World ex-UK fund

cuthbertlilly

Hi,
does anyone have any examples of World ex-UK funds that have a low allocation to UK equities please? (also preferred with a slightly lower US equities by market capitalisation, and higher EM/asia)
I am re-balancing some of my ISA.

sparsely

Monevator has a good list of lox cost index funds, although the OCFs of some are a little out of date. (you'll have to google "Monevator low cost index trackers" yourself as I can't post a link to the article yet.)

Here is their section on international ex-UK funds:

Cheapest

• L&G International Index Trust I (GB00B2Q6HW61) OCF 0.13%

Next best

• Vanguard FTSE Dev World ex-UK Equity Index (GB00B59G4Q73) OCF 0.15%

• Aviva Investors International Index Tracking SC2 (GB00B2NRNX53) OCF 0.26%

• db x-trackers FTSE All-World ex-UK (XWXU) OCF 0.4%

You can also pick ‘n’ mix using individual US, Europe ex-UK, Japan, and Pacific ex-Japan trackers.

Only the db one seems to include EMs.

You can approximate lower US and higher EM by just buying that + a little bit of an EM fund, otherwise you'll have to buy all the component funds and work out allocation yourself.

jimjames

cuthbertlilly wrote: »

Hi,
does anyone have any examples of World ex-UK funds that have a low allocation to UK equities please? .

Wouldn't all of them have a zero allocation to UK? Isn't that the point of the ex UK in the name? Or did you mean something else?

cuthbertlilly

jimjames wrote: »

Wouldn't all of them have a zero allocation to UK? Isn't that the point of the ex UK in the name? Or did you mean something else?

Yes, sorry i mean i want to keep woodford equity income which ive currently got at 19.5% alongside VLS80 meaning i'm overweight in UK equities.

cuthbertlilly

Currently £2,053 in VLS80 and £462 in Woodford equity income, I’ve decided to re-structure and put in £15,000 of this year’s ISA allowance as follows:
CORE
VLS80 30% £4,500
Woodford equity income 20% £3,000
City financial absolute equity 10% £1,500
Scottish mortgage IT 10% £1,500 [or similar global fund - tbc]
Blackrock global property tracker D 5% £750
Newton Real Return 5% £750

SAT’S
Baillie gifford global discovery 5% £750
Woodford patient capital 5% £750
Fundsmith 5% £750
Lazard EM 5% £750

Any thoughts/opinions on the above strategy?

Linton

My thoughts......

1) It should be possible to describe a strategy in a sentance or three. I cant deduce what your strategy is from your tactical choice of funds.

2) The choice of satellites looks more like its based on funds that have done well over the past few years. This is not necessarily a safe strategy. If basing your choice on performance you need to see the bad years as well as the good. Some of your Core funds look more like satellites.

2) You have too many funds for your size of portfolio. It over complicates things. Suggest you have no fund of less than £2-3K.

3) Too much duplication - anything in fundsmith and much of Woodford is already in VLS 80%.

4) CF Abs Equity fightens me. Such funds are meant to provide a steady if unexciting return over a broad range of market conditions. However during 2010 it dropped by 25%, then did nothing for about two years. Since 2012 it has doubled in value. I cant see any requirement that it could satisfy apart from possibly providing a bit of entertainment.

5) Baillie Gifford Global Discovery is another fund like CF Abs Equity, and Scottish mortgage that invests in companies the manager likes, often in-fashion high tech, with fairly wild results. Note that Scottish Mortgage is run by Baillie Gifford. It more than halved in value in the 2008 crash. The other two werent around then.

I suggest you increase VLS to say 70% or more and put the rest into say Property, EM and any other areas that are poorly represented in the VLS fund. Small Companies is an obvious example. The point is that to maximise diversification the Satellites should major on sectors not well covered by the Core.

bigadaj

cuthbertlilly wrote: »

Currently £2,053 in VLS80 and £462 in Woodford equity income, I’ve decided to re-structure and put in £15,000 of this year’s ISA allowance as follows:
CORE
VLS80 30% £4,500
Woodford equity income 20% £3,000
City financial absolute equity 10% £1,500
Scottish mortgage IT 10% £1,500 [or similar global fund - tbc]
Blackrock global property tracker D 5% £750
Newton Real Return 5% £750

SAT’S
Baillie gifford global discovery 5% £750
Woodford patient capital 5% £750
Fundsmith 5% £750
Lazard EM 5% £750

Any thoughts/opinions on the above strategy?

