Allocation: Input please:)

wyrleyite

Hi

I'm considering investing a sum of money and I'd like some input regarding my allocation.

40% in Santander 123 (earning 3%)
10% Property (mixture of Uk and Global REITS/ETFs)
25% UK (ETFs/OEIC trackers and/or UK Equity ITs such as Temple BAR)
8% Europe
8% USA
4% Japan
4% Asia (Ex Japan)
1% EM

I'm investing for the long term (20+ years) but using this as a starting point (ie 123 account won't last 20 years!). I'd consider myself moderate when it comes to risk. I have no debts (mortgage etc).

Input would be appreciated :beer:

bigadaj

The Santander money obviously isn't invested, though it could be argued it offers up An analogy to bonds with lower risk. That allocation looks below medium risk given your suggested timespan. Assuming you're maxing one santander account then total investment is £50k, which means that some elements may be irrelevant, eg £500 on emerging markets.

Might be better to look at a cheap multi asset fund, vanguard life strategy, black rock, legal and general, fidelity etc with maybe one or two side funds if you like to include, specific sectors or geographies like smaller companies, property, commodities, emerging Asia etc.

That allocation is also seriously underweight in the U.S. Component, and whilst people are nervous of the strength of the U.S. Market it would make up 40%+ of a neutral weighted pure equity global investment.

wyrleyite

bigadaj wrote: »

The Santander money obviously isn't invested, though it could be argued it offers up An analogy to bonds with lower risk.

That was my thinking. With the bonds markets bouncing around all over the place I thought my safer component would do fine in the 123.

bigadaj wrote: »

That allocation looks below medium risk given your suggested timespan. Assuming you're maxing one santander account then total investment is £50k, which means that some elements may be irrelevant, eg £500 on emerging markets.

It's more than that. I've got 2 123 accounts. One in my name and one joint account.

bigadaj wrote: »

Might be better to look at a cheap multi asset fund, vanguard life strategy, black rock, legal and general, fidelity etc with maybe one or two side funds if you like to include, specific sectors or geographies like smaller companies, property, commodities, emerging Asia etc.

That's good advice thanks:T

bigadaj wrote: »

That allocation is also seriously underweight in the U.S. Component, and whilst people are nervous of the strength of the U.S. Market it would make up 40%+ of a neutral weighted pure equity global investment.

Thanks. That's the one area I was unsure of.

Does anyone have any comments regarding using a well established IT such CTY, Merchants etc over an index tracker? It seems that the larger ITs have quite low fees, albeit not as low as trackers. Do you think it's worth paying the bit extra for active management? Is it worth investing in both?

masonic

It's also worth considering P2P as an alternative to bonds. Even a relatively low risk P2P platform like Ratesetter would generate substantially better returns than your 123 accounts. There are also strategic bond funds like M&G Optimal Income that have the freedom to avoid some of the assets most sensitive to interest rate rises.

ITs are certainly worth researching if you are willing to take the time to do so. I use them extensively in my portfolio, although I don't use them for my UK allocation (or USA for that matter).

ChopperST

Regarding P2P IF Osbournes tax free savings thresholds are allowed through then it makes them more attractive again still as a bond alternative. I drip feed to spread the money across various loans on various platforms to mitigate the risk.

wyrleyite

I'll certainly use P2P but will probably reinvest divis.

I've updated my portfolio idea

Europe ex UK 20.00% Henderson Euro Trust IT
UK Small Companies 15% Henderson smaller companies IT
UK 25% City of London IT
USA 25% Vanguard ETF VUSA
Japan 6.00% Vanguard ETF VJPN
Asia ex Japan 6.00% Vanguard ETF VAPX
EM 3.00% Vanguard ETF VFEM

What do you think?

masonic

The amount you'll be investing as a lump sum / monthly will be relevant if you want to include ETFs at low percentages. You'll be paying a trading fee to buy these, so it wouldn't be very cost effective to buy small amounts at a time. If you have £100k+ to invest, then 3% in an ETF may be ok, but much smaller than that and topping up/rebalancing will be pretty expensive.

wyrleyite

masonic wrote: »

The amount you'll be investing as a lump sum / monthly will be relevant if you want to include ETFs at low percentages. You'll be paying a trading fee to buy these, so it wouldn't be very cost effective to buy small amounts at a time. If you have £100k+ to invest, then 3% in an ETF may be ok, but much smaller than that and topping up/rebalancing will be pretty expensive.

It's a fairly sizable sum and the smallest investments are over £1k just about.