At what stage to you diversify?

AimHigh

Afternoon all,

I've had various regular savers/CAs etc mature which means I want to move a chunk of money into my S&S ISA (only about £4000).

I'm currently only in VLS 80 as my total investments are very low (low 5 digits). I don't yet know anywhere near enough to justify picking individual funds etc so am happy to carry on using VLS 80 until I'm comfortable enough to start diversifying across individual funds.

So my question is - is there any point in diversifying across multi-asset trackers? Should I just throw this extra £4000 into my VLS fund or is it worth putting it in a second tracker like the BlackRock Consensus 85 fund? (I'm with HL so they are at a discount). Given these are small amounts I don't know whether it's worth it?

And I guess my follow up question is whether I should do it in a lump sum or drip feed? I've read that lump sums have historically performed better through time in the market but I'm very conscious that a correction could be right round the corner so not sure whether it's worth drip feeding instead. Still, completely appreciate we have no idea when it will actually be so acknowledge the standard arguments of "what if it goes up by 10% before it drops" etc.

AH

bostonerimus

I'd invest the lump sum in one go and then commit to investing something every month......so do both, drip and lump sum.

Whether you stick with VLS80 or go with BlackRock won't make much difference. If you want to reduce fees or you have some problem with the asset allocation in your multi-asset fund you could look at some individual trackers, but frankly you don't need to go out looking for complications however large your portfolio. I have a fairly large portfolio and most of it is in just three tracker funds, US equity, Global equity and US bonds (I live in the US). It's given solid returns for the last 30 years and I don't plan on changing it much.

Prism

I don't think there is a single best time to do it. Its basically when the job and cost of rebalancing funds is worth it compared to the total amount. One of my SIPPS is with a provider which doesn't charge for fund changes but another does.

I first did it when I hit £100k. Up till then I was happy with a multi asset fund. I get paid quarterly so I drip feed quarterly. It to be monthly. If I get a lump sum for any reason I invest it at once. A correction or crash could be years or minutes away

AimHigh

Thanks both - think I'll go with the lump sum option then.

Still not to sure whether to go BlackRock or VLS though. A follow up question though, what exactly is the difference between the 'Class I' and 'Inclusive - Class A' versions of the BR Consensus 85 fund please? Believe it's something to do with voting rights? Does it really matter which one I go for?

AH

Prism

AimHigh wrote: »

Thanks both - think I'll go with the lump sum option then.

Still not to sure whether to go BlackRock or VLS though. A follow up question though, what exactly is the difference between the 'Class I' and 'Inclusive - Class A' versions of the BR Consensus 85 fund please? Believe it's something to do with voting rights? Does it really matter which one I go for?

AH

Are you with HL? Its seems that the Class A is more expensive normally but HL discount it to the same charge as the Class I of 0.09%. I don't know if HL ever drop the discounts on existing funds. I might play it safe and go for the Class I

AimHigh

Prism wrote: »

Are you with HL? Its seems that the Class A is more expensive normally but HL discount it to the same charge as the Class I of 0.09%. I don't know if HL ever drop the discounts on existing funds. I might play it safe and go for the Class I

I am, yes. I also don't know the answer to that discounts question so will take the advice - thanks again Prism.

grey_gym_sock

it makes it simpler if you go for the clean class (class I, in this case). because with class A, the discount arrives monthly in cash (called 'loyalty bonus'), which has to be used to buy more units. and there is a screen on HL's site where you have some control about which fund the loyalty bonus is reinvested in and when. so it's all more complication ...

AimHigh

grey_gym_sock wrote: »

it makes it simpler if you go for the clean class (class I, in this case). because with class A, the discount arrives monthly in cash (called 'loyalty bonus'), which has to be used to buy more units. and there is a screen on HL's site where you have some control about which fund the loyalty bonus is reinvested in and when. so it's all more complication ...

Ahhh I see, thanks for the explanation :beer:

george4064

grey_gym_sock wrote: »

it makes it simpler if you go for the clean class (class I, in this case). because with class A, the discount arrives monthly in cash (called 'loyalty bonus'), which has to be used to buy more units. and there is a screen on HL's site where you have some control about which fund the loyalty bonus is reinvested in and when. so it's all more complication ...

Second this, was just about to post this myself.

bostonerimus

Yes keep it "clean"

You are well diversified with either VLS80 or BlackRock Consensus 85. You might look at your cash levels or real estate as your portfolio grows

Alexland

AimHigh wrote: »

I'm currently only in VLS 80 as my total investments are very low (low 5 digits). I don't yet know anywhere near enough to justify picking individual funds etc so am happy to carry on using VLS 80 until I'm comfortable enough to start diversifying across individual funds

Frankly unless you are worried about going seriously above FSCS compensation limits (in which case worry about both the fund manager and platform) there is no point going with multiple multi asset fund managers in the same account when they are offering such similar products.

As such one fund per account should be fine and in the case of HL then Blackrock Consensus 85 would be preferable to VLS80 due to the discounted fee class - if you are ok with the slightly higher equities exposure volatility.

Save your Vanguard fund manager exposure for another investment account.

Or move your whole S&S ISA over to Vanguard Investor and invest in VLS80 for even lower total fees.

Alex