180K Investment

greenglide

Unless you go to SJP of course!

A proper IFA cannot get commission.

MonroeM

AnotherJoe wrote: »

Well, I'm not sure what I'm doing is 'textbook' or should be followed :eek: essentially I have 5 global trackers 2 of which are ex UK. Then I have the Property, Far East & Biotech.

One reason for having so many global is that I have a Company Pension which restricts what I can invest in plus a SIPP. For a long time the CP had dull and boring funds and the SIPP somewhat 'racy' funds but over the last 3 or 4 years I've moved them towards each other , so CP now has 3 global funds where it should probably only have two (one with UK one ex UK) but i couldn't decide which of the two ex UK to go for so I've just split between them.

And in the SIPP i did have one global fund VLS but I've decided to move some of that to a lower cost version (HMWO). Again if i was a bit more decisive I'd just have swapped it all to HMWO but it was a fair chunk and its done well so I didnt fancy moving it all. I cant claim this is logical or anything, though i suppose what with ETFs not havinga s much protectin as funds maybe a bit of diversification is safer also? Thats rationalising after the event though.

So thats how I ended up with five global when it should really be two, one in CP, one in SIPP. But I dont see any real harm done either.

Yes, its seems there is no rhyme or reason in investing in global trackers. I have read various posts on this forum and quite a lot of people hold the opinion that there is no point in holding more than 1 global world tracker! Whereas, others like yourself like to have 2/3 to break it up a little for instance a) All World b) World (inc EM) but ex UK C) Developed World either inc UK or ex UK?

Very interesting the split in viewpoints on this subject?

AnotherJoe

MonroeM wrote: »

Yes, its seems there is no rhyme or reason in investing in global trackers. I have read various posts on this forum and quite a lot of people hold the opinion that there is no point in holding more than 1 global world tracker! Whereas, others like yourself like to have 2/3 to break it up a little for instance a) All World b) World (inc EM) but ex UK C) Developed World either inc UK or ex UK?

Very interesting the split in viewpoints on this subject?

I guess its easy to get caught up in the minutea, and forget that on a scale of say 0 - 100, where 0 is worst, and 100 is best possible investment for you, then having two overlapping funds both matching your needs instead of one is probably still 99.5, and most people are likely on a score of about 20.

So with 5 global instead of 2 maybe I'm on 99

Wirenth

A couple of good places for you to start your research: a book called 'Smarter Investing' by Tim Hale, followed by various articles on the monevator website.

Incidentally, I'm in VLS100, but I have time on my side for compounding to work, and I have other assets that act as bond-type stabilisers.

bowlhead99

MonroeM wrote: »

Yes, its seems there is no rhyme or reason in investing in global trackers.

It is perhaps not so much that there is no rational rhyme or reason, but that when you look at online forums you are talking to a group of people across a whole range of investment experience who will have their own reasons for doing what they have done.

That will include a bunch of people who are just following what they have read... or don't fully understand their own objectives... or don't care which particular tracker they use anyway because they just want some quick and easy and cheap exposure to international stocks generally... and those people with only relatively small amounts invested... and those who have messed with their portfolio so many times over the years that it is not what it would be if they scrapped it and started from scratch, but they are not bothered enough to "fix" it.

It also probably includes people who partially sold out of one tracker to buy into another very similar one for planning reasons such as CGT, even though they were satisfied with the original product.

I have read various posts on this forum and quite a lot of people hold the opinion that there is no point in holding more than 1 global world tracker!

That is fine if you can find a tracker that holds all the types of assets in all the industries and regions that you want in the proportions that you want and you know that you will always want the proportions that the global tracker provides.

Indeed if you are bought into the concept of "passive" investing, you can just sit back and let the world index provide.

However, you may decide that your goals and needs are not necessarily aligned with some "average global investor" (which includes lots of different institutions and individuals in lots of countries worldwide), and therefore you want a different result.

Perhaps for example you want to have a cap on the maximum exposure to a particular region or industry; or some bias towards investment opportunities in your home country; or an "over-exposure" weighting to emerging markets which are relatively small but expected to grow over the longer term; or you want to specifically avoid the higher volatility in those markets.

So some people will deliberately try to create their own blend, while others won't.

Whereas, others like yourself like to have 2/3 to break it up a little for instance a) All World b) World (inc EM) but ex UK C) Developed World either inc UK or ex UK?

Actually, he specifically said that he thinks that both his SIPP portfolio and his other portfolio should each only have one global fund apiece, and it was just accident of circumstance which had left him multiple global funds around the place, which he hasn't bothered to fix at this point.

He said he didn't go into building a portfolio with a major justification for using three different funds, and that any attempt to explain it would be making something up after the fact, rather than being a genuine well-planned intention to have multiple funds ; he would not particularly recommend it to anyone else.

