Building a Low Maintenance Long Term Portfolio

Audaxer

bostonerimus wrote: »

Nobody believes that a "simple cap weighted portfolio provides the best returns" or if they do they are foolish because it's mathematically it's not going to happen. There are thousands and thousands of active portfolios that will beat a cap weighted index portfolio, but also thousands and thousands that won't. It's managing to beat the averages consistently that is the trick. If you go with a cap weighted index portfolio you are deciding that you are ok with the average market performance over the term of your investments, That's what I did back in the late 1980s and it worked out well for me. If people think they can beat the market they would be foolish not to have an active portfolio.....or maybe they are foolish to believe they can beat the market?

The way I now understand it is that a good multi asset fund of passive indexes is likely to do as well or better long term than most active portfolios investing in the same sectors. However active portfolios like Linton's can beat the likes of the VLS100, because he has a more diverse portfolio as he has chosen active funds in sectors not covered by the VLS100, and he has the knowledge and experience to get the right percentages of sectors and sub-sectors in his portfolio.

bostonerimus

Audaxer wrote: »

The way I now understand it is that a good multi asset fund of passive indexes is likely to do as well or better long term than most active portfolios investing in the same sectors. However active portfolios like Linton's can beat the likes of the VLS100, because he has a more diverse portfolio as he has chosen active funds in sectors not covered by the VLS100, and he has the knowledge and experience to get the right percentages of sectors and sub-sectors in his portfolio.

Linton may well be one if those "unicorn investors". But for the regular investor without the time/desire/knowledge to research a market so deeply, or the ones that believe such efforts are probably fruitless over the long term, then a simpler approach has merit.

larryk

It seems most advice here is recommending that I use a multi-asset fund like VLS80.

Should I put my full allocation in there, or split it between two - perhaps the Royal London Sustainable World Trust? Or even add an index tracker?

Alexland

larryk wrote: »

It seems most advice here is recommending that I use a multi-asset fund like VLS80.

Should I put my full allocation in there, or split it between two - perhaps the Royal London Sustainable World Trust? Or even add an index tracker?

VLS80, HSBC GS Dynamic, Blackrock Consensus 85 and L&G MI 7 are all good adventurous multi asset funds and there's nothing wrong with putting all your investments in one of them for a volatile ride with a pretty average but most likely long term positive outcome. They are a really good place to start and you shouldn't go too far adrift provided you don't make the mistake of selling when markets are low.

However a mostly passive approach might not give the best outcome so some of us like to do a bit of both. I tend to run our Pensions and LISAs as mostly passive (but with fundamental asset allocation decisions) and the ISA and unwrapped investments in more active funds and trusts (keeping an eye on fundamentals) in search of a higher return.

Alex

Thrugelmir

larryk wrote: »

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.

Then you should do some more reading first. The aim of having a diversified portfolio is minimise losses. Not to maximise gains. As no one can predict which sector will perform best over any future period of time. A diversified portfolio however will produce positive returns longer term. If rebalanced on a regular but infrequent basis. The tortoise ultimately beats the hare.

dunstonh

The clue is in the name. Multi-asset means they are investing in a spread of assets. The spread is not random. Every single multi-asset fund/mixed equity fund is built to follow a defined strategy. That strategy may be return focused or risk targetted but it has a structure. If you start adding single sector funds then you are breaking that structure. And effectively saying that you think you are better than the fund house/manager.

If you think are you better, then add more funds. An experienced investor may well think so and will often do better. An inexperienced investor is more likely to get it wrong though.

Audaxer

larryk wrote: »

It seems most advice here is recommending that I use a multi-asset fund like VLS80.

Should I put my full allocation in there, or split it between two - perhaps the Royal London Sustainable World Trust? Or even add an index tracker?

In my view there is nothing wrong with splitting a large investment between 2 multi asset funds, and nothing wrong with one of them being an active multi asset fund like the one you have mentioned above. Another active multi asset fund that I like the look of, as it has a good long term track record and has a low OCF, is the Baillie Gifford Managed B fund, so that may be one worth researching and considering.