Asset allocation review.

Zippeh

My SIPP is with HL, but I can't find the L&G Multi Index fund on this platform. Is it not available? If it is, can you point me in its direction so I can look at it?

Drp8713

HL dont have it. Blackrock Consensus is cheapest with HL i think the AMC on the 85 is 0.09 plus the 0.45 platform so 0.54% all in

Zippeh

Looking through a lot of the "Mixed Investment" sector funds, and they're all very high on their UK exposure. Are there any "ex UK" Mixed Investment funds out there?

Linton

Zippeh wrote: »

I've spent more time looking at allocation percentages (but not actual funds yet). Can you review and offer any advice?

European Tracker 10.00%
European Small Companies 5.00%
Uk Tracker 5.00%
Uk Small Companies 5.00%
Woodford Income 10.00%
US Tracker 25.00%
US Small Companies 5.00%
Emerging Markets Tracker 10.00%
Japan Tracker 5.00%
REIT / Property Fund 5.00%
Bonds 15.00%

I've held the Woodford Income fund since opening, and I'm happy with it's performance, but it currently makes up a large percentage of my portfolio (about 40%!). I will decrease this percentage, but would still like to hold on to it. In terms of Bonds, I'm open to suggestions as to whether they should be corporate, inflation linked, or whatever! I'm a bit concerned with the messages coming out of the bond markets that they're taking a hammering. Are they not the "safer" element they were once considered to be?

The overall allocation looks good to me. So it's just a matter of working out how best to achieve it.

Bonds at the moment are not as risk free as they were because they have risen in price as investors have looked for better returns than cash. However a bond crash is very unlikely to be as devastating as a major share price crash. I think you have three options if you want to hold bonds, and I believe it is a reasonable thing to do.

- go for short dated gilts or other very safe bonds - much the same returns as cash, ie nothing.
- higher risk corporate bonds. These give a much better return but behave more like shares as in bad times there is a greater chance of the issuer going bust, so you lose some of the diversification benefits.
- choose a strategic bond fund and hope the manager can avoid some of the risks. These have been giving good returns.

My portfolio holds a couple of strategic bond funds.

Zippeh

I've tried to firm up on my selections for my funds and have come up with the following. My research has been going along the lines of comparing the performance of the fund against its sector, and trying to keep charges as low as possible.

• Legal & General European Index 10.00%
• Baring Europe Select 5.00%
• Legal & General UK Index 5.00%
• Legal & General UK Smaller Companies 5.00%
• CF Woodford income 10.00%
• Legal & General US Index 25.00%
• Threadneedle Smaller Companies 5.00%
• Blackrock Pacific ex Japan Tracker 10.00%
• Blackrock Japan Equity Tracker 5.00%
• Schroder Global Property Income Maximiser Z Acc 5.00%
• Legal & General All Stocks Index-Linked Gilt Index 7.50%
• Blackrock Corporate Bond Tracker 7.50%

dunstonh

My research has been going along the lines of comparing the performance of the fund against its sector

That is not good enough. Just because a fund is in a sector, does not mean it carries the same risks as all the other funds in that sector.

If you take a typical 1-10 risk scale (cash =1 10 = highest risk conventional unit linked funds) then you will find that the funds in a sector could be as wide as covering 4 risk profiles.

What that is likely to result in general is that the highest risk funds appear at the top of the performance tables in growth periods and bottom in negative periods.

So, you are likely to be building a portfolio which is higher risk than you think it is and looking at some of those funds, that appears to be very much the case.

e.g. You have chosen a high risk property share fund and not a lower risk bricks and mortar fund (so you dont benefit from the asset diversification in that respect).

Zippeh

Thank you for your advice. I will check again in more detail.

jamesd

As dunstonh suggested, while comparing to funds in the sector is a good starting point, you really should be trying to go a but further and understand why the fund is performing differently.