Building portfolio for 20+ years

ExpectVolatility

Good evening,

I am a 34 year old lady who has worked in the UK for 6 years, and I'm originally from Spain. Unfortunately, I will have to leave the UK and my employment shortly due to a close family member needing my help. This situation means that I have to define a "forget and balance" pension portfolio for the next 20-25 years.

Besides the pension pots that I have built through my employments in the UK, I have a shares portfolio. I own mostly blue-chip companies which pay good dividends and that should be there for many years to come. It is comprised by a mix of European (Spain, UK, Germany, France, Netherlands) and US stocks. I keep adding to it (specially at market downturns), reinvest dividends and almost never sell, so it's basically a classical buy & hold portfolio.

To give you an idea of how I invest, I'll mention that I bought several Spanish and european shares on the days after Brexit. The spanish market had its worse day ever when it closed at -12%.
So, I'm not afraid of volatility (rather I embrace it for the opportunities it creates), and I understand that ups and downs of markets are the toll for performance.

Regarding my private pension, I would like to combine the two pension pots into a SIPP with Bestinvest. This will help me get cheaper costs, will be easier to track and re-balance, etc. This is in the low-medium 5 figures mark, and will represent around 30% of my total investments. It will likely decrease throughout the years because it won't receive new money. I'm also wanting to improve my current asset allocation, as there are better funds available in the SIPP compared to my pension providers.


Planned portfolio allocation:

Weight - Fund - OCF
25% - Legal & General International Index Trust - 0,08%
22,5% - Vanguard Global small-cap Index - 0,38%
22,5% - Blackrock Emerging Markets H - 0,25%
10% - Blackrock Global Property Securities - 0,2%
10% - Lindsell Train Global Equity B - 0,77%
10% - Fundsmith Equity I - 0,97%

This comes at a total OCF of 0,3% (platform fee) + 0,36% = 0,66%. It would be lower without the two active funds, but I strongly believe in their investment philosophy and will pay the price to own them. I find the overall costs of the portfolio are in the reasonable range.

Considerations:

- My main objective is that the pension portfolio complements my portfolio so that major areas and sectors that are not in my portfolio are covered. However, it has to follow a very simple strategy, and ideally should not have any of my biases around investing. This is why it's heavy on Emerging Markets, Small caps, why it includes the Property fund, and why it doesn't explicitly cover UK or Europe. Is it only me, or do those two conditions slightly contradict each other?

- I owned the Fundsmith and Lindsell Train funds in my shares portfolio, and I've moved to the SIPP for tax reasons. This is the only part of the portfolio where I intend to consciously include my own ideas regarding investments.

- The fund weights will be re-balanced twice a year, around April and September (my birthday).

- The portfolio won't receive any additional money after I set it up. Surely transferring euros from my bank account into pounds would be expensive, plus I wouldn't receive tax relief at all. Instead, I'll keep growing my shares portfolio. I expect the pension portfolio to "handle itself" for the next 20 years, and that's why I'm giving a lot of thought on it right now.

- I am not including bonds as it's an asset class I don't understand very well. It seems to me as if the times when they offered reduced volatility and allowed for equity portfolios re-balancing are over.


Questions and doubts:

1) Any thoughts on the portfolio allocation? Does it sound sensible at all? I'm aiming for long term performance.

2) What do you think of the correlation between the asset classes? The less correlated they are, the most effective re-balancing I could do during a down market. Otherwise I will have to wait for markets to recover.

3) How would you invest the money from the pension pots into the funds? The transfer of the pension pots will be done as cash. Once it's available in my SIPP, I'll need to either invest it at once, or to do smaller contributions each month. Given that this money was already invested before the transfer, I feel it would be better to invest as a lump sum, but the current market conditions appear not to be the best (lots of market highs, pound down which might reverse soon, etc...). I tend to invest new money whenever it's available, but in this case I'd like to be more prudent than usual, although I don't want to time the market either.

As you can see, the fact that no new money will be added is imposing some limitations on how I should build the portfolio. I appreciate any help, criticise or thought you could share to help with this.
Many thanks,

ExpectVolatility.