Portfolio Advice

gif1

IanManc wrote: »

To be honest - and I'm not trying to be nasty - I think this is even worse than the allocation you began with.

You're obviously struggling with this decision, so I suggest that you keep things as simple as possible while you're learning about investing.

For a start you ought to be using a stocks and shares ISA.

If you're not using an ISA then using Inc classes of funds rather than Acc is easier for when you need to work out any income tax or capital gains.

If you're in the UK you might want some bias towards UK investments seeing you'll be doing most of your living and spending in sterling, but you might decide you don't.

I am not keen on fixed income investments at present, such as gilts and bonds, because the yields are on their knees compared to historical levels, they've gone up in value alongside equities this time after years of quantitative easing, and I've no confidence that they'll provide the hedge against falling equities that they previously have. They're so overvalued that I think that the only way ahead for them to go is down.

As you want a global spread of investments I suggest you consider a couple of passive global funds such as HSBC FTSE All-World Index class C (which has an OCF of 0.2% and invests in more than 2800 companies worldwide) and Vanguard FTSE Global All Cap Index Class A (which has an OCF of 0.24% and invests in more than 4900 companies worldwide). Both have an emerging market element in their investments. For a UK passive fund I'd suggest that you look at HSBC FTSE ALL Share index Class C (which has an OCF of 0.07% and invests in more than 570 companies).

Hi IanManc, no worries about being nastry, I am after genuine advice and criticism.
Anyway I guess the fundamental question to be answered is whether a selection of an handful (30) equities from all around the world, picked by a professional, would provide enough diversification and risk spreading? Some would say yes, some no, I, basically, don't know.
In yuor view, if I spilt the 40% Fundsmith allocation, as, say 20% Fundsmit and 20% Lindsell Train Global Equity (another selection of 30 global companies, 22% of which are in Japan, by another fund manager), will the outlook of the porfolio look better?
Furthermore, I will be using an ISA, and I am not looking at getting any further exposure to the UK than I already have (job, home, pension, company sharesave schema are all in the UK).
Thank you

rathernot

gif1 wrote: »

Hi IanManc, no worries about being nastry, I am after genuine advice and criticism.
Anyway I guess the fundamental question to be answered is whether a selection of an handful (30) equities from all around the world, picked by a professional, would provide enough diversification and risk spreading? Some would say yes, some no, I, basically, don't know.
In yuor view, if I spilt the 40% Fundsmith allocation, as, say 20% Fundsmit and 20% Lindsell Train Global Equity (another selection of 30 global companies, 22% of which are in Japan, by another fund manager), will the outlook of the porfolio look better?
Furthermore, I will be using an ISA, and I am not looking at getting any further exposure to the UK than I already have (job, home, pension, company sharesave schema are all in the UK).
Thank you

Everyone will have an opinion but I would say if you're drip feeding nothing is set in stone.

Split the monthly contribution three ways between Fundsmith, LT Global, and something you consider acceptably lower risk is another option.

Ultimately there isn't a single "right" way to do it.

capital0ne

Having read this thread, it's all very interesting, everyone has 'an edge' over everyone else and over fund managers.
Ask 10 experts about a certain strategy and you'll get 10 different answers, so read all of the above, and then do what you think suits your needs given the current economic situation. It's that simple really.

sevenhills

gif1 wrote: »

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%

Just looking at

Fundsmith Equity Class I
LF Lindsell Train UK Equity Class D

What does the class I and D mean?

bowlhead99

Funds are often available in different "classes", but the letters for those classes will differ from fund manager to fund manager.

Generally, other than 'Acc' for accumulation version and 'Inc' or 'Dist' for income distribution version, the class codes refer to a different level of management fees or a different level of minimum purchase size, while being exposed to the same basic underlying portfolio of investments.

Just buy the cheapest class available to you on your platform of choice, which might be C or D or I or Z or whatever the manager wants to call it for that particular fund.

GreasyPalms

One thing that puts me off Fundsmith is how much it!!!8217;s grown in size. How big is too big? With over £13 billion now under management, will Terry Smith have to find more and more companies to invest in which he doesn!!!8217;t have as much conviction for?

cogito

GreasyPalms wrote: »

One thing that puts me off Fundsmith is how much it!!!8217;s grown in size. How big is too big? With over £13 billion now under management, will Terry Smith have to find more and more companies to invest in which he doesn!!!8217;t have as much conviction for?

No. Smith has said that even if his fund grows to ten times its size, his holding in each of the 30 or so companies in which he invests would still be less than 1% of their market capitalisation.

bowlhead99

GreasyPalms wrote: »

One thing that puts me off Fundsmith is how much it's grown in size. How big is too big? With over £13 billion now under management, will Terry Smith have to find more and more companies to invest in which he doesn't have as much conviction for?

Investing £13bn in your favourite stocks if you're trying to invest in the small cap space with a maximum company size of £1bn is going to be a tough ask. You just can't get that sort of money deployed in just a few companies as there isn't the space, so you have to cast the net further and wider and dilute your profit potential from what you'd good to achieve.

However, many/most of his favourite ideas are in the 'very big' size range - large and growing brands with a huge international customer base. He's said he expects the fund to have about 20-30 companies making up most of his portfolio from time to time. If you want to put £100-£1000 million into a company you'll really struggle if the whole company is only valued at £100m itself, but if it's valued at £50bn you can probably find enough liquidity to build a position. And as someone who likes to hold for multi-year periods, it's not like he's constantly struggling to sell out and turn over the portfolio contents.

ivormonee

Before any final decisions take a look at some model portfolios to get a few more ideas. There are many you can look at on various platforms. They normally designate them as income or growth orientated and usually split them into a number of risk categories ranging from cautious to "adventurous" or "aggressive" (interesting choice of words; theirs, not mine).

Compare some of those with what you have and, if you're able to, do a couple more things - one, is to backtest just out of interest to see what past performance and volatilty has been like and, two, is to analyse the overall portfolio to get a breakdown of geographies, value v. growth, large cap. v. small cap. If you can do this, and you'll need to set aside a few hours, you'll quite possibly find it an eye opener and also it will give you a lot of insight into helping you make your final choice.

ps. for the analysis parts of my suggestions there may be tools available online that other readers might be able to suggest.

gif1

With regards to the Bond allocation , 30% of the overall portfolio, would you think that the M&G Optimal Income Class I - Accumulation fund is a sensible option? The target would be to have a conservative, low-risk, fund able to mitigate any downturn in the equity market (70% of ptf)
What put me off a bit is the high cost, but I am not sure what else to consider instead.
Thank you for any suggestions.