Portfolio Advice

gif1

Hi all, I am trying to set up a portfolio for my OH, drip-feeding every month between 500 and 1000£. The desired allocation is 70 equity/30 bond, with a global/all world exposure. I have come up with the following allocatios:

• Fundsmith Equity I Acc 40.0%
• Vanguard Emerging Markets Stock Index Acc GBP 10.0%
• Vanguard LifeStrategy 40% Equity A Acc 50.0%

Being the fundsmith fund very concentrated (28 holdings), can this be an issue in giving global exposure? Or, is it ok to a get such exposure via a "good" equity sample picked from the different global regions?
Is the unavoidable overlap between the equity portinon of the Lifestyle with the other two funds a problem?
I am aware of the higher costs ot the fundsmith (active) fund.
Any othert suggestions/ issues that you might spot is more than welcome.
Thank you in advance

Prism

It is reckoned that you can get a good level of diversification from a range of between 20 - 30 stocks so with Fundsmith plus the other two funds you are probably covered. Be aware that Fundsmith does not invest in certain sectors like financials (banks) and cyclicals or property. I personally see that as a benefit rather than a problem but its something to consider. The only area that you are light on is developed Asia and Japan. Again, if that bothers you, index trackers for that region can help, or if you want something similar to Fundsmith but in Japan have a look at Lindsell Train Japan.

rathernot

If you want something similar to Fundsmith but with greater global exposure maybe look at Lindsell Train Global Equity.

pip895

You are light on asia and small company but you could look to cover these a little later once you have a larger pot of money to play with.

A_T

Other than the fact he's done well in the short time of it's existence what are the other reasons for putting such a large proportion in Terry Smith's fund?

Prism

A_T wrote: »

Other than the fact he's done well in the short time of it's existence what are the other reasons for putting such a large proportion in Terry Smith's fund?

Thats kind of the point of a global fund. It means you don't have to try and select a bunch of regional funds to get a good core allocation.

gif1

Thank you all for your answers.
The reason for picking up Fundsmith is to gain global exposure by market cap via a well performing fund.
I appreaciate the suggestions about being light on Japan and ASIA, I will look into that now. Anyway I am not sure about the Lindsell Train funds as they seem to be Income while I am after Accumulation. Any other alterantive for covering those two areas?

Alexland

I agree the Lindsell Train Global Equity portfolio is preferable to Fundsmith Equity fund and the strategy is more likely to endure and adapt to changing market conditions. Also if you invest with HL they offer a discounted LT unit class and you can reinvest income for no extra cost.

A_T

Prism wrote: »

Thats kind of the point of a global fund. It means you don't have to try and select a bunch of regional funds to get a good core allocation.

It may invest globally but it lacks diversity - nearly 80% in US and UK. And only 30 holdings - one of the top 10 is now Facebook which Smith ploughed into just before it dropped. I've got some Fundsmith but more than half the equity allocation of a portfolio is way too high in my opinion.

bostonerimus

70% Global Equity (eg Vanguard Global Equity Index)
30% Global Bonds (eg Vanguard Global Bond Index)

Drip feed and rebalance when necessary

Why does this need to be difficult?

Lungboy

Free

bostonerimus wrote: »

70% Global Equity (eg Vanguard Global Equity Index)
30% Global Bonds (eg Vanguard Global Bond Index)

Drip feed and rebalance when necessary

Why does this need to be difficult?

I've asked about global bonds in this forum before and the consensus was to keep them UK, and that with bonds, active is often better than passive due to the way they work vs equities.