Opinion/Advice....Any welcome

Linton

Flobberchops wrote: »

The point of funds is to diversify easily. If you have (say) five funds but 80% of their combined holdings are the same dozen blue chip companies then it was a wasted exercise; you may as well just buy a collection of individual stocks. It's the "Best-of Album" syndrome; you find a new favourite band, buy several compilation albums featuring them, and discover most of the good tracks are duplicates.

I've seen some super-minimalist portfolios comprising exactly three funds: one domestic, one rest of world, one bonds. In theory that should be all anyone really needs.

If you had a clear underlying strategy and chosen your funds sensibly and appropriately you wouldnt have the same blue chip companies in 80% of them. More likely you would have virtually no duplication whatsoever.

As far as minimalism is concerned you could hold just one multiasset fund that covers local and foreign equity and bonds. This should be sufficient and very sensible for most very small investors.

Audaxer

Flobberchops wrote: »

The point of funds is to diversify easily. If you have (say) five funds but 80% of their combined holdings are the same dozen blue chip companies then it was a wasted exercise; you may as well just buy a collection of individual stocks. It's the "Best-of Album" syndrome; you find a new favourite band, buy several compilation albums featuring them, and discover most of the good tracks are duplicates.

I've seen some super-minimalist portfolios comprising exactly three funds: one domestic, one rest of world, one bonds. In theory that should be all anyone really needs.

Yes, I know there may be some overlap if you hold multiple funds, but I can't see how some would be redundant. Someone on here said they couldn't choose between 2 multi asset funds so put 50% in each. Although there may have been a lot of duplication, there would have been some additional diversification over having it all in just the one fund. I can't see anything wrong with that.

AnotherJoe

Audaxer wrote: »

Yes, I know there may be some overlap if you hold multiple funds, but I can't see how some would be redundant. Someone on here said they couldn't choose between 2 multi asset funds so put 50% in each. Although there may have been a lot of duplication, there would have been some additional diversification over having it all in just the one fund. I can't see anything wrong with that.

The difference is as follows.
Suppose you have £100k to invest in USA. You can't decide between Fund A and Fund B so you put £50k in each. You are invested £100k where you want to be.

Now suppose you have £50k to invest in the USA and £50k in healthcare. You buy a fund in each with £50k. However it turns out that 90% of the healthcare companies in the fund are in the USA. So now you have £95k in the USA which you didn't want.

Perhaps not the best example but I'm sure you get the drift.

bostonerimus

copthis1 wrote: »

Any comments on the funds we're in?

Maybe you can tell us why you chose the funds you own......I get the feeling that a combination of funds promoted on certain platforms and a dart board is a common strategy.

Linton

AnotherJoe wrote: »

The difference is as follows.
Suppose you have £100k to invest in USA. You can't decide between Fund A and Fund B so you put £50k in each. You are invested £100k where you want to be.

Now suppose you have £50k to invest in the USA and £50k in healthcare. You buy a fund in each with £50k. However it turns out that 90% of the healthcare companies in the fund are in the USA. So now you have £95k in the USA which you didn't want.

Perhaps not the best example but I'm sure you get the drift.

Yes, which is why it is very illuminating to use the Trustnet and morningstar tools that analyse the underlying investments in ones portfolio. You can adjust the %s of your various funds to get the overall allocation you want or choose new funds to fill obvious gaps.

copthis1

Following a visit many years ago, an IFA advised putting a lump sum into Wealthbuilder as a long term thing, £1500 into the tech fund as a high risk investment, the China one was a recommendation of a friend who had done well out of it over a few years. We've added nothing to them over the years. The Lindsell one was based on comments on this site and others, with the intention of paying a monthly sum in to it.

Someone mentioned building 'good core holdings' earlier.....like what?

Linton

copthis1 wrote: »

Following a visit many years ago, an IFA advised putting a lump sum into Wealthbuilder as a long term thing, £1500 into the tech fund as a high risk investment, the China one was a recommendation of a friend who had done well out of it over a few years. We've added nothing to them over the years. The Lindsell one was based on comments on this site and others, with the intention of paying a monthly sum in to it.

Someone mentioned building 'good core holdings' earlier.....like what?

The problem is that you are investing in apparently random funds for reasons purely related to each separate fund. You need to consider the portfolio as a whole, where geographically is it invested, in which types of industry in what size of company.

The danger is of not doing this is that all the funds you like may be highly invested in a small set of particular areas which adds greatly to the risk. Should those areas falter your portfolio would be badly hit. Furthermore, you may be neglecting other areas which could perform very well.

You can spread your underlying investments by buying one or two funds that cover everything (such as the Fidelity Wealthbuilder which invests in shares worldwide) or a set of more specialised funds chosen for the purpose. The former approach is more appropriate for small and/or inexperienced investors. Those with more money to invest and greater experience can hone the allocations to meet their particular requirements. For both however the general principle of spreading one's investments is paramount.

Audaxer

Linton wrote: »

Yes, which is why it is very illuminating to use the Trustnet and morningstar tools that analyse the underlying investments in ones portfolio. You can adjust the %s of your various funds to get the overall allocation you want or choose new funds to fill obvious gaps.

I've used the free analyst tool in Morningstar which is good, but it limits you to 10 funds. Maybe that is enough, but I was looking to possibly add another couple. I didn't realise there was one on Trustnet as well - I will have a look at that.

Am I right in now thinking that when selecting funds, the diversification you choose across sectors and underlying holdings is more important than picking the funds with the best track records and best Morningstar Analyst ratings and reports?

copthis1

Any opinions on the Lindsell Train Global Equity Acc....Is it worth paying more into monthly as well as the lump sum?

Linton

Audaxer wrote: »

.......
Am I right in now thinking that when selecting funds, the diversification you choose across sectors and underlying holdings is more important than picking the funds with the best track records and best Morningstar Analyst ratings and reports?

Yes, choose the areas you want to invest in first and then choose the best funds to do it with. Best track records or analyst ratings are possible criteria but are far from being reliable. One I use is best performance during the bad times.