Easy two fund portfolio

henryandmay

Hi

I want to start investing £300 per month into an S&S isa as I have now exhausted all bank and saving account options ( nationwide, tesco etc).

To keep things simple and cost down, I want to only invest in two index funds.
My thinking is;
70% in a world index fund ex UK
30% in a FTSE all share index fund

My appetite to risk is 4/5 so medium to high as my outlook is 10 to 15 years.

Would you say the above sounds ok?

Thanks

geeovana

Why would you want to skew your portfolio 30% towards the UK, when in reality the UK makes up only around 6% of the total global market cap?

henryandmay

geeovana wrote: »

Why would you want to skew your portfolio 30% towards the UK, when in reality the UK makes up only around 6% of the total global market cap?

Home bias I guess. so go 6% into FTSE?

eskbanker

Why not just go for one low-cost global multi-asset fund?

henryandmay

eskbanker wrote: »

Why not just go for one low-cost global multi-asset fund?

Ok. Please can you provide further info and a suggestion on funds?

geeovana

eskbanker wrote: »

Why not just go for one low-cost global multi-asset fund?

As above. A quick search on here should show multiple posts on the same subject.


Funds such as the FTSE Global All-Cap Index etc. There are many alternative so do a little research. You won't have to worry about re-balancing this way either.

geeovana

Your also missing a vital ingredient - Bonds.


To what extent and at what point you add these to your portfolio is up for debate. There will be some much wiser investors along soon with more information.

eskbanker

henryandmay wrote: »

Ok. Please can you provide further info and a suggestion on funds?

The most frequently suggested options on here are typically Vanguard LifeStrategy, HSBC Global Strategy, L&G Multi-Index and Blackrock Consensus, but others are available.

This recent thread goes into a bit more detail: https://forums.moneysavingexpert.com/discussion/5879942/multi-asset-funds-differences

aroominyork

henryandmay wrote: »

Home bias I guess. so go 6% into FTSE?

There is nothing wrong with home bias. It is absolutely your choice. Most IFAs will invest for their clients with a home bias, and Vanguard LifeStrategy - one of the most popular index funds - is 22% UK. Vanguard's All Cap is 6% UK. You pays your money and you takes your choice.

geeovana

aroominyork wrote: »

There is nothing wrong with home bias. It is absolutely your choice. Most IFAs will invest for their clients with a home bias, and Vanguard LifeStrategy - one of the most popular index funds - is 22% UK. Vanguard's All Cap is 6% UK. You pays your money and you takes your choice.

Is this not a little misleading? The OP clearly doesn't have a lot of insight and I was trying to steer them towards an understanding of global market capitalisation. What benefit would a home bias of 30% give? Perhaps reduced volatility due to currency fluctuation, however they should really be understanding why they want a home bias, rather than just on a whim because its their money.

System

aroominyork wrote: »

There is nothing wrong with home bias.

Home bias reduces the benefits from global diversification:
https://en.wikipedia.org/wiki/Equity_home_bias_puzzle