Mainly Passive ETF portfolio

Linton

I think the new portfolio is better, it's easier to see what is going on. 10 funds seems reasonable for a 6 figure portfolio.

Some Comments
1) UK Small(ish) Companies very high %. What about Europe, and Japan SCs? Spread your net a bit wider.

2)Your large company index funds may have a relatively high correlation since they are dominated by global giants operating in the same global markets. I think I would use one global fund to cover US,UK, Europe, and Japan large companies, since it doesnt matter much where for example a global oil company happens to be listed.

3) Property seems very high. It no longer fulfills the role it used to in the classic investment texts when it was seen as a steady fairly lucrative income generator. Now I would say it's only useful as a relatively minor bit of diversification but not at the 10% level.

4) Your justification seems to have a significant strand of short term guesses. OK safe bonds can only really go one way now (eventually) but the effects of Trump and Brexit are completely unknown and shouldnt be driving a long term portfolio. They may both be sorted one way or another in 2-3 years time and other things could be filling the headlines. Are you going to rejig your portfolio every couple of years?

5) Why is your equity % so low? Are you going to need the money in the next 10 years say? Are you continuing to drip feed?

pip895

Thanks Linton - just the sort of reply I was looking for. I have some more thinking to do.

bostonerimus

pip895. There's a thread going that is comparing the performance of various portfolios at the end of each month. You might be interested.

https://forums.moneysavingexpert.com/discussion/5719517

Prism

I think there are a few places that you shouldn't go passive, Japan being one of them. The general index performance is poor compared with that of active funds over the last 3, 5 and 10 years. You could probably pick a completely random active fund with no research and have a better than 50% chance of it beating a passive. The best OEIC based passive Japan fund over 5 years is iShares which comes in at 30th of a list of 51.

I use passive funds generally for sectors rather than regions (US excepted). I have an ETF in automation and two OEIC passives in tech and health

Glen_Clark

Malthusian wrote: »

Those of us who don't have $billions to live on should not be risking so much on a single country.

Do you think S&P 500 companies are dependent on a single country?

Malthusian wrote: »

Why use ETFs and not a cheaper .......

Can you tell us a 5 star fund cheaper than 0.07% ?

(- the i shares S&P 500 ETF I use - CSP1 https://markets.ft.com/data/etfs/tearsheet/summary?s=CSP1:LSE:GBX )

PS: Could diversify it further by adding H50E which costs 0.05% : https://markets.ft.com/data/etfs/tearsheet/summary?s=H50E:LSE:GBX

Glen_Clark

pip895 wrote: »

Commodities - these have been performing very poorly and are very out of favor, but I cant help feeling they will come back at some point??

I'm sure they will, but that doesn't necessarily mean todays companies are a good investment. Mining tends to have very high fixed costs. So by the time prices recover, todays companies may have gone bust.

Alexland

pip895 wrote: »

Thanks Linton - just the sort of reply I was looking for. I have some more thinking to do.

I spent ages trying to devise an ETF mix that I was happy with and in the end determined that the differences between my mix and a multi asset fund were not significant enough (and I had no greater certainty of outcome) to be worth the trade costs of setting up and rebalancing.

darkidoe

pip895 wrote: »

The portfolio is in the mid 100k's

1. S&P 500 - major part of world - 30% of my equity is on the low side (true passive should be close to 50% I think) but its valued pretty high at the moment and I think Trump may come unstuck so I don't want heavy exposure.
2. Europe - Fairly neutral exposure
3. Asia - Probably a bit light but a bit scary
4. Japan - Fairly neutral
5. Best property etf I could find??
6. Short dated Corp Bonds - good and boring to make up the numbers - not as bad as gov bonds/guilts
7. Global high yield - hedged - not to volatile but better return than corp/Gov bonds
8. Emerging market - good growth potential but with high risk
9. FTSE 250 - 24% of my equity - deliberate UK bias - think the pound will probably move up once brexit is behind us. Prefer the 250 to 100 as less volatile and more UK based.
10. Gold - small hedge against meltdown - negative correlation to equities.

Not the most in depth analysis - then if I was really confident of what I was doing I probably woldnt be posting on here!:)

There must be an element of portfolio over-analysis somewhere along this story. All very good rational but don't get too uptight about the specific numbers. There is no perfect allocation and you might be worrying about missing small percentages here and there when in the end, you do not know if it is for better or for worse.

After all, portfolio allocation is all there to help you sleep at night and also to provide stability in times of storm. I prefer to keep things simple with a few principles (Low costs, diversify, global, reinvestment, savings rate) and work on my investing psyche to make sure I don't stray from the path.

bostonerimus

darkidoe wrote: »

There must be an element of portfolio over-analysis somewhere along this story. All very good rational but don't get too uptight about the specific numbers. There is no perfect allocation and you might be worrying about missing small percentages here and there when in the end, you do not know if it is for better or for worse.

After all, portfolio allocation is all there to help you sleep at night and also to provide stability in times of storm. I prefer to keep things simple with a few principles (Low costs, diversify, global, reinvestment, savings rate) and work on my investing psyche to make sure I don't stray from the path.

I agree. I shove money into and rebalance 3 funds; I never use the conditional or "should, would or could" when talking about my portfolio; spend very little time managing my portfolio and sleep well at night.

Audaxer

darkidoe wrote: »

There must be an element of portfolio over-analysis somewhere along this story. All very good rational but don't get too uptight about the specific numbers. There is no perfect allocation and you might be worrying about missing small percentages here and there when in the end, you do not know if it is for better or for worse.

After all, portfolio allocation is all there to help you sleep at night and also to provide stability in times of storm. I prefer to keep things simple with a few principles (Low costs, diversify, global, reinvestment, savings rate) and work on my investing psyche to make sure I don't stray from the path.

Yes, maybe if having more small companies, gold, high yield bonds etc. were so important to get a balanced portfolio, passive and active multi asset funds would include them in their funds?