Please advise on my fund portfolio?

cashbackproblems

HI all

I currently have been drip feeding £250-300 pm for a number of years into funds, trying to diversify but with no real method behind it just where I feel will be growth areas. Each fund makes up an even split of the portfolio (approx). Are there any areas I have missed out, I realise there is some duplication but any regions/sections I should focus on?

I am happy to take higher risk and do not have any FTSE tracker as not confident of much UK growth over the next few years, but hold individual shares in Aviva/Barc/Vodaphone/Sirius Exploration.

Aberdeen Global Indian Equity
Aberdeen Latin American Equity
AXA Framlington Global Technology fund
Blackrock Continental EU Equity Tracker
Blackrock Gold and General
Blackrock Pacific ex Japan Equity Tracker
Blackrock Emerging Markets Equity tracker
JPM Emerging EURO and Middle east and Africa
Legal and General US Index
Royal London Sterling extra yield Bond
Vanguard Global Small-Cap Index. (tracker fund)

Thinking of adding the legal and general Healthcare index tracker (0.31% TER). Or the Blackrock global property tracker

My total portfolio is showing as 22% increase, but is there anyway I can see the all time gains, as I have switched funds with high gains into other funds so therefore this isn’t included in my total portfolio gain.

Also I don’t understand if my fund shows 20% gain, is this after the fees (hl/fund manager fees), if I hold a fund for 20 years would I expect this % to show 500% (assuming high growth) or does it reset?

Also all my funds are accumulation, would this show in the % gain as all dividends are reinvested?

Many thanks for sny pointers!

Linton

What is the total value of the pot? Unless its £100K or more I feel you are holding too many funds. I cant see any obvious structure or rationale behind your fund choices. Without knowing the %s in each fund its difficult to make detailed comments.

I suggest you put your portfolio into one of the portfolio tools that provide an asset allocation data - both Morningstar and Trustnet provide this. Or one may be available from your platform's web site. The information may be helpful in showing what you are missing.

On your questions....

1) Performance data - may be available from portfolio tools
2) Published returns are after fund fees, but obviously cant include platform fees.
3) Published returns can be shown either as overall % gain for the 1,3,5 or sometimes 10 previous years. They may also be shown as annual averages though this is less usual. Note that 20% annual gain over 20
years is given by 1.2^20=38.34. ie 3734% gain. Such is the power of compound interest.
4) Published performance figures assume dividend re-investment so inc and acc funds are directly comparable.

AnotherJoe

Property, biotech & healthcare (not the same though there are funds that cover both I think ) are missing id say.

The only way you can see long term growth is your annual report, as you say a funds growth starts from zero every time you buy one. This is also an issue in general with HL, in that though it shows you growth of each fund in your portfolio, this is from when you bought, so fur example, two funds may each show 22% growth but one may have been bought last month and and the other 5 years ago.

I've requested that HL add an option to show growth across consistent time periods, say last week, month, year, quarter, financial year, whatever. In the meantime all you can do is create a watchlist with your funds in it, and then the performance for all starts from a consistent place. I did that at the start of this year with my and my wife's ISAs and SIPPs.

The growth shown is from the time you bought a share or fund.it includes fees for buying and dividend growth if it's an acc fund. Management fees will come out if general fees so you can't see that. If it's an inc it won't show any dividend growth. (afaik).

Performance figures never reset once bought . That would be way too confusing if it reset at some arbitrary point !

bowlhead99

cashbackproblems wrote: »

I currently have been drip feeding £250-300 pm for a number of years into funds, trying to diversify but with no real method behind it just where I feel will be growth areas. Each fund makes up an even split of the portfolio (approx). Are there any areas I have missed out, I realise there is some duplication but any regions/sections I should focus on?

Everyone will have a view on an ideal portfolio but if you don't construct it with a particular plan in terms of goals or volatility or whatever, you shouldn't expect any particular result.

