Index Portfolio

mas2000

Appreciate any comments on my portfolio. I have been investing for about 18 months.

Current percentages:

Holding name % of this portfolio
Vanguard Emerging Markets Stock Indx Acc 20.6
Vanguard U.K. Government Bond Index Acc 17.32
Fidelity Index US Fund P-Acc 26.7
Vanguard FTSE Dev World ex UK Eq Ind Ac 9.84
Fidelity Index UK Fund P-Acc 25.53

I'm aiming for an allocation of:

Fidelity UK Index-Acc 25.00
Fidelity US Index- Acc 10.00
Vanguard FTSE Developed World ex-U.K.Equity 20.00
Vanguard global small cap 10.00
Vanguard Emerging Markets Stock Index Acc 10.00
Vangaurd UK Gov Index Acc 25.00

26 yrs old.
Homeowner.
6 month emergency fund.

AlanP_2

Quick thoughts (without knowing your time scales or objective):


25% in Bonds at Age 26 seems high if this is a long term / retirement pot you are building. If it is going to be cashed in within 5-10 years and you want to reduce the volatility impact of the equity content then that's different.

UK is high compared to its words market share of about 8% but your allocation is probably in line with a lot of UK based investors. Not familiar with the Fidelity one, which index is it tracking? If it's FTSE 100 I wouldn't be comfortable with 25% allocation to that and would go broader to include other UK indices.

On the same basis US allocation is low.

Very little European exposure with that mix.

JohnRo

Not sure what you're asking for, allocations are largely arbitrary, it's the rebalancing that matters over the longer duration.

FWIW I hold these trackers

8% BLACKROCK FM LTD CONTL EURP EQTY TKR D ACC
10% BLACKROCK FM LTD CORPORATE BD TRACKER D DIS
6% BLACKROCK FM LTD EMG MKTS EQUITY TKR D ACC
10% BLACKROCK FM LTD GBL PROP SEC EQTY TKR D INC
2% BLACKROCK FM LTD JAPAN EQUITY TRACKER D ACC
8% BLACKROCK FM LTD MID CAP UK EQUITY TKR D ACC
4% BLACKROCK FM LTD PAC EX JPN EQTY TKR D ACC
6% BLACKROCK FM LTD US EQUITY TRACKER D ACC
30% VANGUARD INV SER GBL SMALL CAP INDEX INC NAV

that's 84% of the portfolio total the other 16% is in four specialist AXA Fram. managed funds, Biotech, Financials, Health and Tech

I chose the UK mid cap index since it is has much more regional integrity imho that the trackers holding UK mega/large caps.

mas2000

Thanks for the input.

Regarding the bond percentage I went for 100-Age= Equity allocation. The rest going into Bonds.

Fidelity is tracking the FTSE 100 which from what I read is a pretty poor index to track.

I suppose it is early days and no doubt things will evolve as time goes on.

Linton

One would normally have a high % of a broader fund and smaller satellite funds to move the geographic allocations to where you want them to be. In that light I wouldnt have the US tracker since the Developed world tracker is 61% US anyway. So I suggest you move all your US tracker money into the Developed World Tracker. It would give a more balanced portfolio.

Linton

mas2000 wrote: »

Thanks for the input.

Regarding the bond percentage I went for 100-Age= Equity allocation. The rest going into Bonds.

Fidelity is tracking the FTSE 100 which from what I read is a pretty poor index to track.

I suppose it is early days and no doubt things will evolve as time goes on.

The bond % depends on when you want to use the money. If its > 20 years I probably wouldnt have bonds at all. So the bonds make the portfolio look reasonably cautious whereas the current 20% EM is pretty risky. So the portfolio doesnt tell a clear story.

TrustyOven

mas2000 wrote: »

Fidelity is tracking the FTSE 100

Are you sure about that?

https://www.fidelity.co.uk/fund-supermarket/Fidelity-Index-UK-Fund-A-Accumulation-Shares-GB0003875324

The above says FTSE All Share.

Check your fund with the ISIN to double-check.

redpete

I would decide the % I want in different sectors rather than by fund - e.g. 20% UK, 20% US, 20% Europe, 10% EM, 10% bond, 10% global small cap, 10% property (numbers just for illustration, not what I've got nor what I would necessarily recommend), then choose funds that deliver that spread, starting with one of the cheap global trackers such as Vanguard Lifestyle or Blackrock Consensus for the majority and finesse with satellite funds for the specialist mix I want..

mas2000

Trusty Oven, I stand corrected :

'The Fund's investment objective is to achieve long term capital growth by closely matching the performance of the FT-SE Actuaries All-Share Index.'

Thanks for spotting that!

Sam_J12

I would go 100% equities. Bonds will reduce your long term growth expectation and the reduction in volatility you get from diversifying into bonds does not really help you if you are investing for the long term.

I think the 10% small cap and emerging markets investments are a decent allocation.

As for the allocation in developed world large cap, it is really just down to personal preference and there is a lot of guess work involved in my opinion. My strategy in the past has to be put all my equity exposure into the S&P 500, since this has historically outperformed the global market, and investing in global stocks does not really provide any worthwhile diversification since the US and the rest of the world markets are so highly correlated. Alternatively, putting it all into a developed world tracker is a good idea, which you can't go far wrong with. I do think having a significant UK bias is not a particularly good idea as it seems unlikely to me that the UK is going to do particularly well. If you are going to have any kind of bias then I would go for a US bias.

TheTracker

The key thing about going 100% equity at your age isn't the long term sense of it, because that is incontrovertible, its your personal ability to take a stomach churning drop of maybe 50% at some point. That's not much easier at 25 than it is at 45 even though its of much less long term consequence.

I took a hammering when I started investing at your age. My first tracker was QQQ which tracks the nasdaq (I worked in NYC at the time), it went from 50 in early 1999 when I bought it to 100 in 2000 but fell 80% to 20 by 2002 and only in 2014 did it get back to where it was in 2000. I was lucky to sell in 2000 at a good profit but I lost more than an equal amount elsewhere and ran away from the market for a few years. Maybe if hadn't been 100% in equities I wouldn't have exited. Fascinating to go back just now for the first time in 15 years and see I would have really made out if I'd continued to hold some of the single stocks from 99 until today but it would have been a helluva ride I wouldn't have enjoyed and frankly would not have stuck with.