Building a Low Maintenance Long Term Portfolio

larryk

Apologies if this appears anywhere else on this forum - couldn't find it if it does.

I'm trying to build a long term investment portfolio, with minimal maintenance once set up.
I'm looking to invest £100k for 10-15 years. Medium+ risk.
I've done a bit of research and built a few portfolios on Trustnet to see their projections, but was hoping for some advice from people who know what they're talking about.

I'm aware of the Vanguard LifeStrategy Funds, but thought I may be able to get better returns if I built my own portfolio of funds, even including the LifeStrategy 80 for balance/diversity.

What do people think of the below portfolio?

Fundsmith Equity I Acc 11.12%
Lindsell Train Global Equity B GBP 11.17%
Old Mutual North American Equity R Acc GBP 11.22%
Royal London Sustainable World Trust C Acc 44.39%
TB Amati UK Smaller Companies B Acc 11.04%
Fidelity Japanese Values PLC 11.06%

Any help appreciated. Thanks in advance!

ArchBair

You have chosen two high conviction global funds that also have a concentrated small amount of holdings. If you wanted two global funds I would choose either Fundsmith or LT and select another fund or IT that has more holdings and that covers more sectors and regions. As an example Old Mutual Global Equity or Bankers or Witan Investment Trusts could possibly fit the bill.

You are missing some regions notably Europe and Asia Pacific excluding Japan. You may also like to consider smaller companies in other regions not just in the UK?

HappyHarry

Your portfolio appears to be 100% specialised/sector specific equities.

It also looks like a "fashion" fund mix, and one that could be drastically "out of fashion" in 10-15 years' time.

I wouldn't call that portfolio a medium+ risk, or indeed, a portfolio that would be low maintenance.

If you are looking for medium+ risk, then other asset classes, such as fixed interest securities, should play a part in your portfolio.

If you want low maintenance, then I would expect to see multi-asset funds being prominently featured.

Linton

You can get better returns than VLS80 by choosing you own funds, but not by picking a random set of funds that may happen to have performed well recently. Even if you choose a sensible set of higher risk and potentially higher return funds your portfolio could hardly be classed as low maintenance as you would need to rebalance it every year or so and keep an ongoing check to ensure the funds continue to match the objectives for which you bought them.

Rather than come up with a list of funds it would be better in my view to produce with a top down breakdown of what sectors you want to invest in and then find a set of funds that do the job. You would then avoid missing things like Europe and Asia/Pac as has been mentioned, and also avoid all your funds having a high % of investments in particular sectors.

Purely investing in equities ensures that your portfolio is much higher than medium+ risk.

larryk

Thank you for all your replies!

As I mentioned above, I did initially start by looking at the VLS80 fund but wanted to increases the gains, and did so by adding in more funds from different sectors that have performed well over the last 5 years.

As I don't know much about the different markets, or what indicators to look out for, i'm not specifically bothered which sectors I invest in as long as the returns are good.

I thought that by adding in Royal London Sustainable World Trust C Acc, it would reduce the risk, as the fund covers different assets? Would adding in the VLS80, and maybe the Jupiter India I fund 'balance' things out?

I understand that adding more funds means that the portfolio will require more attention and adjusting... Would having the VLS80 plus one or two well performing/higher risk funds be a better idea?
Or adding in commodity funds like Pictet Water I dy GBP help to reduce risk?

dunstonh

I'm trying to build a long term investment portfolio, with minimal maintenance once set up.

Yet your selection doesnt fit that criteria.

Single sector funds means rebalancing will be needed - ideally annually
managed funds mean you need to keep them under review as some will have strategies that do not work well in certain phases of the economic cycle. So, that means making changes.

The funds selected seem to be fashion investing and way above the risk level that you would typically call medium (although words mean nothing without context - what is your definition of medium? - i.e. how much loss in a 12 month period)

As I don't know much about the different markets, or what indicators to look out for, i'm not specifically bothered which sectors I invest in as long as the returns are good.

It is very often the case the top sector one year will be bottom the year after. So, you are picking a high maintenance strategy on a flawed basis with no knowledge of what you are doing. Yet you think you will do better than a structure multi-asset fund put together by someone or a team that do know what they are doing. What makes you think you will do better?

Would adding in the VLS80, and maybe the Jupiter India I fund 'balance' things out?

Jupiter India and reducing risk are not words that go together.

Why dont you just acknowledge your lack of knowledge and use multi-asset funds that meet your criteria rather than try and do something outside your skillset and doesnt meet your risk profile or objectives.

larryk

Yet you think you will do better than a structure multi-asset fund put together by someone or a team that do know what they are doing. What makes you think you will do better?

Firstly, thank you for you're input. It is greatly appreciated.
However, I'm not, in anyway, suggesting that I will, or even can do better than a multi-asset fund. I'm just trying to find out how I can do better than using one, such as the VLS80.

I thought by adding other high earning funds that had done well over the last five years (is that fashionable?) to a portfolio including a multi-asset one might be the answer, but I can see now that it wouldn't be as low maintenance as i'd hoped. I did think that the fact each fund was managed would mean that I could just hold it for 10-15 years.

I am prepared to learn and invest my time to get the best out of my savings, though. I just want to start on the right track.

Would you suggest lumping everything into the VLS80, or splitting it between two multi-asset funds, and possible adding a smaller amount into 'higher risk' funds. Say 40-40-20 split?

BLB53

Suggest core/satellite strategy.

Core VLS 60 for stability then 3 or 4 funds of choice for potential outperformance but be wary of just selecting those which have done well during a bull market. I suggest adding Scottish Mortgage to the possibles...just my two penn'orth fwiw.

Audaxer

larryk wrote: »

Would you suggest lumping everything into the VLS80, or splitting it between two multi-asset funds, and possible adding a smaller amount into 'higher risk' funds. Say 40-40-20 split?

As it's £100k you're investing, I don't think there is anything wrong with splitting it 50/50 between 2 multi asset funds. As others have suggested, I wouldn't bother adding higher risk funds.

sstteeww

Hi larryk,

By choosing actively managed funds, you are effectively saying you know which fund managers are going to beat the market in the future - not only that, but you're willing to pay these fund managers a hefty premium for their FUTURE stellar performance.

I'd argue that you don't know which managers are going to beat the market (I certainly don't!) and you'd be far better off buying VLS80 (or another index fund) and getting the average market return at the lowest possible cost. Over time, the lower cost of index funds will trump superstar mangers that go in and out of vogue. Also VLS80 is a "set it and forget it" fund, you won't have to keep track of hot/cold superstar managers and VLS80 automatically rebalances itself.

If you really have an irresistible itch to try and beat the market, I'd put 90% of your £100k into VLS80 and then use the other 10% to buy individual stocks, gold, bitcoin, lean-hog futures, mortgage-backed securities, funds run by superstar managers, etc etc. (play money). After a year or two you'll realise you can't beat the market, you can then use the small residual of your 10% play money to top up your VLS80 holding slightly.

bostonerimus

Why not just use global equity and bond trackers in a ratio to match your risk tolerance? If you want to overweight sectors like corporate bonds, EM, small cap or maybe UK (if you have a domestic bias) then add those in smaller percentages. Rebalance when your allocations diverge from their spec by +/-5%.