Equal weight to everything sounds "diversified" but can be a bit farcical if you end up with £5000 in a telecoms fund investing in $500bn of assets, and £5000 in a generalist US fund investing in $25 trillion of assets.

I am happy to take higher risk

That's evident from the holdings. The peak-to-trough drawdown for FTSE All-World for a dollar investor in the last ten years was 58% (period ending early March 2009). For FTSE Emerging the figure was 64.5%. For a portfolio skewed away from a generalist largecap developed-world mix towards funds such as small cap, emerging, industry specific ones like gold mining or healthcare, tech; losses could be quite a bit greater.

This may have been fine for you when starting out with your £300pm because if the portfolio is only £1500 in size after six months, it can lose 60% which is only £900 and after three months you have topped it up again with new money from your wages. But when you have £20k and lose £12k of it, it's 3 years money. And just because everything bounced quite quickly in 2003, 2009, 2011, there is no fundamental reason why a severe slump has to recover in five years. Certainly there were periods last century when it didn't.

So, your portfolio is way riskier than the typical UK investor's risk appetite but if you have that appetite and capacity for loss, fair enough.

My total portfolio is showing as 22% increase, but is there anyway I can see the all time gains, as I have switched funds with high gains into other funds so therefore this isn’t included in my total portfolio gain.

Basically no, you would need to keep your own records. HL can tell you for any one of your funds what you paid into it (for the units in that fund that you haven't sold yet) and what are those units now worth.

If you sell everything in the European fund yesterday except for one share that cost £1, and then today you buy 1000 more shares for £2 each, it will say you now own 1001 shares that cost you £2001, which is compared to the value of those 1001 shares, £2002, and it says you currently have an unrealized profit of £1. It doesn't remember that until yesterday you owned 5000 other European fund shares and sold them for thousands of profit which is how you were able to afford to buy the 1000 European shares today and 3000 Japan shares tomorrow.

If you want a "life to date" profit for your portfolio as a whole, you can look at your cash statements to see what your contributions have been in total to the account and then if you know what it is all worth today you can say it was a profit of 2.5x your contributions over a decade, or a 15% IRR, or whatever, depending how much detail you go into.

Also I don’t understand if my fund shows 20% gain, is this after the fees (hl/fund manager fees),

It is after fund manager fees because it is saying you paid £1000 into that fund and now worth £1200 based on the price if you sold today, and the value of what it is worth today is always net of the manager knowing that the fund owes him fees and valuing it downwards every day accordingly.

It doesn't record the ongoing platform fee cost you paid to HL within the £1000 cost you paid into that fund, and it doesn't record the ongoing platform fee cost you paid HL in the valuation of £1200 that it's worth now. You pay any platform fees to HL separately out of cash.

So in your cash history you can see them but they are not in the cost or value of any individual asset. When you do your big comparison of everything you every paid into HL with what your funds and residual cash are all worth now, you will get a total lifetime profit number which is always inherently net of all types of fees suffered.

If I hold a fund for 20 years would I expect this % to show 500% (assuming high growth) or does it reset?

Yes if you put £1000 in a fund and left it for two decades delivering 9.37% a year annualised compound growth, after 20 years it would be showing at about £6000 of value. The £5000 of unrealized profit would show as 500% gains.

However, you probably won't just buy £1000 and leave it untouched. You will probably add another £1000 next year and another the year after etc. So after 20 years you will have invested £20k. The first £1k which had 20 years growth might be £6k. But the next £1k was bought at a higher price and only had 19 years growth. And so on until you have the last £1k bought at a pretty high price and only having a year of gains on it, perhaps those shares that you paid £1k for in year 19 are only worth £1090 by year 20.

So, it does not "reset", but your investments in fund ABC which you spent £20k on over 20 years, will probably be worth less than £60k, and less than £60k value is less than £40k profit, and £40k profit on £20k invested is nowhere near 500%. So it is pretty difficult to get up to 500% return, especially as you keep diluting profits by adding or by selling off a bit here or there to add something else.

Also all my funds are accumulation, would this show in the % gain as all dividends are reinvested?

