Update - Anyone see any issues with this portfolio?

Prism

JohnRo wrote: »

They're not immune to buying good, bad and indifferent companies.

On a number of different criteria then thats pretty much all they do - buy recognised proven good companies. Sure, companies can change under different times and management but they don't usually go from good to bad overnight. That doesn't mean that they will provide better stock returns but it certainly increases the odds I would say. As an example, the equites the Fundsmith invested in only dropped 12% total during the financial crisis compared to about -35% for the FTSE world index. I don't have any stats on Lindsell Train global but I guess they are similar.

Its certainly not the only way to invest and misses all the gains you could make from smaller companies but I prefer their chances vs a global tracker any day.

ivormonee

Prism wrote: »

Sure, companies can change under different times and management but they don't usually go from good to bad overnight

I think they do. BT was doing great and then there were some scandals and the shares lost half their value. Facebook lost a chunk of its value recently due to some data breach issues. Toys-R-Us went bust unexpectedly as did I think Matalan. Companies do get hit suddenly with bad and/ or unexpected issues and they can lose a lot of share value. Active fund managers invest in these companies just like others they deem suitable investments as they don't see it coming, just like the rest of us don't.

ColdIron

FIRSTTIMER wrote: »

Thanks for this - I was going to do all Vangaurd 80 but decided to split it for the first few years then I may transfer it all into vanguard 80 in say 5+ years.

Most people would do this the other way around

Prism

ivormonee wrote: »

I think they do. BT was doing great and then there were some scandals and the shares lost half their value. Facebook lost a chunk of its value recently due to some data breach issues. Toys-R-Us went bust unexpectedly as did I think Matalan. Companies do get hit suddenly with bad and/ or unexpected issues and they can lose a lot of share value. Active fund managers invest in these companies just like others they deem suitable investments as they don't see it coming, just like the rest of us don't.

Its all open to opinion however was Toys-R-Us a good company as far as stock market returns are concerned? They have been struggling and issuing profit warnings for years.

Are BT a good company? You could compare them to Unilever which both FS and LT hold. BT certainly is cheap at PE 9, and I guess can just about cover their dividend at 1.25x but don't find it very easy to make cash with a pretty poor ROCE of 7.5%. Whereas Unilever is more expensive at PE 18 but has better dividend cover at 1.8% and a much larger ROCE of 22%.

Now there are many more stats you could look at but I don't think that you would find many people that would say that BT is as good a company as Unilever. So many value investors will look at the price of BT, and hope that something they do in the future will triple their profits to be up there with Unilever. Those same investors will likely sell out at that point and look for the next deal - thats hard I reckon (value investing)

All that FS and LT do is watch the companies that have year after year of good results, make sure they are not particularily reliant on the strength of the rest of the economy, and then buy and hold them for as long as the returns (and future) hold out. At times they will make mistakes and buy late or sell early.

Both types (and blends) work of course but when a crash hits I would rather be in expensive quality than hopeful recovery equities. I am indifferent to index funds as of course they capture it all

cogito

IanManc wrote: »

And all that shows is that the time to buy them was five years ago.

So lets come back in 2023 and see how they compare.

ValiantSon

cogito wrote: »

At 34 years of age investing for the long term, I'd want to be 100% in equities. If you look at the performance of the underlying bond funds, it's pretty mediocre.

The Vanguard fund is a fund of funds so you have two levels of charges on the main fund and the underlying funds. It's still fairly cheap but that doesn't mean it's good value. I'd rather pay a bit more to an outstanding manager like Terry Smith or Nick Train to buy first class companies rather than a mix of good, bad and indifferent.

You can't really compare Fundsmith or Lindsell Train to Vanguard LifeStrategy (or any other multi-asset fund) as they are quite different, both in terms of their approach and the diversity they offer. This is in no way to knock either of those funds, but simply that a multi-asset tracker is a very different kind of fund and one which, in my view, is a better proposition for a first time investor to begin building their portfolio with.

