Just finished Smarter Investing...

chockydavid1983

Hi guys,

Just finished this book and it's reinforced a lot of my existing investment philosophies as well as made me more aware of what asset classes outside of bond and equities bring to the table.

To that end, I'm looking to at some point add commercial property in the form of a global REIT fund and maybe commodity futures for further diversification. How would I go about researching which fund to choose? Ideally I would like to invest in a single global REIT fund and similarly for commodity futures if that is possible?

I am currently 100% in Vanguard Life Strategy 100 Acc (started investing about a year ago) and plan to gradually reduce exposure to equities as I approach retirement, probably down to around a 50/50 split. This is through Cavendish for my S&S ISA and Best Invest for my SIPP.

Thanks,
Chris.

AnotherJoe

I'm not saying don't do it, I myself have plenty of property related investments (probably too much and I will be cutting back gradually) , but many people take the position that your house is enough investment in property, if you look at its value as a proportion of your overall wealth, so don't feel obliged to do it.

chockydavid1983

Thanks Joe.
I wasn't thinking a considerable amount, just a little for diversification purposes (undecided on precise amounts as yet).
I'm not too concerned with having this as well as a house (I own just over 40% of my property with £167k owing and am in the process of remortgaging) but from what I can tell, REIT provides diversification away tom my residential property as its in commercial property.

Chris.

masonic

You must be reading an older edition of the book if commodity futures were suggested. The arguments in favour of this asset class were shaky at best and I understand the suggestion to include it was removed from the most recent edition of the book.

For REITs, I hold 3 and these give me exposure to the UK/Northern Europe only. I'm not really inclined to get exposure to property elsewhere. Others opt for Blackrock Global Property Securities Equities Tracker, which is a global fund.

chockydavid1983

Thanks Masonic.
Ah yes, I hadn't realised I was on an older 2nd edition. I picked it up cheap. Is there much reason to get the latest one? I follow blogs like Monevator and sites such as this.
Thanks for the suggestions on REITs, I will look into those some more. What kind of percentage of your portfolio does that take up? I haven't considered percentages for mine yet but would be useful to hear other people's.
Thanks for the warnings over commodity futures. As opposed to property, it was something I hand't even considered before reading the book so looks like I will need to look into that some more and decide whether it is indeed worth doing.

Thanks,
Chris.

masonic

chockydavid1983 wrote: »

Ah yes, I hadn't realised I was on an older 2nd edition. I picked it up cheap. Is there much reason to get the latest one? I follow blogs like Monevator and sites such as this.
Thanks for the suggestions on REITs, I will look into those some more. What kind of percentage of your portfolio does that take up? I haven't considered percentages for mine yet but would be useful to hear other people's.
Thanks for the warnings over commodity futures. As opposed to property, it was something I hand't even considered before reading the book so looks like I will need to look into that some more and decide whether it is indeed worth doing.

I've not read the latest edition either, although from accounts of others here there isn't a great deal that is different - the change regarding commodity futures being the most prominent. The problem with futures contracts is roll costs (see: http://www.etf.com/etf-education-center/21018-why-you-cant-buy-spot-oil-a-guide-to-contango-and-backwardation.html). Also, you have to get your head around the concept of contango and backwardation.

Property makes up a little under 10% of my portfolio - much the same as Hale's suggested allocation for a higher risk portfolio.

chockydavid1983

Thanks for that link Masonic, definitely something I need to look into further! :-)

Dird

Your house is only an investment if you plan to sell for a profit in later life & spend your last years living under a bridge

masonic

Dird wrote: »

Your house is only an investment if you plan to sell for a profit in later life & spend your last years living under a bridge

Many people downsize later in life.

coyrls

AnotherJoe wrote: »

I'm not saying don't do it, I myself have plenty of property related investments (probably too much and I will be cutting back gradually) , but many people take the position that your house is enough investment in property, if you look at its value as a proportion of your overall wealth, so don't feel obliged to do it.

I doubt that there's a high correlation between UK residential property prices and something like the Blackrock global commercial property REIT.

chockydavid1983

masonic wrote: »

Many people downsize later in life.

Or move to a cheaper area