Vanguard Life Strategy v HSBC Global Strategy Dynamic Portfolio v Fundsmith Equity

needhouseadvice

bowlhead99 wrote: »

Well, with many fund-supermarket type platforms you can invest in one ISA and hold multiple funds within that ISA - the ISA itself is just an account number, like a shopping basket into which you put the funds. But you are right that when you are only investing a relatively small amount compared to your entire lifetime earnings, it is probably not going to be a grievous mistake to buy one or the other rather than doing £1000 each in all three.

Oh, I didn't realise that you could take out different ones via the same platform! Thanks for making that clear.

needhouseadvice

rangers_fc wrote: »

Really we are all gamblers its a question of how much you are prepared to gamble. equities i.e shares over the longer term outweighs banks. However you have to accept investments may fall as well as rise. So pick a globally managed fund such as VLS or HSBC Global Strategy Dynamic Portfolio and expect volatility. It is likely you will profit if you hold the funds for a extended period , more than 5 years

Sorry if this is a stupid question but is there a chance I could lose all the money I put in any of these? I guess Fundsmith if it is 100% equities? I'm prepared for my investment to drop in value but that's fine as I'm in it for the long game.

rangers_fc

The other key issue you need to consider is cost, something that has illuded me in the past if you intend to make regular or a small contribution into share save schemes check out snowmans spread sheet on site. The issue is 1 size dosent fit all so you need to consider how you will contribute moving forward, and what platform is best for you

rangers_fc

You may see a 40% drop, you need to accept that but be prepared to weather the storm, however longer term larger funds are likely to rise

bowlhead99

economic wrote: »

How do comments like this even help?

You seriously wonder how it "even helps" ??

The OP is a self-confessed "complete novice to investing" and is contemplating whether to invest in a concentrated portfolio of 20-30 stocks fancied by Terry Smith (Fundsmith) who had caught their eye with impressive returns over the bull market throughout which it has been in existence; or an internationally diversified portfolio of thousands of stocks and bonds issued by global companies and governments (HSBC Global Dynamic or Vanguard LS80).

In response, Thrugelmir suggests that the aim should be to build a diversified portfolio. Select a fund that gives you the widest possible exposure, to create a solid foundation for the future. He observes that no single fund or strategy is always going to be best over an extended period of time.

That advice, which is generally sound (depending on the person's objectives) would generally lead the person to select one of the HSBC or Vanguard diversified international multi asset funds to be the core of their portfolio, rather than a single specialist fund such as Smith's.

What!!!8217;s the point of as much diversification as possible? Own a tiny amount of everything that can be bought? You would be buying a lot of crap in that case!!

There are no doubt a lot of crap companies in the US market and in the wider world market, yet you were telling us the other day that 45% of your shares portfolio was in US and global tracker funds, which will give you exposure to all those crap companies, and then you have another 30% of your portfolio where you use multiple active fund managers to select the stocks they like. So, you are hardly shy of diversification.

With no disrespect intended, it sounds like Thrugelmir who has decades of experience is making some sensible comments which the OP could use as part of their consideration of what type of fund they might like to buy; while you are a wealthy youngster who can afford to gamble on individual stocks so you are poo-poohing those comments and dissuading the OP from being very broadly diversified by saying they should just invest in things which are not crap investments (without offering any advice on how that is best achieved). Meanwhile you are glossing over the fact that you have previously told us that a quarter of your pension and one of your largest ISA holdings is actually just a global equity tracker because you don't know really what companies will do best and it is good to get cheap diversified exposure.

I'd suggest Thrugelmir's comments would be worthy of consideration by the OP - and your proclamation that you can't see there is even a point in him making such comments might be attributable to it being late at night on a bank holiday weekend with no work in the morning so you've been on the sauce?

bowlhead99

needhouseadvice wrote: »

Sorry if this is a stupid question but is there a chance I could lose all the money I put in any of these? I guess Fundsmith if it is 100% equities? I'm prepared for my investment to drop in value but that's fine as I'm in it for the long game.