So, be careful seeing that someone has done something and then inferring "others like yourself like to have 2/3 funds to break it up". That was not what he said ; breaking it up was an afterthought.

If the reason to hold three funds was simply to break it up to minimise counterparty risk from one provider, you would still generally look to use the same underlying index for your needs, but placed via different managers (e.g. Vanguard, HSBC, Black rock, Fidelity, L&G, etc etc etc). Not chop and change between some high UK, some low UK, some nil UK, some with emerging, some developed only, etc etc

Very interesting the split in viewpoints on this subject?

To be frank, the reason that people do have more than one type of global tracker, or don't have more than one global tracker, can because they are lazy (not an attribute you should necessarily seek to emulate), don't care too much (not an attribute to emulate), or don't fully comprehend the differences in options available (not an attribute to emulate). Of course, it might be because they are targeting a very specific blend of assets, but you should only copy that if you are also happy with that very specific blend of assets.

As they say in the world of jargon: DYOR.
:beer:

MonroeM

bowlhead99 wrote: »

Actually, he specifically said that he thinks that both his SIPP portfolio and his other portfolio should each only have one global fund apiece, and it was just accident of circumstance which had left him multiple global funds around the place, which he hasn't bothered to fix at this point.

He said he didn't go into building a portfolio with a major justification for using three different funds, and that any attempt to explain it would be making something up after the fact, rather than being a genuine well-planned intention to have multiple funds ; he would not particularly recommend it to anyone else.

So, be careful seeing that someone has done something and then inferring "others like yourself like to have 2/3 funds to break it up". That was not what he said ; breaking it up was an afterthought.:

I'm sorry, the last thing I wanted to do was misrepresent anything he had said in his post. I was asking him questions over several posts, he very nice and kindly responded to my queries (I've only been on here a few days so obviously everybody will know from my posts that I am new and apparently very naive). Personally, from his response, I didn't feel he felt in any way offended by what I said because I certainly had no intention of 'inferring' any incorrect message or train of thought.

I was merely trying to get an insight into other people's views on this subject and the differing opinions. I will be much more careful on my phrasing/wording in any future posts and humbly accept this reprimand and apologise for any misunderstanding .

AnotherJoe

MonroeM wrote: »

I'm sorry, the last thing I wanted to do was misrepresent anything he had said in his post. I was asking him questions over several posts, he very nice and kindly responded to my queries (I've only been on here a few days so obviously everybody will know from my posts that I am new and apparently very naive). Personally, from his response, I didn't feel he felt in any way offended by what I said because I certainly had no intention of 'inferring' any incorrect message or train of thought.

I was merely trying to get an insight into other people's views on this subject and the differing opinions. I will be much more careful on my phrasing/wording in any future posts and humbly accept this reprimand and apologise for any misunderstanding .

No offence was taken at all, whatsoever, and as Bowlhead very eloquently says (well, writes ) mine is partly an artifact of having two pensions that dont share the same fund availability, some irrational indecision on my part ending up in splitting between two funds when either one would be fine (twice, one in each pension ), and fundamentally a complete irrationality in not collapsing everything into one single fund with a very few 'satellites' to tweak the allocations, and then going and doing the garden or clearing out the gutters instead of watching fund prices.

But I console myself with the fact that I reckon I'm still at 99 out of 100 in being where i want to be, and the angst of making a decision one way or the other when I'll only get from 5 main funds to 3 isn't worth it.


In your case MonroeM, I suggest you start by gradually consolidating, and as discussed right up front in this thread, reducing UK exposure as you do that.

MonroeM

Right. I have sold my UK Equity, European & the Royal London Multi Assett funds and invested in the Vanguard FTSE All World (VWRL) to limit my overall exposure to the UK.

I will keep all my active global funds (Newton Global Income, Henderson Global Growth, Fundsmith Equity, Old Mutual Global Equity, Lindsell Train Global Equity) until I have fully researched each fund and the associated fund costs involved and see if they overlap in asset allocation etc before I continue with my overall strategy and diversification.

I think its best to see how it all goes with my DIY S&S ISA investments first of all before I contemplate moving my pension into a SIPP.

I would welcome any comments/opinions and thank you all for your time.

AnotherJoe

I think thats a great start, you'll have some time after mince pies when there's nothing to do and you're bored with whats on telly to check those out.

My suspicion is that the active are covering a pretty similar set of areas and you MIGHT take a punt on one or two areas of specialisation, either geography or sector, that you think will do well longer term. I suspect you'll find (I havent looked) that Train and Smith look the best of that bunch if you do keep some.

Only other comment is that I dont think (I'm not sure) that theres any property there. Some people take the view that property includes your house so you dont need to include that, others disagree. I ended up with BlackRock Global property I'm sure there are others.

bowlhead99

A couple of observations (sorry if it appears critical):

Back in post 17 you mentioned that you were happy with quite a high risk profile, so would go quite high on the equities, maybe 80:20 equities vs non equities.

