Investing in Funds

funkey_monkey

Is there a notional split between sectors that I should be aiming for?

AnotherJoe

funkey_monkey wrote: »

Is there a notional split between sectors that I should be aiming for?

No.

There are basically 3 options.
1. Take the worldwide numbers and buy a fund that reflects that. The L&G International for example.
2. Take the worldwide numbers and buy a fund that reflects that but modified to increase the % for local markets, eg if you live in the UK, have a higher UK %. VLS funds do this, they have 25% UK whereas UK is about 6 or 7% global.
3. Take an arbitrary allocation according to your predictions, biases, convictions and change over time as those factors change.

For 3, you do that either by buying one fund that has a manager that does all that for you, or by using an IFA to do it, or by doing it yourself.

You can of course always do a mix of 1,2 & 3, for reasons of history eg as you start learning you change, you add stuff but maybe continue to run with something thats worked.

Which leads me to 4 which is buying individual company shares. I do a mixture of 1,3,4 for example. Possibly not recommended :eek:

In your case, either just buy a worldwide tracker of the L&G type, or VLS if you want more UK but I think that has issues*, or pay someone. What i suggest you do NOT want is to pay someone to buy a general tracker, eg options 1 or 2, for you.

* the reasons I think it has issues is that that UK investment isn't generally spread equally across the UK economy, but is focused on almost literally a handful of companies in a very few sectors. You'll making a relatively big bet on oil, mining, finance, pharma and tobacco. Other than pharma I wouldn't be wishing to increase my allocation of those.

Prism

funkey_monkey wrote: »

Is there a notional split between sectors that I should be aiming for?

Its up to you really. I roughly follow the MCSI global allocations https://www.msci.com/world with a small boost to UK. There are many ways to do this as AnotherJoe states. One example could be to get the L&G world ex UK tracker and then add the UK element back in with 6-7% allocation to a UK mid cap fund (plenty to choose from, probably active) which is usually more preferable to a FTSE 100 fund.

There is no real science to it. For example, I add in global tech funds to my mix because I work in the industry, understand it and 'think' that it will continue to be a high growth and also fairly defensive sector. I could be totally wrong.

movilogo

If you follow Benjamin Graham's (author of Intelligent Investors) advice, best funds would be very boring, entirely passive index trackers where you would invest and then forget for few years.

People do all types of analysis to beat the market. But Graham advises that don't try to beat market but aim to match the market and you'd be still rich!