Too many funds and far too fiddly. I wouldn't bother with less than maybe £5k in each fund, the difference in the returns on £750 even if it massively outperforms will only amount to a couple of hundred pounds.

bowlhead99

I agree with the other basic comments above, Linton's post is spot on. As soon as you describe a 'core' as being "one global multi-asset fund, plus one UK equity income fund, plus a global high conviction equities fund, plus real estate, plus a couple of absolute return funds" you have lost me.

Look at a cross section of our planet in a kids science book. In the middle is the big yellowy red bit they call the earth's core. It is basically one thing which spreads out in all directions roughly equally and is generally hot throughout. It is not "one generally hot bit that spreads out in all directions and then 5 other special things with their own unique specialist properties crammed in there causing the core to be so much of a mish-mash that you have to go and find four other things to strategically place around the outside to bring it back into some sort of balance".

Better idea:
£8k VLS80 (is about 6.5k equities 1.5k bonds with a bias to the UK)

£3k iShares MSCI World Size Factor ETF (100% equity, only about 7% UK, removes some of the bias to large cap companies and US/UK companies that you have in the VLS)

£1.5k direct commercial property fund

So at that point you have spent £12.5k of your current year allowance and have a decent core. You have what equates to 10% of the £15k ISA allowance in bonds, 10% of it in property, and 63% in general global equities across all countries (including a small amount of emerging markets) with some bias, but not a massive bias, to the UK, and another £2.5k yet to spend. You also presumably have your existing £2.5k of assets, although I'm not clear if your existing assets are in addition to, or part of, the current year £15k.

But basically after doing £12.5k in a core (of which 9.5k is equities and 3k is not equities) you will either have £2.5k or £5k left for ONE or TWO satellites at £2.5k a pop before you run out of money.

Maybe you would like to tilt to the UK dividend payers with 2.5k Woodford. Maybe you would like to have more than £3k in non- equities so you buy another defensive fund. Maybe you would like to go high conviction in US tech stocks or biotech or oil and resources or emerging or frontier markets so you do one of those. But you don't try to do ALL of them, or the "core" will be overwhelmed with "tilts" and it loses all real meaning. So you do one or two satellites for now and that's it, stop.

Next year, if you have the means, you can do another £15k. So that's another £10-12.5k core and another ONE or TWO satellites.

After three years, if you can afford it, you will do the same again and by then you will have three to five satellites, operating in areas where you have medium-to-long term convictions. If you can't afford it, that's fine, because it means your portfolio is not very big and so doesn't need a lot of fancy messing about with satellites.

If you look back at the kids book that shows the earth. The planet has one 'satellite', the moon. A little thing that spins around the edge creating tides and werewolves and generally keeping things interesting. But the earth doesn't have four massive satellites which are a similar size to the earth itself.

Similarly, you don't need your portfolio to have a six fund core and a four fund set of satellites right off the bat with a few hundred pounds in each. That's a waste of your time and a needless distraction from the core effort of saving and investing.

Dird

bowlhead99 wrote: »

useful info

What are your thoughts on a focus on dividend based investing? Essentially meaning metals/oils judging by the top 20 payers last year, 9 of them paid out 8%+ in dividends :-o

Also do the funds actually give any kind of transparency on your dividends being re-invested? Fundsmith has increased in value but in transactions it only shows sell: http://www.pasteall.org/pic/show.php?id=102285
I thought there'd be buy/re-invest entries too

coyrls

Dird wrote: »

What are your thoughts on a focus on dividend based investing? Essentially meaning metals/oils judging by the top 20 payers last year, 9 of them paid out 8%+ in dividends :-o

Also do the funds actually give any kind of transparency on your dividends being re-invested? Fundsmith has increased in value but in transactions it only shows sell: http://www.pasteall.org/pic/show.php?id=102285
I thought there'd be buy/re-invest entries too

Those transactions are nothing to do with Fundsmith buying and selling shares, they are charges from your advisor, it looks like he/she is selling units in Fundsmith to fund service fees and their ongoing charge.

They are incredibly small amounts: between 5p and 20p. It seems an excessively expensive way to collect tiny amounts of money.

Dird

coyrls wrote: »

Those transactions are nothing to do with Fundsmith buying and selling share

But then how do you know the value of fundsmith going up isn't 100% share price rises and he's just keeping the dividends for himself instead of re-investing?