Global portfolio for young investor

mateo

Thanks for all the comments. Much appreciated!


The "why not doing more than 100%?" stayed in my mind for a while... Never saw that approach in "Should I go 100% equities"-like forum posts.
And because my instinct response was a no, it made me think about why I actually don't want to do it.
The answer was because I am looking for something easy, understandable, cheap, passive etc.

In response to that, I put my 6 funds list and the amount of money in my S&S ISA (15k) next to each other on my screen with my eyes going right, then left, then right...
I was wondering if it was worth the hassle and that it might not hurt to simplify.

If time IN the market is important, does it mean we should tilt/diversify straight from the beginning?
i.e: what would be the difference between if add money to frontier markets now or only in 10 years when the pot will (I hope) be more consequent?
I am thinking about removing the frontier markets fund for now anyway.
Fund's fees (1.50%) added to what it takes to purchase Investment trusts (0.5% stamp duty + 0.1% transaction fee from Cavendish Online) makes the whole thing heavy & pricey with probably no real impact as both the allocation (5%) and the portfolio are small.
And if a frontier market really erupts, it will be promoted to emerging market where I'll capture some performance.

Then, I looked at BG Global Discovery. I was interested in it because: 1) it is not that expensive, 2) it has a global scope, 3) it has an average market cap of 1.2 billion which is almost half of Vanguard global small (2.2 billions).
I still think it could be a good satellite for the portfolio but it might not have a huge impact (again, better to invest in it early or not?) and I could still diversify in the future where maybe we'll have better funds to track global small/micro caps passive funds.


So, a simplified version would be:

World: 50% Fidelity Index World
Small: 25% Vanguard Global Small
Emerging: 15% Vanguard Emerging Markets
Property: 10% Blackrock Global Property

I would have preferred Vanguard instead of Fidelity for tracking World but it doesn't exist in the UK (except ETF) unless I go for UK All-Share + Developed World ex.UK

racing_blue

Even having frontier / emerging / small / world funds to rebalance, isn't going to protect a 100% equity portfolio from a market rout.

I'd rather have 80% equities, 20% lean hogs & annually rebalance. (Genuinely! - actually my portfolio is a bit like that)

Bowlhead99 made a very powerful post about rebalancing a while back

masonic

mateo wrote: »

World: 45% Fidelity Index World

I would have preferred Vanguard instead of Fidelity for tracking World but it doesn't exist in the UK (except ETF) unless I go for UK All-Share + Developed World ex.UK

Be aware this fund uses futures contracts and derivatives rather than relying solely on replication of the index. This introduces additional risks and potential sources of tracking error (although the intention is to track more closely under normal circumstances). A case could be made for opting for the two Vanguard funds instead.

mateo

masonic wrote: »

Be aware this fund uses futures contracts and derivatives rather than relying solely on replication of the index. This introduces additional risks and potential sources of tracking error (although the intention is to track more closely under normal circumstances). A case could be made for opting for the two Vanguard funds instead.

Yeah I have been thinking about this too, especially tracking error differences that might occur between Fidelity and Vanguard.

If I stop overthinking, at the end I prefer the simplicity of 4 funds (rebalancing, etc.) rather than having to manage Vanguard UK + Dev. World separately.
The small position (5-7%) in the UK All-Share might be a bit problematic to manage with my £500 monthly investing too. 5-7% doesn't match the minimum for the fund, which is £50.

richyg

meteo, yes stop overthinking it.

Keep the number of funds down and don't overtrade. Small percentages are probably not what is going to drive your returns. Not making bad decisions - going to cash when things look grim , or churning your positions to erase red from your portfolio graph will detract.

You are young and have time on your hands. You could have say 20% bonds as a cash reserve - and buy equities with it when things look at their grimmest in the market. Who knows when that will be but it might be some dry powder for you if stocks take a tumble.



Best of luck.