World ex-UK fund

AnotherJoe

coyrls wrote: »

I guess they are taking the charges from your largest holding, if £150 is the largest. Spreading £1,200 over 13 funds is unusual.

That's a polite way of saying it's an unbelievably terrible strategy due to all the extra dealing charges being way out of whack. OP should also be keeping some cash in his account to pay charges rather than have them needing to sell funds which is very expensive.

Essentially this is a car crash of a portfolio if the idea was to make money with it.
If the idea was to track performance and play it's still a car crash as that could be done in theory. And with 13 funds odds are its approximating some sort of tracker or two which could have been bought individually at lower cost.

bowlhead99

bottleandahalf wrote: »

I am thinking the Lind/ Train fund as it's top holdings are global companies eg Diageo, Unilever etc. These companies don't seem to be included in VLS top holdings.

That sounds like a nonsense to me.

Firstly, your largest holding is the VLS fund which holds thousands of companies from all over the world. So the idea that you need to buy a UK fund because some of its holdings will be companies that operate globally, thereby getting you exposure to economic activity from all over the world, is silly, because you already have exposure to economic activity from all over the world.

Secondly, you know that 25% of the equity exposure in the VLS comes from the UK stockmarket, using market capitalisation indexes to weight its allocations among companies and putting the most money in the biggest companies. Generalising, the biggest companies on the UK markets are those 'global companies' that you refer to. So, within VLS's UK exposure, the top ten to fifteen companies will definitely include global drinks giants like Diageo and SAB Miller, and global pharma companies like AstraZeneca and GlaxoSmithkline, and global consumer goods companies like Unilever. And its top US holdings will include Procter & Gamble and Johnson & Johnson, and its top European holdings will include Nestle.

So with the VLS fund you are already getting exposure to global sales of all kinds of products. Take booze for example:

One of your top ten holdings in the 25% of your VLS equities which happen to be listed in the UK is Diageo, selling Smirnoff and Guinness globally. And in the same fund one of your top ten European holdings is Anheuser-Busch InBev selling Stella and Budweiser globally, who happen to be listed in Brussels. And back in the UK top five you have SAB Miller selling Carling and Peroni and Fosters and Miller Genuine Draft. And when SAB Miller disposes of Italian-based Peroni and Dutch-based Grolsch and Greenwich-based Meantime to the Japanese group Asahi for a couple of billion later this year, you will still own them all because you already own Asahi listed in Tokyo.

Similarly if you are doing your weekend shop, you might buy some Shreddies cereal (Nestle, listed in Switzerland) or some Listerine or Band-Aid (J&J, listed in US) or some Dove or Ben & Jerry's (Unilever, listed in UK) or some Bold washing powder (Procter & Gamble, US) or maybe you prefer Persil (Henkel, Germany, but licensed in several parts of the world by Unilever, UK). If you plan to get lucky on Saturday night maybe you want to wax your bits with Veet and load up on Durex (Reckitt Benckiser, one spot below Diageo in the FTSE100).

All of the revenues from all of these global products will accrue to someone who owns a global portfolio via VLS.

To then add Lindsell Train UK using the rationale that it focuses on the UK stockmarket and will be able to buy you some more Diageo and Unilever, which you already have, but in pursuit of global brands it will not be able to buy you any more J&J or P&G or A-B Inbev or Nestle because the investors of the Lindsell Train UK fund don't want it to go buying US or Belgium or Switzerland listed companies... is a very strange way of building a balanced portfolio with broad exposure to the global consumer sector.

I have held FS Asia as my EM for a while now.

FS has a number of Asia funds, so I'm not sure which particular one you mean. Most of them with 'Asia' in the name are focused on Asia-Pacific ex-Japan, which puts most of your money into Hong Kong, Singapore, Australia, Taiwan etc, and not into emerging markets. Though of course some of those countries' companies will have revenues from emerging markets, just like Unilever and Proctor & Gamble do. The VLS does already have dedicated asia exposure and emerging markets exposure.

and it has done well, so wasn't thinking of changing that one

Something doing well in the past is not really relevant if you are truly doing what you say you are doing, "readjusting and simplifying" your portfolio. In your re-adjusted and simplified portfolio, everything needs to have a reason. If you are not building a portfolio through a balancing act of using ten specialist region- or sector-focused funds, you need a better reason than 'it has done well so I'll keep it', to include it.

There are two thousand funds out there which 'have done well' over the time period you have had that fund (and I can confidently say that without knowing what exact fund you have and how long you have had it). You are not going to include them all. And yet you are going to include that one. I can only conclude it is out of laziness.

I am not using that L and G property feeder now as it has quite a large spread of 5.7%.

