You are 100% in equities and nothing in bonds, real estate or other asset classes which aren't correlated with equities (ie diversification to withstand an equities crash). So it's a rather aggressive portfolio before you even look at the individual funds. That's ok for some people but aggressive for a short timescale (i.e. 10 years drip fed).

At a glance you are using broadly regional funds. So with that approach you should aim to put a good chunk into each part of the globe. The UK stock market makes up 7-9% of the investible companies in the world, by value. You have about 40% in the UK which some would say is "overweight" on that measure, although most would acknowledge that "home bias" is natural.

Almost half of your UK market exposure is coming from relatively small or quite tiny (microcap, nanocap) companies which is a high risk approach. The larger UK listed companies, via Woodford, are all from the equity income sector while you don't actually know what type of companies will thrive in whatever economy wet have in the next decade compared to current preferences in the low interest environment; so again that could be an area to consider modifying.

The largest stockmarket in the world is the U.S., making up half the world's investible listed capital, by value. You seem to have only 9-10% of your portfolio there (a tiny amount via Woodford in addition to the dedicated fund) and pretty much all in small/mid size companies. Assuming you have no specialty knowledge over and above the average market participant, that's a bold bet.

Your Europe fund is again specialist rather than generalist but it is so small that it makes no noticeable contribution to, or detraction from, overall performance. Europe is a large part of the world economy, as well being on our doorstep, and the governments there are introducing monetary stimulus, boosting markets. Most would have 10% or more invested there.

Maybe they would have a similar 10-15% in Asia/Pacific ex Japan or 20% including Japan. Across two fund classes of the same fund, you have 38% in Asia-Pac "Leaders" and nothing in Japan.

8-10% in "emerging markets" might seem reasonable to many. Such markets would include China, India, other emerging Asia, Africa and Latin America, Eastern Europe, plus Russia. You've decided to put all your eggs into the Russia basket. Another bold move.

If I had this portfolio given to me, say as an inheritance : I would forget sentimentality and whether the funds had served someone well in the past. I would just rip it up and start again.

The £500 to the IFA would probably have been money well spent if he was actually independent and you actually took his advice.

No offence intended by the way : lots of people have stupid high risk unbalanced portfolios because they know nothing about what they are doing but refuse to pay for advice, go DIY without stopping to read up about it first, or are unwilling to accept a normal boring mixed asset fund because all these individual specialist ones sound sexier. The fact you're here is a positive. But the portfolio is still crappy!

sg1000

Bowlhead....

Brilliant advice. Thanks so much for this. believe me, I have read up over the years, but it still makes little sense to me. By the way, the "IFA" was, so I was to believe, independent, but put me on to a Sinfonia Multi asset fund which proved to be in the fourth quartile for all the time I had it (seven years).

I realise that I may have just been a bit lucky so far and will take your points on board.

Many thanks,

SG

Borrowedtune

Unless you make a few geographical calls you might as well have a global tracker.


I travel a lot in Asia with business, and I see the investment in infrastructure and education: this is the Asian century. So, like you I'm "overweight" in Asia ex. Japan, but not to your extent. FSAPL is a champion fund so you did well to pick it. But your allocation is too high, so why not take some profits and rebalance elsewhere?


Japan's demographics on the other hand are a horror story: the land of the setting sun. They sell more adult incontinence pads there than babies' nappies. Along with the levels of debt it means I'm happy to avoid.


I have fond memories of making a packet out of Fleming New Europe, but Russia is nowadays too risky for me. The Neptune fund is up in recent months so I'd bail out while going is good - hopefully you've made some profits there?


Woodford is a champion manager, so I would hold that position if I were you.

sg1000

Thanks for the input, Borrowed. More things for me to think about. I would definitely be planning to keep Woodford for the forseable future.

TakeCareOfThePennies_2

sg1000 wrote: »

I realise that it is high risk, but I am ok with that....until it crashes and burns :-)

Well, as long as you are aware of the consequences of your actions, then who are we to moan about your portfolio.

Good Luck. You'll need it. :eek:

tigerspill

Hi sg1000,

I have read a lot while setting up my portfolio. I have learnt a lot on here from people way more knowledgeable than me.
I am generally a low risk person.
In the end I reckoned i couldn't do better than the Vanguard guys so just put the vast majority in their LS40 fund. And added couple of satellite funds.