How much to hold in any one fund

Audaxer

bostonerimus wrote: »

Agreed. Any large diverse mutual fund or ETF is very safe...... apart from market variability. The funds I'd worry about would be small niche ones like junk bond funds and closed end funds where the chances of a bad loan, investment decision or fraud are slightly higher.

But as Linton indicated, could there not be a possible risk from a major fraud or gross negligence? The risk might be minimal but I wouldn't want to risk a seven figure sum in the same fund - and from memory your other two funds are also with Vanguard. With such a large portfolio is there not a case for diversification across a few different fund houses?

bostonerimus

Audaxer wrote: »

But as Linton indicated, could there not be a possible risk from a major fraud or gross negligence? The risk might be minimal but I wouldn't want to risk a seven figure sum in the same fund - and from memory your other two funds are also with Vanguard. With such a large portfolio is there not a case for diversification across a few different fund houses?

I do have little bits from previous employers' pension funds in other fund houses, but I see no reason to move anything from Vanguard. There is basically zero risk of fraud or negligence because of the fund structure. The only risk I am taking is of a stock or bond market collapse, and as I don't take any retirement income from my investments I am ok with a risky high percentage of equities. I would not feel as sanguine if I was invested in Investment Trusts because of their freedom to use borrowing and other complex financial strategies.

aroominyork

bostonerimus wrote: »

I would not feel as sanguine if I was invested in Investment Trusts because of their freedom to use borrowing and other complex financial strategies.

Do you have any examples of ITs' structures or strategies leading to problems? Presumably one thing that can easily be checked is their maximum potential gearing.

StellaN

ArchBair wrote: »

Funnily enough, when I was looking at Global funds, I did look at Artemis Global Growth and was very tempted especially as the fund manager Peter Sacke has been there since 2004. I also looked at Henderson Global Growth, Invesco Perpetual Global Opportunities and Fidelity Global Special Situations. I presume you prefer OEIC funds to IT's.

Henderson Global Growth is a very good fund which has performed well over the past 10 years with the same fund manager.

IanSt

bostonerimus wrote: »

I do have little bits from previous employers' pension funds in other fund houses, but I see no reason to move anything from Vanguard. There is basically zero risk of fraud or negligence because of the fund structure.

Hi, I was wondering how does the fund structure stop someone gaining access to Vanguards internal systems and fraudently moving funds around? I realise it is a very low risk, but I do try to keep my funds with a range of providers to mitigate that - especially where the fund charges are broadly similar.

coyrls

IanSt wrote: »

Hi, I was wondering how does the fund structure stop someone gaining access to Vanguards internal systems and fraudently moving funds around? I realise it is a very low risk, but I do try to keep my funds with a range of providers to mitigate that - especially where the fund charges are broadly similar.

You must make your own decisions on level of risk and if and when it is necessary to reduce risk. My view is that this is a risk I am prepared to take.

bostonerimus

IanSt wrote: »

Hi, I was wondering how does the fund structure stop someone gaining access to Vanguards internal systems and fraudently moving funds around? I realise it is a very low risk, but I do try to keep my funds with a range of providers to mitigate that - especially where the fund charges are broadly similar.

I still get quarterly paper statements and check my balance regularly so if there was to be any stealing from my accounts I'd know and be able to document it.

AlanP_2

IanSt wrote: »

Hi, I was wondering how does the fund structure stop someone gaining access to Vanguards internal systems and fraudently moving funds around? I realise it is a very low risk, but I do try to keep my funds with a range of providers to mitigate that - especially where the fund charges are broadly similar.

One person moving funds around is unlikley to affect many investors to a great extent though is it?

Admitedly a hacker could theoretically get in, sell everytging the fund house owned for cash and transfer the ill gotten gains into Bitcoins or something but that is very, very unlikely in my view.

More likely is someone, internal or external, gaining access and syphoning off the odd pence / cents or whatever from each account over a period of time and hiding it away. Limited individual impact that the fund house would make good without recourse to the FSCS.

Linton

Audaxer wrote: »

But as Linton indicated, could there not be a possible risk from a major fraud or gross negligence? The risk might be minimal but I wouldn't want to risk a seven figure sum in the same fund - and from memory your other two funds are also with Vanguard. With such a large portfolio is there not a case for diversification across a few different fund houses?

I dont think there is a serious risk of fraud. There are much more serious/likely risks to worry about. Fraud has been grought up, not because people think it's a real possibility but rather because it's about the only example of a situation one can think of where the FSCS guarantee could apply.

Audaxer

Linton wrote: »

I dont think there is a serious risk of fraud. There are much more serious/likely risks to worry about. Fraud has been grought up, not because people think it's a real possibility but rather because it's about the only example of a situation one can think of where the FSCS guarantee could apply.

I appreciate the risk is minimal, but an IFA recently posted that he would split clients' multi asset funds between different fund houses to keep within the FSCS limit, the reasoning being why take the risk, albeit minimal, when no need to. If your equity portfolio drops 50% in a crash, it will hopefully bounce back, but if you have £100k in a fund house and the worst happens like a major fraud, you will lose 50% of it with no hope of getting it back.

Apart from a major fraud, I was wondering whether there is any risk to investments if for example, a fund house was subject of a major cyber attack?