Yes. If you buy some fund shares for £100 and over a year the fund earns £3 dividends and its investments generally go up in value by another £5, it will be worth £108. If it never physically pays you any of those dividends because it has agreed to reinvest them, then it will still be worth £108. The portfolio summary will say you have cost of £100 and value of £108 which is 8% profit.

If you do nothing and it grows at same rate next year (putting on another 8% through income and capital growth) it will have a cost of £100 and value of £116.64. Which is 16.64% on your table of portfolio holdings.

However if you put another £100 in at the start of the second year you will have £208 of assets which might grow at the same 8% for a year, and turn into £224.64.
When you compare £224.64 of value to £200 of money spent on the fund, you will see an overall gain of 12.32%. That figure looks nothing like the 8% a year you know you have been earning and nothing like the 16.64% you've now earned on the very first money you put in. It is a blended rate and not very meaningful. You would need to track the raw data in a spreadsheet to get meaningful conclusions.

jimjames

Looks like a rollercoaster portfolio to me! Must be up there on the very high risk end of the spectrum. The one area missing is UK which tends to be present for home bias - but you appear to be almost exlusively overseas only

Linton

mmmmm, just run it through Morningstar. What's missing geographically is UK and Japan. And it's possibly a teeny weeny bit high in EM.

Greater Europe 26.49

United Kingdom 2.91
Western Europe - Euro 8.54
Western Europe - Non Euro3.74
Emerging Europe 6.34
Africa 4.40
Middle East 0.56

Americas 43.54

United States 26.03
Canada 5.95
Central & Latin America 11.56

Greater Asia 29.61

Japan 1.20
Australasia 4.79
Emerging 4 Tigers 7.75
Emerg Asia Ex 4 Tigers 15.86


So - 46% Emerging

Looking at the sectors, its 19.45% Finance, 19.5% Technology,16.7% Basic Materials
Company sizes - 66% large, 21% Medium, 10% small

Performance 1 year 36%, 3 years 12.5% annually 5 years 10.4% annually

jdw2000

cashbackproblems wrote: »

HI all

I currently have been drip feeding £250-300 pm for a number of years into funds, trying to diversify but with no real method behind it just where I feel will be growth areas. Each fund makes up an even split of the portfolio (approx). Are there any areas I have missed out, I realise there is some duplication but any regions/sections I should focus on?

I am happy to take higher risk and do not have any FTSE tracker as not confident of much UK growth over the next few years, but hold individual shares in Aviva/Barc/Vodaphone/Sirius Exploration.

Aberdeen Global Indian Equity
Aberdeen Latin American Equity
AXA Framlington Global Technology fund
Blackrock Continental EU Equity Tracker
Blackrock Gold and General
Blackrock Pacific ex Japan Equity Tracker
Blackrock Emerging Markets Equity tracker
JPM Emerging EURO and Middle east and Africa
Legal and General US Index
Royal London Sterling extra yield Bond
Vanguard Global Small-Cap Index. (tracker fund)

Thinking of adding the legal and general Healthcare index tracker (0.31% TER). Or the Blackrock global property tracker

My total portfolio is showing as 22% increase, but is there anyway I can see the all time gains, as I have switched funds with high gains into other funds so therefore this isn’t included in my total portfolio gain.

Also I don’t understand if my fund shows 20% gain, is this after the fees (hl/fund manager fees), if I hold a fund for 20 years would I expect this % to show 500% (assuming high growth) or does it reset?

Also all my funds are accumulation, would this show in the % gain as all dividends are reinvested?

Many thanks for sny pointers!

Why not just get a Vanguard LifeStrategy? (Although that would give you substantial (15% ?) UK exposure, which you don't want).

TheTracker

That's a highly risky portfolio which can be expected to have loads of volatility.

You've got two issues to address.

