24Y - Passive Investment Plan - Comments/Advice

sadhu99

Thank you to everyone for all the advice so far, taking the comments received into account, this is where my portfolio stands currently (as before comments/advice appreciated):

Funds
40% - Vanguard FTSE Developed World Ex UK Acc
10% - Vanguard Global Small-Cap Index Acc
10% - Fidelity Index UK Fund P Acc
10% - HSBC FTSE 250 Index C Acc
10% - BlackRock Emerging Markets Equity Tracker D Acc
10% - BlackRock Global Property Securities Equity Tracker D Acc
5%- Vanguard UK Government Bond Index Acc
5%- Vanguard UK Inflation Linked Gilt Index Acc

Average OCF= 0.16% (+0.2% Platform fee)

bigfreddiel

dunstonh wrote: »

The ISA tax wrapper is not recognised in the USA. The US taxation on funds makes it harder for managed funds to beat passive. Pre-tax managed funds do very well against passives. Post tax, most of them cant beat passives. The UK does not have that tax.

Blimey I thought they had isa's in the us of a! If not why not? Hehehehe!

bigfreddiel

sadhu99 wrote: »

Thank you to everyone for all the advice so far, taking the comments received into account, this is where my portfolio stands currently (as before comments/advice appreciated):

Funds
40% - Vanguard FTSE Developed World Ex UK Acc
10% - Vanguard Global Small-Cap Index Acc
10% - Fidelity Index UK Fund P Acc
10% - HSBC FTSE 250 Index C Acc
10% - BlackRock Emerging Markets Equity Tracker D Acc
10% - BlackRock Global Property Securities Equity Tracker D Acc
5%- Vanguard UK Government Bond Index Acc
5%- Vanguard UK Inflation Linked Gilt Index Acc

Average OCF= 0.16% (+0.2% Platform fee)

So you're ocf is in fact 0.36%, not too bad but you could do better!

fj

masonic

bigfreddiel wrote: »

So you're ocf is in fact 0.36%, not too bad but you could do better!

Maybe by a few basis points, but that is probably within the tracking error and it would be necessary to compromise on diversification in order to achieve it. The average fund OCF is very low, the next thing to work on would be the platform fee when the portfolio is large enough to move to a fixed fee basis. By the time that is relevant, many things could have changed.

TheTracker

bigfreddiel wrote: »

So you're ocf is in fact 0.36%, not too bad but you could do better!

fj

Really, how?

sadhu99

So you're ocf is in fact 0.36%, not too bad but you could do better!

fj

The bulk of that is the platform fee, which I'll make sure to reduce at the point when something like iWeb becomes the more sensible option with its fixed fees for dealing. Could also marginally improve the OCF by simplifying to a global index fund, but I kind of like the balance between diversification and low fees I've got here. Any other comments would be appreciated.

sadhu99

An update on my asset allocation, some further simplification:

Funds
40% - Vanguard FTSE Developed World Ex UK Acc
10% - Vanguard Global Small-Cap Index Acc
10% - Fidelity Index UK Fund P Acc
10% - HSBC FTSE 250 Index C Acc
15% - BlackRock Emerging Markets Equity Tracker D Acc
15%- Vanguard UK Government Bond Index Acc

Average OCF= 0.17% (+0.2% Platform fee)

---

Does anyone have any thoughts on inflation-linked government bonds vs normal government bonds?

collingbone614

A further simplification may be to keep all of your UK allocation within the FTSE All Share.

From the looks of it to me, you are holding the All Share via the Fidelity fund, then adding FTSE 250 exposure via the HSBC fund.

masonic

collingbone614 wrote: »

A further simplification may be to keep all of your UK allocation within the FTSE All Share.

From the looks of it to me, you are holding the All Share via the Fidelity fund, then adding FTSE 250 exposure via the HSBC fund.

It's worth bearing in mind that the FTSE 100 (and hence FTSE All share, which is about 80% FTSE 100) is a pretty distorted index and adding in some extra FTSE 250 does help with diversification. The Vanguard small cap fund has not got much exposure to the UK (<10%).

On the subject of index linked gilts, they can be useful in times of very high inflation, but a high equities portfolio will give quite a good hedge against moderate inflation, so index linked gilts are more commonly seen in portfolios with a lower proportion of equities.