What do you think of my portfolio

Franko43

Hi All

Just started in the markets from last October. I've built up a 10K portfolio. Appreciate any feedback on my choices:

Invesco Perpetual High Income fund 2K
M & G Recovery fund 2K
European Property Fund 1K
Jupiter Russia 1K
Jupiter China 1K
NS & I Cash ISA 6.3%

wombat42_2

Cant see any obvious problems with it.

Aegis

Franko43 wrote: »

Hi All

Just started in the markets from last October. I've built up a 10K portfolio. Appreciate any feedback on my choices:

Invesco Perpetual High Income fund 2K
M & G Recovery fund 2K
European Property Fund 1K
Jupiter Russia 1K
Jupiter China 1K
NS & I Cash ISA 6.3%

What do you consider your risk profile to be?

wombat42_2

Aegis wrote: »

What do you consider your risk profile to be?

It is of course fairly hi risk but I wouldnt have thought it would matter too much as it is fairly small amounts of money and with 3K (I think) in a Cash ISA.

jon3001

Franko43 wrote: »

Just started in the markets from last October. I've built up a 10K portfolio.

[...Funds...] 7K
NS & I Cash ISA 6.3%

Hopefully a daft question but you didn't put 7K in a maxi-isa and 3K in a mini-isa during the same tax year did you?

As other posters say - this portfolio would be quite high risk. 30% (2k in 7) would usually be considered a nice chunk for international equity. But a good portion of that would be in developed economies (e.g. EU, USA, Japan/Far-East [Australia, Singapore, etc]). BRIC is considered high risk and this would be higher still - being just RC. Maybe a nice synergy between Russian Oil and Chinese construction projects will develop...

On the UK side - I like value/income funds myself. Again - expect more volatility as the market might take a while to fully value your holdings while you undertrack any benchmarks. This is a portfolio for a free-thinker who doesn't mind wide tracking errors. You could consider adding a UK Smaller Company fund.

Still - if you've got a strong stomach to ride the inevitable downturns you may do well in the long run.

Aegis

wombat42 wrote: »

It is of course fairly hi risk but I wouldnt have thought it would matter too much as it is fairly small amounts of money and with 3K (I think) in a Cash ISA.

Yes, but if he's looking for a low risk portfolio, then he's got a bad fund selection. You have to match your profile to your portfolio as best you can even when starting out, otherwise you'll feel sick every time one of this higher risk funds enters one of its really volatile periods.

As an example, I've got a profile that's built quite similarly to this, but with different UK Equity and foreign funds. If anything, mine is higher risk than the OP's, but I know what I'm getting myself in to. I consider myself a high-risk investor, possibly even above what most others would! Admittedly still on the small scale, but high risk nevertheless.

If I was a new somewhat cautious investor and had picked my funds based on their past performance, for example, I might find myself asking people for a review of my profile and being shocked at magnitude of the risk associated with my own list.

I'm not saying there's anything bad about the selection or the risk profile, just that it's worth letting the OP know what his selection is likely to entail over the short term.

Franko43

Thanks to all..you've brought some good points to my attention. Firstly - my risk profile - good Q!! I'd say (and not to be a fence sitter) I'm a medium risk taker in most things in life, share portfolio been no different. What's my aim with this?? Well - for a start it's all set aside money, 10 years minimum, currently I've a 150K mortgage out so I'd hope to pay a lump sum off then OR if I can get away with it keep it on for children's inheritence (DW is 8 months pregnant). I will probably not be able to add any more funds to my portfolio for another 2 years as I'll need the dosh for house downpayment but after that I'd like to put in 4K per year. I didn't actually think it was as risk risk as some of the more experienced commentators have identified. One good thing - I was going to pick a Japanese fund instead of China - glad I didn't...

to answer someone's Q - the cash ISA is in DW's name..

p.s. I'm hoping for a overall return of 7/8% over 10 years - too ambitious with this selection?

