Is it a sensible idea to use 1 multi manager fund?

dunstonh

AnotherJoe wrote: »

Hugely unbalanced I'd say, because it has 50% UK shares, and that is effectively all the shares it has, everything else is trivial percentages. There must surely be similar 'cautious' funds with a much more global outlook which almost by definition are more cautious / less risky / more balanced.

There are some funds I could, sort of, imagine having all my investments in. Not this one in a month of Sundays.

Given the risk profile of the fund, 50% UK is about right. To be fair, the fund is generally well regarded. Although recent performance has been hampered by the UK equity segment. The fund is not really the issue. Seeing someone with this fund in their portfolio would not concern me at all. However, £400k in it is the issue.

ArmyDilllo

Investments 101

Rule 1: Only invest what you can afford to lose.
Rule 2: Diversify (to spread risk).

dunstonh

ArmyDilllo wrote: »

Investments 101

Rule 1: Only invest what you can afford to lose.
Rule 2: Diversify (to spread risk).

Rule 1 would depend on what you are investing in. Total losses would not apply to most retail financial investments. However, they can apply to certain types of investment. i.e. you can mitigate it.
Rule 2 can both increase risk and decrease risk.

AnotherJoe

dunstonh wrote: »

Given the risk profile of the fund, 50% UK is about right. To be fair, the fund is generally well regarded. Although recent performance has been hampered by the UK equity segment. The fund is not really the issue. Seeing someone with this fund in their portfolio would not concern me at all. However, £400k in it is the issue.

Seems to me highly risky to have all your funds in one economy, which with one proviso, is what this fund essentially has. Especially if that one economy is the UK just abut to enter an economic zone of uncertainty.

The one proviso, its big constituents at least do a lot of their business outside the UK, but even so....

dunstonh

Seems to me highly risky to have all your funds in one economy, which with one proviso, is what this fund essentially has.

You know from my history of posting that I advocate sector allocation. However, from a historical risk point of view, UK equity is considered lower risk due to currency fluctuations not being an issue. It is easy to argue that in 2016, that viewpoint is out of date as these things are priced on a global stage and a lot of UK equity includes companies with overseas incomes.

Uncertainty is one I do not agree with. Markets have always lived with uncertainty and uncertainty can lead to gains as well as losses. And with UK companies generally cheaper to buy now if you are an outside predator, this could be a very good time to have UK equity. So, the usual swings and roundabouts applies.

balooney2000

on the basis of the above - what % split would you say would be reasonable if we split the investments and used 2 fund of funds focusing different sectors of investment, using Hargreaves Lansdown as the platform?

dunstonh

balooney2000 wrote: »

on the basis of the above - what % split would you say would be reasonable if we split the investments and used 2 fund of funds focusing different sectors of investment, using Hargreaves Lansdown as the platform?

Its all opinion but on £400k, I wouldnt be using fund of funds but would be using single sector funds built to a structured allocation. Its cheaper and spreads the money across multiple fund houses (to reduce impact of FSCS limits).

If you insisted on using multi-asset for an amount that size, I would use a minimum of 4 but ideally 6 or 7.

balooney2000

The total amount is in 2 pension pots and 2 isa's - so this seems a lot of funds for each pot which are a portion of the total amount.

dunstonh

balooney2000 wrote: »

The total amount is in 2 pension pots and 2 isa's - so this seems a lot of funds for each pot which are a portion of the total amount.

FSCS limit if £50k per fund house. Going a bit over that is fine but are you happy going a lot over it?

Each fund will have its own strategy and many of these cautious funds will be focused on yield (as is the Henderson one). Are you happy limiting yourself to one or two strategies?

balooney2000

Our understanding was the FSCS is per fund - so if a fund of funds is made up of 8 funds for example that would be £50 per fund in the fund of funds ie £400,000 - or have we got that completely wrong?