One is that you can balance the portfolio to get a return that might be slightly less but which will have much less volatility. Do this by including enough asset classes in enough proportion to make a difference. Some world all Cap. Some property. A dash of p2p. Maybe some commodities. Etc. It's not simple to perform efficiency calculations on your own, but there are plenty of examples and rules of thumb out there, like 5-10% property, 5-15% EM (not your 45%).

The next is settling on your risk level. That is, assuming a balanced portfolio, how much volatility could you endure. And then address this in that balanced portfolio by either reducing equities and replacing with bonds/cash, or increasing equities.

Wha...??? How does one increase equities in a 100% equity portfolio. Well, there is nothing special about 100%. You could leverage in various ways to make it 110%, 150%, 200%. Release capital in your home or borrow money. Buy a 2x or 3x ETF. Having this debate with "I'm so hard I 100% equities" investors can make them reconsider their real limit to volatility. Especially since 80:20 reduces volatility considerably vs 100:0. I go through this example in the semi-chance you'll respond to all the criticism with, and I paraphrase, "I can take it. I bungee jump and do a hundred press ups before noon".

I love the irony of your username against your portfolio.

cashbackproblems

Linton wrote: »

What is the total value of the pot? Unless its £100K or more I feel you are holding too many funds. I cant see any obvious structure or rationale behind your fund choices. Without knowing the %s in each fund its difficult to make detailed comments.

I suggest you put your portfolio into one of the portfolio tools that provide an asset allocation data - both Morningstar and Trustnet provide this. Or one may be available from your platform's web site. The information may be helpful in showing what you are missing.

On your questions....

1) Performance data - may be available from portfolio tools
2) Published returns are after fund fees, but obviously cant include platform fees.
3) Published returns can be shown either as overall % gain for the 1,3,5 or sometimes 10 previous years. They may also be shown as annual averages though this is less usual. Note that 20% annual gain over 20
years is given by 1.2^20=38.34. ie 3734% gain. Such is the power of compound interest.
4) Published performance figures assume dividend re-investment so inc and acc funds are directly comparable.

Thanks everyone for the advise its going to take me a few days to absorb it all and decide what to do next and i will get back to u all. I have total 35k invested and aiming to get to 50k by year end. I am 30 and wont need this money for the foreseeable 10-15yrs+. The % in each is around equally the same, when one grows i switch some units to an exisiting fund, like with AXA as its done so well.

I think keeping track of total gains will be too complicated if im buying and selling funds so will leave it as is, interesting to hear that the accumulation appears under the percentage growth i didnt realise

Linton- thanks so much for your portfolio allocation analysis i did not realise i was so EM heavy, but this is where i see the growth. My US tracker includes alot of companies in the AXA tech fund eg microsoft and apple. Would you recommend selling that and buying a VLS 80 instead? Or selling for one of the two trackers below, which are lower AMC ?

How about the legal and general healthcare tracker or blackrock property tracker, adding these will just increase the number of funds i hold and someone mentioned i hold too many. I get a 3k bonus from work soon so will split this into two funds (new or exisiting).

Also any biotech ones i can buy?

cashbackproblems

jimjames wrote: »

Looks like a rollercoaster portfolio to me! Must be up there on the very high risk end of the spectrum. The one area missing is UK which tends to be present for home bias - but you appear to be almost exlusively overseas only

With the ftse sky high i dont have confidence in much growth versus EM but i agree UK couldbe less volatile. Also i bought barclays at 3.50 and it crashed, i bought plus markets and it went bust, i bought range resources it almost is bust, and i bought sainsburys and didnt make much. Aviva has been good. So my UK single stock experiences has put me off

cashbackproblems

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-gbl-health-and-pharma-index-i-accumulation. HEALTH CARE


http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-ftse-uk-all-share-index-accumulation Uk TRACKER

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-global-property-secs.-eq.-tracker-accumulation-inclusive PROPERTY

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-all-stocks-index-linked-gilt-c-accumulation UK GILTS WOULD THIS GIVE MORE BALANCE AND LOWER RISK.

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-global-inflation-lnk-bond-indx-c-accumulation INFLATION LINKED BOND?