Passive Investing

stphnstevey

D503 wrote: »

In relation to the OP, I was in a similar situation with H&L ISA + SIPP, I had between 14 - 17 different funds on the go and not really getting anywhere in terms of growth (some doing well...some not so).

I started researching Passive Investment and came across Lars Kroijer (I am not allowed to post links so Google him), which (for me) is some of the most sane and transparent investment strategy 'advice' I have yet to see (along with John Bogle and Benjamin Graham).

My ISA portfolio (now on Vanguards direct platform)*, is roughly:

70% Vanguard Global All-Cap Index
10% Vanguard Life Strategy 20** (for diversified bond exposure with an effective 2% increase in equities)
15% Vanguard UK Index Linked Gilts Index
5% Cash in the general account

My SIPP remains on HL until Vanguard start a SIPP (and if I can let go of the Alpha funds that are currently performing) is roughly:

50% Vanguard Global All-Cap
10% Vanguard Life Strategy 20** (for diversified bond exposure with an effective 2% increase in equities)
10% Vanguard UK Index Linked Gilts
25% in funds seeking Alpha
5% Cash

*I'm not trying to advertise Vanguard in favour of others, I just find Vanguard transparent and cheap. (Blackrock, HSBC, L&G all offer similar)
**Using the Life Strategy 20 could, strictly speaking be seen as seeking Alpha

My Asset Allocation is in relation to my age (39) and my intention to hold for >20yrs, so far it works for me, but only time will tell.

Google Lars Kroijer, see what he has to say...

Thanks, despite receiving a hard line on here, good to know I am not the only one that experimented at first before finding passive investing

Your portfolio looks along the lines of where I want to be headed

TBC15

As soon as my 25yrs+ of utter folly results in a less than average bottom line I'll be on this one in a shot.

His argument is totally convincing, only a fool would do otherwise.

Unfortunately, I keep hitting my head on the bottom line.

tibbles209

bowlhead99 wrote: »

...

This was a fantastic, really helpful post. Thank you Bowlhead! :beer:

forextc

I started researching Passive Investment and came across Lars Kroijer (I am not allowed to post links so Google him), which (for me) is some of the most sane and transparent investment strategy 'advice' I have yet to see (along with John Bogle and Benjamin Graham).

Good to hear someone else likes Lars.

I put together a 'portfolio' of HSBC Global FTSE All Share and HSBC UK Gilt Index for a couple of family members. A simple two fund strategy of diverse equities and minimal risk assets. It also gets around the over weighting of the UK in the Lifestrategy funds. A few corporate bonds were added to one portfolio for a bit of diversification.

Very simple, and for all the reasons he explains, there is very little to add to it that can make an appreciable difference to the risk profile.

stphnstevey

I have been analyzing ETFs, I was looking for:

- Fund or ETF - some preference for ETFs as they would be cheaper to hold with some brokers
- A World and USA tracker - some preference for S&P 500 for USA tracker due to lower costs to track this index
- Accumulation so no further costs to reinvest dividends
- Available in GBP to lower currency costs
- Preference for a larger number of holdings for more diversity
- Preference for larger size so not newly established, so less chance of ending and having to transfer elsewhere
- Trading history for at least 5yrs in line with sector

I picked a fund and ETF to allow take advantage of broker charging

For S&P 500 I found:
- ISHARES VII PLC CORE S&P 500 ETF - TER 0.07%
- HSBC AMERICAN INDEX CLASS C - ACCUMULATION FUND - TER 0.06%

For World tracker I found:
- Fidelity Index World (Class P) Accumulation Fund - TER 0.13%
- iShares Core MSCI World UCITS ETF - TER 0.20%

How do these sound?
Any lower TER for the sector and still in the requirements above?

TBC15

For info VLS 100 and VLS 80 after inflation would have returned about 1.5% and 0.9% over the last year.

AlanP_2

stphnstevey wrote: »

I have been analyzing ETFs, I was looking for:

- Fund or ETF - some preference for ETFs as they would be cheaper to hold with some brokers
- A World and USA tracker - some preference for S&P 500 for USA tracker due to lower costs to track this index
- Accumulation so no further costs to reinvest dividends
- Available in GBP to lower currency costs
- Preference for a larger number of holdings for more diversity
- Preference for larger size so not newly established, so less chance of ending and having to transfer elsewhere
- Trading history for at least 5yrs in line with sector

I picked a fund and ETF to allow take advantage of broker charging

For S&P 500 I found:
- ISHARES VII PLC CORE S&P 500 ETF - TER 0.07%
- HSBC AMERICAN INDEX CLASS C - ACCUMULATION FUND - TER 0.06%

For World tracker I found:
- Fidelity Index World (Class P) Accumulation Fund - TER 0.13%
- iShares Core MSCI World UCITS ETF - TER 0.20%

How do these sound?
Any lower TER for the sector and still in the requirements above?

Would these be your only two investments - USA and world? What asset allocation are you working with?

A lot of the world market is US based so won't there be a lot of overlap?

Apologies if these are just part of a wider fund / etf set you are structuring.

jm78

Using LS20 for diversified bond exposure as suggested by D503 above seems a great idea to me.

This is an area that, as a newbie, I’ve been grappling with – my equity allocation has been doing well over the last couple of years but my gains are being held back by my bond allocation: Vanguard UK Inflation Linked Gilt Index and Vanguard Gov Bond Index – I’ve made losses on both.

Why then does D503 hold Vanguard UK Inflation Linked Gilt Index as well as Vanguard LS20? The LS20 holds the inflation linked gilt fund, so isn’t the inflation risk sufficiently addressed through this?

Linton

jm78 wrote: »

........

Why then does D503 hold Vanguard UK Inflation Linked Gilt Index as well as Vanguard LS20? The LS20 holds the inflation linked gilt fund, so isn’t the inflation risk sufficiently addressed through this?

Inflation linked bonds only give you 100% protection against inflation if you buy them at par value when issued (which you cant because they are auctioned) and hold them until maturity. If you buy and sell in the meantime anything could happen. At the moment index linked gilts are priced well above what they should be based purely on past inflation. If you buy index linked funds you are certain to be buying and selling almost all the underlying investments "in the meantime".

The best way of providing long term inflation protection is to buy assets such as funds that invest in solid company shares.

A_T

jm78 wrote: »

my gains are being held back by my bond allocation: Vanguard UK Inflation Linked Gilt Index and Vanguard Gov Bond Index – I’ve made losses on both.

I hold gilt funds but not for gains. They are there to help mitigate the damage to my portfolio of a stock market crash. In 2008 gilt funds went up during the GFC but corporate bond funds went down. I'm hoping there will do the same the next time there is a crash (but who knows?)