My query on why you would use it was simply the unnecessary tax by accessing the main L&G PAIF fund via a taxpaying feeder, not that there is anything wrong with the main fund, which seems decent (my Mum invests in it, not that she is an expert). The spread takes account of the practical costs of acquiring and disposing direct holdings of physical property and discourages people dumping it and running to the exit in a down market.

Thinking of Henderson UK or maybe the BR prop tracker or new L and G one which is similar.(0.2% OCF)

If the Henderson one is this one https://www.henderson.com/ukpi/fund/348/henderson-uk-property-oeic then I notice they also have a large published spread (as there's 5% between 2.18 and 2.30 a share), which you said you don't want, but this is me just glancing at it superficially and maybe some of that spread gets discounted.

A spread in itself is not a problem if you are going to hold for a long time. It is more important to understand the risks to which you're exposed. The Henderson and L&G 'traditional' funds invest in bricks and mortar commercial property. The Blackrock reit tracker and L&G real estate dividend index fund invest in property companies and listed investment trusts. So the approaches (and global reach) are very different which may lead you to prefer one over the other.

As I say, I am at early stages of what to include but will definitely be having VLS as my core

Which is fine

and 10% property

which is fine

and around 12-15% bonds.

Which is fine

But in order to get there I would rip it up and start with a clean slate, forgetting about the LTUK fund and the FSAsia fund and the Microcap fund.

If you then decide you want one or two tilts as a small satellite around a decent multi-asset multi-region multi-sector core, then fine. But take them out and force yourself to justify putting them back in based on what you're actually trying to achieve, in competition with every other investible fund on the planet which is also vying for inclusion. Don't just leave them there because you held them and they 'did well'. That is not really relevant to what you are trying to achieve now, which is a simple straightforward portfolio which meets your objectives, whatever they might be.

FWIW in terms of the 'core', instead of trying to ram together a VLS and a property fund and maybe another bond fund, you could just consider something like the L&G Multi-Index range. https://www.charles-stanley-direct.co.uk/ViewFund?Sedol=B9LF0M8&Isin=GB00B9LF0M88

Good luck anyway; I think you will need some luck if you don't set clear objectives for what you're trying to do.

Dird

AnotherJoe wrote: »

OP should also be keeping some cash in his account to pay charges rather than have them needing to sell funds which is very expensive.

Is it not expensive for them rather than me?

bottleandahalf

bowlhead99 wrote: »

That sounds like a nonsense to me.

Firstly, your largest holding is the VLS fund which holds thousands of companies from all over the world. So the idea that you need to buy a UK fund because some of its holdings will be companies that operate globally, thereby getting you exposure to economic activity from all over the world, is silly, because you already have exposure to economic activity from all over the world.

Secondly, you know that 25% of the equity exposure in the VLS comes from the UK stockmarket, using market capitalisation indexes to weight its allocations among companies and putting the most money in the biggest companies. Generalising, the biggest companies on the UK markets are those 'global companies' that you refer to. So, within VLS's UK exposure, the top ten to fifteen companies will definitely include global drinks giants like Diageo and SAB Miller, and global pharma companies like AstraZeneca and GlaxoSmithkline, and global consumer goods companies like Unilever. And its top US holdings will include Procter & Gamble and Johnson & Johnson, and its top European holdings will include Nestle.

So with the VLS fund you are already getting exposure to global sales of all kinds of products. Take booze for example:

One of your top ten holdings in the 25% of your VLS equities which happen to be listed in the UK is Diageo, selling Smirnoff and Guinness globally. And in the same fund one of your top ten European holdings is Anheuser-Busch InBev selling Stella and Budweiser globally, who happen to be listed in Brussels. And back in the UK top five you have SAB Miller selling Carling and Peroni and Fosters and Miller Genuine Draft. And when SAB Miller disposes of Italian-based Peroni and Dutch-based Grolsch and Greenwich-based Meantime to the Japanese group Asahi for a couple of billion later this year, you will still own them all because you already own Asahi listed in Tokyo.

Similarly if you are doing your weekend shop, you might buy some Shreddies cereal (Nestle, listed in Switzerland) or some Listerine or Band-Aid (J&J, listed in US) or some Dove or Ben & Jerry's (Unilever, listed in UK) or some Bold washing powder (Procter & Gamble, US) or maybe you prefer Persil (Henkel, Germany, but licensed in several parts of the world by Unilever, UK). If you plan to get lucky on Saturday night maybe you want to wax your bits with Veet and load up on Durex (Reckitt Benckiser, one spot below Diageo in the FTSE100).

All of the revenues from all of these global products will accrue to someone who owns a global portfolio via VLS.

