Smaller companies within a wider portfolio

Prism

aroominyork wrote: »

Thanks Tcquins. I'm still confused by why Liontrust would have a very similar line of best fit as Old Mutual but is much smoother day to day compared to OM's jagged graph? What causes that, and it is responsible for the lower Liontrust FE rating? Is it just OM having a number of large, more volatile holdings?

I bought Liontrust as I thought it was a lower risk fund - not fully grasping the difference between risk and volatility. Now I wonder if that was a bad move: it's very expensive with a 3% spread and 1.37% OCF.

I have Old Mutual and my wife Liontrust. On any given day Old Mutual tends to rise or fall by up to 1.5%. Liontrust is usually in the range of +/- 0.2%.

aroominyork

Prism wrote: »

I have Old Mutual and my wife Liontrust. On any given day Old Mutual tends to rise or fall by up to 1.5%. Liontrust is usually in the range of +/- 0.2%.

Is that increased day-to-day volatility an indicator of increased downside risk?

Prism

aroominyork wrote: »

Is that increased day-to-day volatility an indicator of increased downside risk?

Only by a very small amount I would say. In the scale of things over years of growth its probably not important. Compare either to the Legg Mason Japan fund or maybe a gold fund to see a more volatile example with more risk

dividendhero

I've a holding in IPU and ICGT - more than happy with both. Both have beaten the FTSE All share over 1, 3, 5 & 10 years plus IPU has quite a nice dividend record...

aroominyork

aroominyork wrote: »

I just took a look at Hargreaves Lansdown's Master Portfolios where they give you a suggested portfolio of funds with sliders so you can change the allocations. For their Adventurous option their starting weightings include 15% UK micro-cap and 15% global smaller companies so that's 30% SME. But it's also a really strange portfolio because the other allocations are 10% Asia Pacific, 10% EM, 15% Europe, 20% UK, 15% Japan. It looks like the only USA holdings are within the global smaller companies!

I just phoned HL to ask about this. They said it's probably because the portfolios comprise actively managed funds and it's widely thought that active management cannot beat the US index. That's all well and good - but it's not consistent with their blurb which says the suggested funds "dovetail well together to provide a ready-made, diversified portfolio".