It's unlikely you would lose all the money you put into the fund because it's not like you are buying one single company which could go bust ; Fundsmith holds 20-30 companies so for you to lose all your money, most of them would have to fail and the fund's investors be scrambling for the exit; given most of them are well known international brands, that's unlikely.

As you mention, your investment can and will drop in value from time to time, so it wouldn't be implausible for Fundsmith - where the money is spread over a few tens of companies but relatively concentrated in where it puts its money compared to other funds available - to drop 50% from its peak during a market crash. If you leave it long enough to go back up again, you won't have actually lost anything (apart from access to the money to do something else with it until it's back up to a value that you find acceptable). Though if you get scared that your £3000 is now only £1500, or your £4000 is now only £2000 etc and cash out, you will have literally lost that £1500 or £2000 from what you could have had at the peak of the market.

cogito

The question for me is whether my equity holdings should be in a range of businesses in a tracker or in the best companies in the world regardless of their location. Trackers can be misleading. As an example, Nestle is regarded as a Swiss company because it has its headquarters there but 98% of its sales are in other countries. A UK tracker will give you a bundle of shares including many companies which simply list in the UK but have little business there.

After a lot of research, I put most of my money in Fundsmith, Lindsell Train Global Equity and Lindsell Train UK, each of which has a similar philosophy. A plus for me is that the managers invest their own money in their funds.

I also hold REITs for property exposure, enough cash to cover my income needs for a couple of years but haven't touched bonds with a bargepole for years. Return free risk - no thanks.

Here's an interesting read from Terry Smith. Well worth ten minutes of your life.

https://www.fundsmith.co.uk/docs/default-source/analysis---annual-letters/annual-letter-to-shareholders-2017.pdf

rathernot

The difficulty with your question as you'll see on this thread is that there isn't a right or wrong answer (else we'd all be doing the same thing) but simply different strategies.

Some are proponents of buying trackers which are effectively a little slice of everything with bonds to give you some "balance" to the equities.

Some are proponents of buying funds that invest in quality companies (Fundsmith) in the belief it give them an edge.

I've had the same dilemma recently and went with the latter option because when I read/listen/watch to the likes of Terry Smith and Nick Train it makes more sense to me personally than knowing 20% of my equities is invested in financials simply because that's what "the market" has.

Keep in mind you don't have to put the whole amount in your ISA into a single fund, so for example there's nothing to stop you putting 50% into Fundsmith and 50% into Vanguard LifeStrategy or any other combination you choose (those are made up examples).

Remember too, very importantly, that so far as ISA deadlines for this year you only have to open it and get the cash in, you don't have to invest by the deadline, though this won't be an issue if you're not likely to want to max out the £20k allowance next year.

I'd go and watch Fundsmith's AGM and read their letter and "owners manual" and then go do the same for some other similar funds.

oz0707

With all the comments saying small amounts not worth splitting - isn't this wrong?

It's all specific to the individual and if they are only comfortable with investing "x" then what would it matter if 50% was in one fund and 50% in another. The amount may seem small to some but this isn't important. 100k, 10k or 1k it's all relative. It may even help to educate the investor how different funds perform in different market conditions?!

Prism

oz0707 wrote: »

With all the comments saying small amounts not worth splitting - isn't this wrong?

It's all specific to the individual and if they are only comfortable with investing "x" then what would it matter if 50% was in one fund and 50% in another. The amount may seem small to some but this isn't important. 100k, 10k or 1k it's all relative. It may even help to educate the investor how different funds perform in different market conditions?!

I don't think there is any problem with having multiple global funds as long as there aren't so many that you end up with basically the index but with higher fees assuming you include some active funds.

Also some platforms charge per investment so it could cost three times the amount in purchase charges to invest in three funds. If this was a monthly payment then those charges could add up