Anyone else making a loss on all their S&S investments?

grey_gym_sock

EdGasket wrote: »

If I am buying individual shares then how do I achieve a 'balanced' portfolio with exposure to most sectors covered and without to much exposure to any one share without buying a fair number of different shares?

there are about 20 market sectors (or more if you look at sub-sectors), so make your 1st 15 or 20 shares each from a different sector. only start doubling up (buying 2 from the same sector) when you've (nearly) run out of sectors. it sounded like you're only covering about 6 sectors at the moment.

and when you start doubling up on sectors, if possible pick shares that are in different sub-sectors, or otherwise seem like very different kinds of businesses.

also, pick the majority of your shares from the FTSE 100, and most of the rest from the FTSE 250. some sectors, or at least some sub-sectors, may not be represented in the FTSE 100, so that's a good reason to look at a FTSE 250 share. for similar kinds of business, a bigger company is usually a safer bet. but sometimes you get a different kind of business by going for a smaller company.

EdGasket wrote: »

I suppose if I were 'rebalancing' I should be buying more resources right now as most of my resources shares have tanked and aren't worth much.

probably you have far too much in resources already, and have omitted far too many sectors. you need to have a reasonably balanced portfolio before you can consider rebalancing it.

basically, either diversify your individual shares properly, or sell the lot, and reinvest in collective investments.

so far as funds go, there is no real need to hold sector funds at all - e.g. resources or agriculture. or even gold - personally i don't like it, though there is an argument for a tiny % in gold as a diversifier.

most of your funds should cover regions of the world. the capitalization of world markets can be broken down as approximately:

USA & canada 55%
europe ex-UK 15%
japan 9%
emerging 8%
UK 7%
asia pacific ex-japan 6%

so you've ignored 64% of the world (USA, canada, & japan). (OK, not quite true, because you have some in the global income ETF.)

you have UK via individual shares, but poorly diversified.

you have europe ex-UK. it happens to have done badly recently, but that's fine.

you have emerging (which is fine), but you also have latin america and bric - why treble up on this volatile area?

you have asia pacific ex-japan (fine), but also a single country, korea - why?

basically, a diversified portfolio implies covering most of the above 6 regions, though not necessarily in the same proportions as their market capitalizations. by all means cut down USA a bit (doesn't everybody do that?), and have a little home bias.

apart from covering those regions, the only things i'd consider adding (though they're not essential) are:
- property (which you have)
- a tilt to small cap shares
- a tilt to value (which you have via the world income ETF)

gadgetmind

grey_gym_sock wrote: »

so far as funds go, there is no real need to hold sector funds at all - e.g. resources or agriculture. or even gold

I tend to do this in *deeply* unloved sectors, and then I usually go for a well managed and low geared IT that's on a deep discount. My REIT plays worked well, ditto my Europe ones. My EM ones are, well, waiting to come good.

coyrls

EdGasket wrote: »

erm; ever heard of a spreadsheet?

As a quick comparison of your 90 holdings, Woodford Equity Income has over £3.7Bn of its £7.67Bn fund invested in 10 shares.

Linton

grey_gym_sock wrote: »

.......
so far as funds go, there is no real need to hold sector funds at all - e.g. resources or agriculture. or even gold - personally i don't like it, though there is an argument for a tiny % in gold as a diversifier.
...

Although I agree with much of the post I would disagree here. In my view it is important to have diversification in industry sectors and company size (and anything else one can think of) as well as geography. Actually with globalisation one could argue that these other factors are increasingly more important than geography - a multinational company that happens to be based in Brazil is going to experience much the same economic pressures as one in the same sector based in the USA, Russia or France.

If this is accepted it seems perfectly reasonable to consider holding major predefined %'s in specific sector funds in say Technology, Health, Agriculture etc etc and use the geographic funds to adjust the resultant geography allocations.

Linton

gadgetmind wrote: »

I tend to do this in *deeply* unloved sectors, and then I usually go for a well managed and low geared IT that's on a deep discount. My REIT plays worked well, ditto my Europe ones. My EM ones are, well, waiting to come good.

Yes - EM and Far East ITs seem to be on reasonable discounts at the moment. Perhaps its worth holding both UTs and ITs in something like EM and balancing between the two. It's a problem being retired and not having fresh funds to invest - that's the only one though!

In a perfect market this shouldnt happen unless IT managers were provably less effective than UT ones, which seems unlikely. So an opportunity.

grey_gym_sock

Linton wrote: »

Although I agree with much of the post I would disagree here. In my view it is important to have diversification in industry sectors and company size (and anything else one can think of) as well as geography. Actually with globalisation one could argue that these other factors are increasingly more important than geography - a multinational company that happens to be based in Brazil is going to experience much the same economic pressures as one in the same sector based in the USA, Russia or France.

If this is accepted it seems perfectly reasonable to consider holding major predefined %'s in specific sector funds in say Technology, Health, Agriculture etc etc and use the geographic funds to adjust the resultant geography allocations.

i agree that sector balance matters, but i think if you have a reasonable mix of regions, you'll tend to get a reasonable mix of sectors. so the UK has a lot of banks and resources. and the USA has a lot of technology. and so on. but it tends to balance out once you put a bit in each region.

you could always use some portfolio analysis thingy to look at what sector allocations you're getting from a portfolio of regional funds. and if the sectors look unreasonable, you might try changing your regional allocations in order to get different sector allocations.

i am less keen on using sector funds, because you'd need about 20 to cover everything (compared to 6 for regions), and do most of them even exist (at low cost)? most people are just using sector funds to go overweight in whatever is in fashion (or to buy whatever has just fallen, which is often mistaking negative momentum for value).

re company size: i agree that small cap is an area where you might want to add more than your regional funds give you (as they tend to be mostly big cap).

Thrugelmir

coyrls wrote: »

As a quick comparison of your 90 holdings, Woodford Equity Income has over £3.7Bn of its £7.67Bn fund invested in 10 shares.

Some funds do have the problem of having a large amount of money to invest. As the money they invest or disinvest influences the market itself. Also restricts the Companies that can be considered for investment.