Thanks to all for feedback - nice to get some feedback on my decisions....

wombat42_2

Franko43 wrote: »

Thanks to all..you've brought some good points to my attention. Firstly - my risk profile - good Q!! I'd say (and not to be a fence sitter) I'm a medium risk taker in most things in life, share portfolio been no different. What's my aim with this?? Well - for a start it's all set aside money, 10 years minimum, currently I've a 150K mortgage out so I'd hope to pay a lump sum off then OR if I can get away with it keep it on for children's inheritence (DW is 8 months pregnant). I will probably not be able to add any more funds to my portfolio for another 2 years as I'll need the dosh for house downpayment but after that I'd like to put in 4K per year. I didn't actually think it was as risk risk as some of the more experienced commentators have identified. One good thing - I was going to pick a Japanese fund instead of China - glad I didn't...

to answer someone's Q - the cash ISA is in DW's name..

p.s. I'm hoping for a overall return of 7/8% over 10 years - too ambitious with this selection?

Thanks to all for feedback - nice to get some feedback on my decisions....

Well the 10 years plus sounds reassuring. You are in with a fair chance of making good money but it is not certain. Worst case scenario is that you could lose most of it. If you could stomach the chance that you could possibly lose money and prepared to take the risk then fine. Maybe put any spare additional money into cash saving accounts not shares for the time being.

jon3001

Franko43 wrote: »

One good thing - I was going to pick a Japanese fund instead of China - glad I didn't...

Sounds like you're focusing on short-term performance but your portfolio is for that of a very long-term investor.

I keep hearing how Japan is poised for recovery and I've got some of my money there. The funds been like this over the past few years:
'03 +32%
'04 -3%
'05 +30%
'06 -1%

Think it's been sliding again this year but I'm happy overall.

Franko43 wrote: »

p.s. I'm hoping for a overall return of 7/8% over 10 years - too ambitious with this selection?

Lol - this is the portfolio for someone looking to murder single digit returns or die trying! If you're happy with 7-8% and don't want big swings then scale back the emerging market stuff to about 10% of your equity allocation and have a nice spread of developed market equity and you should do it comfortably.

Remember to rebalance (reset your percentages) every year to lock in gains and exploit undervalued markets.

Aegis

Franko43 wrote: »

Thanks to all..you've brought some good points to my attention. Firstly - my risk profile - good Q!! I'd say (and not to be a fence sitter) I'm a medium risk taker in most things in life, share portfolio been no different. What's my aim with this?? Well - for a start it's all set aside money, 10 years minimum, currently I've a 150K mortgage out so I'd hope to pay a lump sum off then OR if I can get away with it keep it on for children's inheritence (DW is 8 months pregnant). I will probably not be able to add any more funds to my portfolio for another 2 years as I'll need the dosh for house downpayment but after that I'd like to put in 4K per year. I didn't actually think it was as risk risk as some of the more experienced commentators have identified. One good thing - I was going to pick a Japanese fund instead of China - glad I didn't...

You may find that your actual risk within this portfolio is much higher than what you consider to be medium. Medium risk would be largely UK equities and some Bonds, with maybe a venture into smaller companies and Europe. That's from my perspective anyway!

More than 25% of your fund value in emerging markets and other very high risk funds would generally be in the region of high risk from a profiling point of view, from what I've seen on here before now.

This is the reason I asked the question. You may find that you are outside your comfort zone now, in which case you need to ask yourself how you'd feel if, say, 30-40% of your value disappeared overnight.

I'm not an expert on risk or anything, but you might want to aska few more people how they would rate your overall selection on a scale of 1-10.

All in all though, if you're happy with your selection, then go with it. Just be aware of what your actual level of risk might mean.

p.s. I'm hoping for a overall return of 7/8% over 10 years - too ambitious with this selection?

Thanks to all for feedback - nice to get some feedback on my decisions....

7-8% per year is all too easy with a fund selection like that. Hell, you might even see that much volatility in a few days from some of the riskier funds of the selection

7-8% to me is more the level of cautious/balanced risk. Higher risk might well be into the double digit percentage growth every year, but as already hinted, you get the volatility with it!