Advice rebalancing portfolio

pt1188

I have finally got round to reviewing my portfolio, which over time and with advice from a previous IFA (no longer have one) resulted in something like 48 funds 10 of which are shares and a further 10 are a mix of of Vanguards funds bought more recently after reading these forum pages and Monevator.

The geographic distribution is as follows:

United Kingdom 50.22
Western Europe 9.75

United States 11.36
Canada 0.21
Central & Latin America 1.80

Japan 16.47
Australasia 0.32
Emerging 4 Tigers 3.71
Emerging Asia - Ex 4 Tigers 5.05

Asset allocation is approximately 85% in equities, 10% in bonds and the rest in cash and others.

I am in my early 60s with a moderate risk profile and I would really like to streamline my holdings into something much more manageable with an emphasis on passive, low cost funds. The funds are mainly in an ISA now and I don't forsee needing the money for a good 10 years or so as I still have an income stream.

I have recently bought the HSBC Global Strategy Balanced portfolio in an effort to re-balance the geographic spread as it's less weighted in the UK. I had thought to just liquidate most of the non passive funds and just re-distribute to the Vanguard LS funds but it doesnt help with the geographic re-balancing. Also, should I invest more in bonds?

Any suggestions would be much appreciated.

BLB53

If it was me, I would just have a very simple low cost multi asset approach with Vanguard Lifestrategy 60 and your existing HSBC fund...simples!

bostonerimus

I'd use Vanguard Global All Cap Index and VLS20 for the bonds.

pt1188

Thanks for both your input much appreciated but my understanding is that vanguard funds are weighted in favour of UK which would add further to my existing UK fund allocation. I will look into their global fund though. Thanks again.

AnotherJoe

pt1188 wrote: »

Thanks for both your input much appreciated but my understanding is that vanguard funds are weighted in favour of UK which would add further to my existing UK fund allocation. I will look into their global fund though. Thanks again.

Life Strategy are. Others, not.

bostonerimus

pt1188 wrote: »

Thanks for both your input much appreciated but my understanding is that vanguard funds are weighted in favour of UK which would add further to my existing UK fund allocation. I will look into their global fund though. Thanks again.

VLSxx is UK overweighted in equities, so that's why I'd use Global All Cap for the majority of the equities and add a bit of VLS20 for the fixed income. The only reason I'd use VLS20 rather than the Global Bond Index is to avoid the entry charge. I think you need to seriously reduce the number of funds you own and there are obviously an infinite set of possible solutions, but 60% Global All Cap and 40% VLS20 would give you a diversified 68% equities and 32% bonds

pt1188

bostonerimus wrote: »

VLSxx is UK overweighted in equities, so that's why I'd use Global All Cap for the majority of the equities and add a bit of VLS20 for the fixed income. The only reason I'd use VLS20 rather than the Global Bond Index is to avoid the entry charge. I think you need to seriously reduce the number of funds you own and there are obviously an infinite set of possible solutions, but 60% Global All Cap and 40% VLS20 would give you a diversified 68% equities and 32% bonds

Thanks that's a good start. It's the kind of proportion I can live with. Housekeeping starts tomorrow.

Alexland

So you are going from a position of massively overweight in UK to a deliberate non UK bias? Seems like a yo-yo going on.

The overseas earnings of UK companies makes the country bias less relevant anyway.

However - given the current uncertainty around the UK's position in the world I think the VLS only approach is ideal as it gives lots of global exposure incase the UK tanks but some protection if the pound strengths.

Given your age but considering you are happy to leave invested for 10 years and the risk on bond prices if interest rates rise I would suggest 75:25 split between VLS60 and VLS80 to create a 'VLS65'

Audaxer

As you have already started to rebalance by purchasing HSBC Global Strategy Balanced, I agree with BLB53 above when he suggested adding a VLS60 to that.

Sam_Jones

Something that nobody has mentioned is the recent devaluation of sterling to historically low levels (or close) means that transferring your sterling assets to non-sterling assets means you are locking in these losses. Should sterling recover over the next few years - and several experts believe it is currently undervalued - then you will end up losing out since you have purchased non-sterling assets when sterling was historically weak.

I think you need to have a better reason to re-balance than simply to better match the global stockmarket proportions.

Alexland

Welcome to the forum Sam.

Even if the UK recovers from this Brexit situation then it's still not clear if the currency will recover of if we will have suffered permanent inflation.

But I agree matching global market proportions is purism that insufficiency covers the risk that sterling recovers. That why I am in VLS and value the slight UK bias.

Alex