To then add Lindsell Train UK using the rationale that it focuses on the UK stockmarket and will be able to buy you some more Diageo and Unilever, which you already have, but in pursuit of global brands it will not be able to buy you any more J&J or P&G or A-B Inbev or Nestle because the investors of the Lindsell Train UK fund don't want it to go buying US or Belgium or Switzerland listed companies... is a very strange way of building a balanced portfolio with broad exposure to the global consumer sector.

FS has a number of Asia funds, so I'm not sure which particular one you mean. Most of them with 'Asia' in the name are focused on Asia-Pacific ex-Japan, which puts most of your money into Hong Kong, Singapore, Australia, Taiwan etc, and not into emerging markets. Though of course some of those countries' companies will have revenues from emerging markets, just like Unilever and Proctor & Gamble do. The VLS does already have dedicated asia exposure and emerging markets exposure.
Something doing well in the past is not really relevant if you are truly doing what you say you are doing, "readjusting and simplifying" your portfolio. In your re-adjusted and simplified portfolio, everything needs to have a reason. If you are not building a portfolio through a balancing act of using ten specialist region- or sector-focused funds, you need a better reason than 'it has done well so I'll keep it', to include it.

There are two thousand funds out there which 'have done well' over the time period you have had that fund (and I can confidently say that without knowing what exact fund you have and how long you have had it). You are not going to include them all. And yet you are going to include that one. I can only conclude it is out of laziness.

My query on why you would use it was simply the unnecessary tax by accessing the main L&G PAIF fund via a taxpaying feeder, not that there is anything wrong with the main fund, which seems decent (my Mum invests in it, not that she is an expert). The spread takes account of the practical costs of acquiring and disposing direct holdings of physical property and discourages people dumping it and running to the exit in a down market. If the Henderson one is this one https://www.henderson.com/ukpi/fund/348/henderson-uk-property-oeic then I notice they also have a large published spread (as there's 5% between 2.18 and 2.30 a share), which you said you don't want, but this is me just glancing at it superficially and maybe some of that spread gets discounted.

A spread in itself is not a problem if you are going to hold for a long time. It is more important to understand the risks to which you're exposed. The Henderson and L&G 'traditional' funds invest in bricks and mortar commercial property. The Blackrock reit tracker and L&G real estate dividend index fund invest in property companies and listed investment trusts. So the approaches (and global reach) are very different which may lead you to prefer one over the other.
Which is fine which is fine Which is fine

But in order to get there I would rip it up and start with a clean slate, forgetting about the LTUK fund and the FSAsia fund and the Microcap fund.

If you then decide you want one or two tilts as a small satellite around a decent multi-asset multi-region multi-sector core, then fine. But take them out and force yourself to justify putting them back in based on what you're actually trying to achieve, in competition with every other investible fund on the planet which is also vying for inclusion. Don't just leave them there because you held them and they 'did well'. That is not really relevant to what you are trying to achieve now, which is a simple straightforward portfolio which meets your objectives, whatever they might be.

FWIW in terms of the 'core', instead of trying to ram together a VLS and a property fund and maybe another bond fund, you could just consider something like the L&G Multi-Index range. https://www.charles-stanley-direct.co.uk/ViewFund?Sedol=B9LF0M8&Isin=GB00B9LF0M88

Good luck anyway; I think you will need some luck if you don't set clear objectives for what you're trying to do.

Hi. Thanks again for for your feedback. Much appreciated.
I had no idea VLS80 was 25% in UK or I would never have even thought of having 25% in LTUK. Thanks for pointing that out. That's they beauty of discussing things like this on these boards.

The Hend UK fund is this one http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=JXPIN&univ=O

I have looked at the L&G index fund before but HL didn't do them the last time I looked, but they seem to do them now. The index 7 one looks perfect for me as it has a broad reach to EM and property and it's one I can just contribute to every month and not need to re balance etc. (or add unnecessary funds. Haha)

Do you suggest I should just use this or add 1 or 2 other funds to try and bump up the percentage eg Commodities, China etc (Not these specific sectors) but something to try to bring up the percentage?
Thanks again.

bowlhead99

bottleandahalf wrote: »

Do you suggest I should just use this or add 1 or 2 other funds to try and bump up the percentage eg Commodities, China etc (Not these specific sectors) but something to try to bring up the percentage?
Thanks again.

If you just want something that you put your money into each month which has broad exposure to equities, bonds, property and cash, it seems to be fine on its own. Note that there are different versions, the multi index 7 is higher risk than the multi index 6 which is higher than the 5. If you're not clear that you definitely want the highest risk version, you should go for a lower one.

