Index vs managed funds the great war

Filo25

sixpence. wrote: »

Hahaha very funny

Current thoughts re portfolio structure are:

Index funds:

73% VLS (60% equity)
10% Asia ex Japan tracker
3% Global tech tracker

Managed funds:

3% Japan small caps
3% Europe growth ex UK
3% China
3% UK small caps
2% India

Top two sectors of equities currently work out at: 19% tech, 14.4% financial, after that it's like 6-7% industrials, healthcare etc

I figure this is geographically diverse enough. All I need to do now is find decent funds that aren't too expensive and make sure as I choose that my sectors don't get un-diversified. Easier said than done really :rotfl:

I still haven't finalised mine either, quite a different draft mix for me though on a broad brush, still not completely locked in to the Europe/Japan/Asia +EM split yet though

US 25% (Passive)
UK 20% primarily mid and small cap and value (Active)
Europe 15% (Active)
Japan 20% (Active)
Asia Pac/EM 15% (Active)
Frontiers 5% (Active)

BananaRepublic

Filo25 wrote: »

I still haven't finalised mine either, quite a different draft mix for me though on a broad brush, still not completely locked in to the Europe/Japan/Asia +EM split yet though

US 25% (Passive)
UK 20% primarily mid and small cap and value (Active)
Europe 15% (Active)
Japan 20% (Active)
Asia Pac/EM 15% (Active)
Frontiers 5% (Active)

You are quite high in Asia with over a third of the total, plus Frontiers too. So you have 40% in more volatile markets, that is courageous, in the Yes Minister sense ... It used to be said that much less should be in Asia, though I'm not sure what the 'accepted opinion' is these days, whatever that phrase means.

bostonerimus

Filo25 wrote: »

I still haven't finalised mine either, quite a different draft mix for me though on a broad brush, still not completely locked in to the Europe/Japan/Asia +EM split yet though

US 25% (Passive)
UK 20% primarily mid and small cap and value (Active)
Europe 15% (Active)
Japan 20% (Active)
Asia Pac/EM 15% (Active)
Frontiers 5% (Active)

This allocation worries me. All that UK small cap and Asian exposure, underweight of the US and no fixed income...........

Filo25

bostonerimus wrote: »

This allocation worries me. All that UK small cap and Asian exposure, underweight of the US and no fixed income...........

It's not my whole portfolio by any means, about £100k of my pension pot, the total pension pot is currently at £220k and being added to through my work scheme at £30-40k a year, all of the rest of it will be in a generic work fund (tracker I believe with about 30% bonds).

Happy to be underweight US, a combination of valuation concerns and I don't see why I would want to be over 50% holding in one market in any case (given it isn't my home market), if we had a market pullback in the US at the some stage I would probably add to that a bit.

Am considering pulling 5% from the Asia/Frontier numbers to Europe though

If nothing else its an offset to the more conservatively invested selection of my pension, the funds which are being transferred in to my SIPP (previous work pensions) haven't exactly been stellar performers either.

Prism

Filo25 wrote: »

Am considering pulling 5% from the Asia/Frontier numbers to Europe though

There are some various Asia/EM funds around which behave very differently. There are funds which focus on developed Asia (Australia, Japan, Singapore) and barely touch China and India. Then you've got the China focuses ones which all invest in the same tech and insurance companies. Then you have the sustainable ones that focus on defensive companies for the emerging consumer.

For example, over the last 3 months my China fund is up 6% and my EM fund which avoids China is up 12%. Over the last year its 51% and 23% in favour of China.

bostonerimus

Filo25 wrote: »

Happy to be underweight US, a combination of valuation concerns and I don't see why I would want to be over 50% holding in one market in any case (given it isn't my home market), if we had a market pullback in the US at the some stage I would probably add to that a bit.

Am considering pulling 5% from the Asia/Frontier numbers to Europe though
.

Like I said, there's a lot of hunch and guess work that goes into many allocations.

Filo25

bostonerimus wrote: »

Like I said, there's a lot of hunch and guess work that goes into many allocations.

I totally agree, could justify moving a fair bit of mine around quite easily.

I prefer not to have over 50% in one country in a diversified portfolio though, I'm not sure I would achieve better diversification by following the value of global capitalisation in this instance, just personal opinion.

It's hard to see how the wall of cheap money out there and its impact on asset prices isn't going to have the impact of depressing returns going forwards one way or another across all markets.

Filo25

Prism wrote: »

There are some various Asia/EM funds around which behave very differently. There are funds which focus on developed Asia (Australia, Japan, Singapore) and barely touch China and India. Then you've got the China focuses ones which all invest in the same tech and insurance companies. Then you have the sustainable ones that focus on defensive companies for the emerging consumer.

For example, over the last 3 months my China fund is up 6% and my EM fund which avoids China is up 12%. Over the last year its 51% and 23% in favour of China.

Yes, was more looking at Aspac excl Japan funds for that section, even some of the Frontier funds I have looked at have a fair bit of overlap with the Asia Pacific developing markets.

sixpence.

bostonerimus wrote: »

This allocation worries me. All that UK small cap and Asian exposure, underweight of the US and no fixed income...........

You seem to be pretty wise. Do you have any opinion on the allocation or anything else of the plan I've shared?

Thrugelmir

bostonerimus wrote: »

underweight of the US .

The US influence on global weightings is going to decline over time.