Linton pointed out that a decent way of getting exposure both geographically and across asset classes (e.g. not just a split globally of the equities, but holding things other than equities, like different types of bonds and property, in other words multiple asset classes)... was to find just find one or two good multi-asset funds and stick it all in that, rather than try to build something yourself out of specialist funds.

You asked if the Royal London Sustainability one was a multi asset fund, and were told it was. It has a few themes, one of them being a tilt to an "ethical" stance, with equities in companies that have decent approaches to ESG, and the other targeted themes being technology, healthcare and infrastructure. All sound like they are useful in a portfolio held for next few decades. But basically, the high level characterisation of the fund is global, and multi-asset.

As of end of October factsheet, it had 27% in UK equity, 56% global equity (i.e. 83% equity of which a third was in your home country), and about 15% bonds, 2% cash. So compared to your target of 80% equity it was a little high, but not far off.

Unless I'm missing something, all of your remaining funds that you're keeping until you've finished reviewing them are 100% equity, and the thing you bought to replace the recent stuff you sold is also 100% equity. So of your £120k which you thought could perhaps be invested 80:20 equities to non equities (£96k:£24k), you have sold the one thing that fulfilled the brief of being a global portfolio with some non-equities in it, and your shares allocation is now sitting at £120k:£000k.

This seems a strange move to make. I'm not saying the RL World Sustainable fund was something that you should build your whole portfolio around -because it is seeking particular characteristics in its investees, just like (e.g.) the Fundsmith fund is seeking certain characteristics, and it is good to have a mix. But the £3-£4k of non-equities as part of your £20k in RL, was the only thing stopping you having 100% equities across the whole portfolio. So now you've dumped it, you've got 100% equities and will get quite a different result from the result of an 80: 20 blend.

So, that's observation one: dumping a multi asset fund to get an equity-only fund seems contrary to the Grand Plan, whatever the plan turns out to be once you've researched more.

Observation two is on your comment that you will "see how it goes" in your ISA before starting on your SIPP.

An economic cycle is a decade or so. That is how long it will take to properly monitor and evaluate what happened when you invested the £120k using your personalised made up asset allocation (currently 100% equity but under review) and fund selection (currently under review) and your ability to keep the components of your portfolio in some sort of balance as they get battered around at the whim of Mr Market.

So, after you've done that for a decade, maybe after seeing the results of how your choices pay out over the full peaks and troughs of an economic cycle, you might have the confidence to move your present pension arrangement into a SIPP and more actively monitor that too. That seems quite a long time to wait.

Yet starting it after only, say, 6 months or a couple of years of ISA-managing experience basically tells you nothing about any "skill" you have in constructing a portfolio. I mean it can highlight if you are very bad at it, like you get a terrible unacceptable result because your research had been grossly inadequate. But a really good result, could just be down to luck, because a year or two is no basis to evaluate anything, it's just fund prices going on a random walk, and any bad selections might just "get away with it" for a couple of years. You may feel you thoroughly understand the markets and how to interpret the risk and volatility of different asset classes to build a bulletproof portfolio, and then it turns out you didn't know what you didn't know, and the following year the emperor is shown to have no pants on.

As such, the short term returns aren't a good yardstick of success.

Maybe what you mean is you'll use this isa as a general learning experience to see if you at least get comfortable with the basic concepts you researched and enjoy evaluating financial stuff. It is not rocket science after all and if you have the time on your hands, why not?

I am curious what the existing pension is invested in. As you were only a small owner managed company and you didn't hitherto have a lot of interest in managing your own portfolio, it might be a very basic scheme with few investment options and relatively high fees, but there are bound to be some choices within it and you may not have chosen something that gives you the sort of risk you currently want. So you can certainly look at that without going the whole hog and deciding you need to stick it in a SIPP.

SIPPs offer tens of thousands of choices right down to individual shares and limitless combinations of those choices. Having choice is popular when DIYing but if you are only going to pick a few funds anyway there are plenty of low fee personal pension choices, either advised or solo.

I'm loathe to bring up IFAs again because I know you want to have a crack at it yourself. But if you are having a go at the ISA for a few years first, might make sense to have someone else look at your existing pension arrangements as a separate project in the background, rather than leaving the pension money to stagnate in something less in tune with your needs.

And if you truly are pretty wealthy with other property and assets in the background and relatively cavalier attitude to risk, there might be all manner of tax efficient investments you could be making - using up your dividend allowance, capital gains exemptions, pension allowances, more exotic stuff like VCTs, etc etc. An independent professional can probably guide you through that stuff far more effectively than a bunch of people on a forum.

Anyway, good luck with your investing journey.