As you probably read in the blurb, they use risk models to determine what proportions to have in what. If you say you think you should 'add one or two funds... to try to bring up the percentage' then you're basically saying you don't like the result of their professional risk modelling and portfolio construction and you think you could do a better job. So, the question is, can you do a better job of risk modelling and portfolio construction to create something better?

The fact you need to ask for opinions on your portfolio as a relative newbie on a web forum and the questions and comments so far - would imply to me that you are *not* going to do a better job of risk modelling and portfolio construction than the people and software that L&G use. You can bet that the head of the L&G team is not over on a web forum somewhere right now asking if anyone knows whether he should add extra exposure to Thailand to his portfolio. Neither is he going to have to apologise at the end of the year and be all, "ah sorry my bad, I had no idea that fund had 25% allocated to the UK, otherwise of course I would have never used this other fund alongside it".

So, personally I'd say don't try to add 'satellites' to the basic multi-asset portfolio until you have a substantial amount in there and are clear on what exactly you need as an 'extra'. If over the course of a year you drip in £1200 to a second fund, then the average amount of money in that second fund over the course of the year is a little over £600. If that fund outperforms your core by a percent, well done, you made £6. If it underperforms by 25% then you lost £160. Neither amounts are lifechanging but if you don't know what you're doing, the loss of £160 might be just as likely as the gain of £6, so there's no point dabbling.

The reason to dabble would be if you decide that the MultiIndex 7 is simply not risky enough for you and is not going to be able to practically deliver the high returns you need for some far-off goal, and you are desperate to (for example) add a load of extra small Japanese companies or UK microcaps as you described in your first post #14, because you have a very strong feeling that those sectors hold the key to better returns.

However, my guess is that you haven't even decided on your realistic far-off goals and what rate of return you need, and even if you have, you're not confident whether it is Japan or UK or 'everywhere' as the best place to invest in small companies. Until you have decided that, and maybe have more money at stake, and have taken the time to do more research, it is not worth messing about too much IMHO.

AnotherJoe

Dird wrote: »

Is it not expensive for them rather than me?

No

If there is a payment due you can bet that all the costs are on you.

Snakey

bowlhead99 wrote: »

The fact you need to ask for opinions on your portfolio as a relative newbie on a web forum and the questions and comments so far - would imply to me that you are *not* going to do a better job of risk modelling and portfolio construction than the people and software that L&G use. You can bet that the head of the L&G team is not over on a web forum somewhere right now asking if anyone knows whether he should add extra exposure to Thailand to his portfolio. Neither is he going to have to apologise at the end of the year and be all, "ah sorry my bad, I had no idea that fund had 25% allocated to the UK, otherwise of course I would have never used this other fund alongside it".

This is solid advice which I shall be bearing in mind for my own attempts at constructing a portfolio. It also made me smile.

grey_gym_sock

AnotherJoe wrote: »

If there is a payment due you can bet that all the costs are on you.

but are there any costs involved (when repeatedly selling small fractions of your holding in a fund to cover platform fees)?

the fund in question (fundsmith) seems to be single-priced (the same price to buy or sell units on the same day), so perhaps not.

bottleandahalf

bowlhead99 wrote: »

The fact you need to ask for opinions on your portfolio as a relative newbie on a web forum and the questions and comments so far - would imply to me that you are *not* going to do a better job of risk modelling and portfolio construction than the people and software that L&G use. You can bet that the head of the L&G team is not over on a web forum somewhere right now asking if anyone knows whether he should add extra exposure to Thailand to his portfolio. Neither is he going to have to apologise at the end of the year and be all, "ah sorry my bad, I had no idea that fund had 25% allocated to the UK, otherwise of course I would have never used this other fund alongside it".

Hi
Thanks again for your feedback.
It is much appreciated and just the reality check I needed.
Drip-feeding into the Index 7 every month will stop me trying to think I am an experienced PF manager because I have been following (and trying to replicate) JB portfolios, (when they were free).
I think you have hit the nail in the head on every point, so thanks again for taking the time to reply and give me the expansive amount of feedback you did.
Cheers

cuthbertlilly

bowlhead99 wrote: »

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.

Thank you, this is very useful information. I like your suggestion of the MSCI ETF, but was looking to avoid dealing charges on such products - are there any comparable OEIC funds such as this?
The original £2.5k was intended to remain part of my overall re-structure. My dilemma is that I'd like to keep Woodford as I have a conviction towards his fund, but this conflicts with the already UK-heavy VLS80. How about if I pair Woodford with a different multi-asset fund? - looking at L&G Multi and Blackrock consensus they're both UK-heavy too . Therefore, I possibly need to ditch either VLS80 or Woodford and start from scratch again it seems.

I'd like to put £15k in this year and then see what I have available next year.