Mainly Passive ETF portfolio

Glen_Clark

pip895 wrote: »

I would have thought if you have flows in and out rebalancing would be easier.

That depends how many funds you have to rebalance.
The more funds you have, the more complicated and expensive it is.

Alexland

Remember we are moneysavers so don't like paying fees. I often wonder why some investors seek to create a bespoke world of admin for themselves for no better certainty of outcome. Anyone can complexify but there is beauty in simplicity.

Russ Mould at YouInvest says every time someone pays a trade fee his children get more Lego and the little bits are starting to clog up their vacuum cleaner so please stop paying fees.

ivormonee

pip895 wrote: »

I hear what you are saying re the number of funds but getting it down to 10 seems pretty good to me. My ISA - for which I use mainly active funds has 18 funds in it and it's half the size of this one lol.:o

The third iteration is as follows -
HSBC MSCI World NAV GBP 30%
HSBC MSCI Emerging Markets GBP 5%
iShares £ Corporate Bond 0-5yr UCITS ETF GBP 15%
iShares Developed Markets Property Yield UCITS ETF GBP 7%
iShares Global High Yield Corp Bond GBP Hedged GBP 10%
Vanguard FTSE 250 UCITS ETF 5%
ETFS Physical Gold GBP 5%
BlackRock World Mining IT 3%
JP Morgan European Smaller Companies Trust PLC Ord 5P 3%
JP Morgan Japan Smaller Companies Trust Plc 2%
JP Morgan Smaller Cos IT plc 5%
Cash 10%

I have taken on board the advice regarding using a global fund for my basic large company exposure. I don't think etf's or indeed passives are best for small companies so I have gone back to using IT's for these + I have also added a Resources IT in place of a small amount of the property etf - hopefully active management in this area will reduce the impact of weaker companies going under. The risk factor is down to 67 and the performance has improved, so I am pretty happy with that.

I've had a look at the third incarnation now! Personally, as in my previous post, I have no qualms about holding relatively large numbers of funds in my portfolio. I think the talk of too much of an admin burden/ time commitment etc. isn't necessarily the case (unless you are rebalancing too frequently with too tight a margin). For a buy and hold approach, where you allow your weightings to drift a bit without getting overly concerned about the overall balance (as I do) having more funds ceases to be an issue (I have currently 21 funds in my portfolio).

In this third incarnation you've gone for 30% in a global equity fund but then overweighted certain areas of equity that you feel may warrant greater weighting, namely emerging markets, Japan (smaller cos) and Europe (smaller cos) and sector specific mining companies. This is an alternative and perfectly reasonable way of putting together a portfolio in my view. It's mostly passive but you've made high conviction active decisions.

You've gone for two extremes with fixed interest, the relatively very safe 0-5 yrs corporate bond ETF and the much more volatile high yield ETF with portfolio weights of 15% and 10% respectively. I would have split this down further with a middle ground bond ETF and had correspondingly lower weightings to these two.

The property ETF should be good for income but invests indirectly in property so won't offer the diversification benefits of a direct property fund, which you could access through an OEIC or, if platform fees are a conecrn, then through an IT. There's a few of them about to choose from.

I think gold and mining may move more or less in tandem but with a time lag. Mining is essentially gold-related so you may be subject to particular volatility because to me it seems that you are invested a total of 8% in something gold related. You may be comfortable with that and if you feel gold may be on the up then this combination would benefit the performance of this portfolio.

The smaller companies ITs are a good addition to the portfolio although personally, as a passive convert, I would have gone with smaller company ETFs rather than actively managed ITs, simply because I no longer believe in active management. The only exceptions would be to access direct property investments which are not available passively and for that type of exposure I have actively managed property ITs in my own portfolio of otherwise passive ETFs.

I can't work out what your asset allocation percentages are just by looking at this portfolio and I don't know what a risk score of 67 means (maybe 67% equity/ 33% non-equity?). If I knew these bits of info I would then compare to equivalent managed multi-asset funds over different timeframes to see whether the risk adjusted performance compares well or otherwise. It sounds like you've done this already using your own methods and have determined that the risk and performance are good for the portfolio, and that's the final step.