I find it difficult to see how Vanguard LifeStrategy isn't good value. Yes, you will pay fractionally more than if you bought all of the underlying ETFs separately, but the marginal extra cost saves you from having to do all the rebalancing and, on small sums (which is what we are dealing with here) gives you immediate access to them all, which you wouldn't have by buying them separately. If you are comparing it cost wise to the aforementioned Fundsmith or Lindsell Train Global Equity then it's worth pointing out that the VLS funds have an OCF of 0.22% (and will bought on a platform charging 0.15%), whereas Fundsmith has an OCF of 1.05% and Lindsell Train is 0.74% (and the minimum platform fee would be 0.25%). The funds you recommend are a lot more expensive. Of course, cost isn't everything, but for a first time investor who has limited sums to invest, I'm not convinced that the cost of these funds (and their limited diversity) make them a god choice. Once the OP has built up a more sizeable pot then they may be of interest.

ValiantSon

FIRSTTIMER wrote: »

LISA
£250 a month using HL Platform - £125 in Blackrock Consensus 85 and £125 in HSBC Global Strategy Dynamic. I will top this up at the end of every year by £1000.

What's the thinking behind splitting the LISA between HSBC and Blackrock? I'd pick one and stick with it for some time. Given the discount on the Blackrock fund with HL then I'd go for that.

FIRSTTIMER wrote: »

Thanks for this - I was going to do all Vangaurd 80 but decided to split it for the first few years then I may transfer it all into vanguard 80 in say 5+ years.

I don't understand why you would increase your exposure to equities at a later point in time, most people would look to decrease their exposure over time.

ValiantSon

bowlhead99 wrote: »

Once you have been going for a couple of years your LISA(gross of bonus) may be at £10k, or more with growth. And hopefully throughout that third year you'll be taking it up to £15k or more. At that point you'll find that the HL platform fees at 0.45% of the £10-15k is a relatively steep £45-£75 annual charge, which is more expensive than paying AJBell Youinvest platform fees at 0.25% of the £10-15k (only £25-£37.50) and paying their 12x £1.50 monthly dealing fees.

HL have a heavily discounted OCF for Blackrock Consensus, so they are a more practical suggestion than AJ Bell, with regular investments, for quite some time.

cogito

ValiantSon wrote: »

You can't really compare Fundsmith or Lindsell Train to Vanguard LifeStrategy (or any other multi-asset fund) as they are quite different, both in terms of their approach and the diversity they offer. This is in no way to knock either of those funds, but simply that a multi-asset tracker is a very different kind of fund and one which, in my view, is a better proposition for a first time investor to begin building their portfolio with.

I find it difficult to see how Vanguard LifeStrategy isn't good value. Yes, you will pay fractionally more than if you bought all of the underlying ETFs separately, but the marginal extra cost saves you from having to do all the rebalancing and, on small sums (which is what we are dealing with here) gives you immediate access to them all, which you wouldn't have by buying them separately. If you are comparing it cost wise to the aforementioned Fundsmith or Lindsell Train Global Equity then it's worth pointing out that the VLS funds have an OCF of 0.22% (and will bought on a platform charging 0.15%), whereas Fundsmith has an OCF of 1.05% and Lindsell Train is 0.74% (and the minimum platform fee would be 0.25%). The funds you recommend are a lot more expensive. Of course, cost isn't everything, but for a first time investor who has limited sums to invest, I'm not convinced that the cost of these funds (and their limited diversity) make them a god choice. Once the OP has built up a more sizeable pot then they may be of interest.

I wouldn't disagree with any of that and think that I pretty much said the same thing in my earlier posts.

I was in a similar position to FIRSTTIMER many years ago and my biggest regret was putting my money into a managed fund on the advice of my IFA. Its performance was pretty indifferent and I eventually came to realise that I had to take more interest and learn about investment stategies and how to make my money work harder for me. Had I put what I learned into practice at an earlier age, I would be much more wealthy than I am today.

bowlhead99

ValiantSon wrote: »

HL have a heavily discounted OCF for Blackrock Consensus, so they are a more practical suggestion than AJ Bell, with regular investments, for quite some time.

The Blackrock fund is cheaper by 0.13% at HL so if that money is being saved on half the assets in the LISA it will reduce the cost of using HL by between £6.50 and £9.75 versus the figures I was presenting for HL vs AJ Bell for a LISA in the £10-£15k range gross of bonus (i.e. year 3 of running the LISA).

So as I suggested HL are probably cheapest and easiest for now with AJ Bell taking over by the time you've done 3 years of maxing the ISA (assuming your funds are worth at least what you paid for them and haven't dropped in value). HL being totally based on your asset value will be cheap if we get a nice big stockmarket dip and the assets have a low value, even though you won't be happy with the value at the time