How Many funds are too many?

Chrism03

Hi All,

I've recently come into some money that I will be using to pay for an early retirement. I have chosen the funds below to make a start in a S&S ISA. The money going into these will not be needed for at least a decade.

Vanguard LifeStrategy 40% Equity
Fidelity Moneybuilder Income Inclusive - Class A
Baillie Gifford American Class B
HL Multi-Manager Balanced Managed Trust Class A
Legal & General All Stocks Gilt Index Trust Class C

I am quite risk adverse but understand the need for a balanced portfolio and a long term view..

Any comments gratefully received. Should I be looking further afield at funds or are these 5 enough to be starting with?

davidquizer

Hi, you haven't got too many funds there and you have quite a good spread. I would have added 2 global funds, Lindsell Global Equity and Sottish Mortgage Investment trust which are superbly run. They are classed as high risk but the returns over 5 years are excellent.
David

masonic

You are in effect holding 26 underlying funds through your investment in the HL fund of funds. That's already too many funds IMHO, and a rather expensive way of getting exposure to them

Do you have a reason for wanting more exposure to US equities than you are getting from your two multi asset funds? Likewise for bonds (for which you've chosen two extra funds)

I think you should be looking at simplifying as there is lots of overlap in your current holdings.

dunstonh

Baillie Gifford American Class B - one of the highest risk US equity funds in its sector.
HL Multi-Manager Balanced Managed Trust Class A - a cash cow for HL.

Fidelity Moneybuilder Income Inclusive - Class A & Legal & General All Stocks Gilt Index Trust Class C - How do these fit with the multi-asset funds?

I am quite risk adverse but understand the need for a balanced portfolio and a long term view..

Your fund selection doesn't match that description. The spread doesnt appear to be that balanced.

Should I be looking further afield at funds or are these 5 enough to be starting with?

You dont mention the amount you have invested. This is important.

You have mixed and matched single sector funds with mutli-asset funds. Yet there is no obvious strategy in place. So, what is your strategy?

You obviously do not mind paying charges. Your spread is likely to be higher cost than an IFA serviced portfolio. The point of DIY is to be cheaper not more expensive.

I would have added 2 global funds, Lindsell Global Equity and Sottish Mortgage Investment trust which are superbly run.

Did you not spot the comment about risk?

eskbanker

dunstonh wrote: »

You dont mention the amount you have invested. This is important.

£500K, according to https://forums.moneysavingexpert.com/discussion/5936903/500-000-and-5-years

Chrism03

Thanks for the response

dunstonh wrote: »

Baillie Gifford American Class B - one of the highest risk US equity funds in its sector.

I like the look of the underlying stocks

HL Multi-Manager Balanced Managed Trust Class A - a cash cow for HL.

Should I drop this and put more towards the Vanguard LifeStrategy fund to avoid HL charges?

Fidelity Moneybuilder Income Inclusive - Class A & Legal & General All Stocks Gilt Index Trust Class C - How do these fit with the multi-asset funds?

I believe that these are a lower risk than the multi-asset funds?

Your fund selection doesn't match that description. The spread doesn't appear to be that balanced.

Whats missing to help balance?

You dont mention the amount you have invested. This is important.

I've set it going for £1000 per month heavily weighted towards Vantage (£600), but come April it will be the full ISA allowance per annum for the foreseeable (possibly 15 years)

You have mixed and matched single sector funds with mutli-asset funds. Yet there is no obvious strategy in place. So, what is your strategy?

Drip feed the maximum I can and don't touch for at least 15 years.

You obviously do not mind paying charges. Your spread is likely to be higher cost than an IFA serviced portfolio. The point of DIY is to be cheaper not more expensive.

An IFA may be on the cards

Chrism03

eskbanker wrote: »

£500K, according to https://forums.moneysavingexpert.com/discussion/5936903/500-000-and-5-years

Yep here's to the gentle slide into pipe and slippers :beer:

dunstonh

Whats missing to help balance?

What asset allocation model are you working to achieve? I cant see an obvious one from your selection. Or is it all b it random? (be honest, if it is)

I've set it going for £1000 per month heavily weighted towards Vantage (£600), but come April it will be the full ISA allowance per annum for the foreseeable (possibly 15 years)

If its £1000 pm (and not £500k) then you only need one multi-asset fund.

I like the look of the underlying stocks

Your spread overall doesnt quite fit your risk profile as you call it. You may like it but do you accept the volatility that goes with it? I like it too as a fund. However, on portfolios I have included it, I have had to adjust the weightings in other areas to counter the increased risk. As the US is unlikely to be the best area in the next cycle, is it worth doing that? (I said no on my portfolios but that is just my opinion).

bostonerimus

You probably have a poorly designed portfolio if you are buying numerous current high flyers and you have too many funds if you can't easily track the asset allocation and take action without the need of a spreadsheet.

The OP gives a list of funds without allocation percentages or the size of the portfolio so it's difficult to comment sensibly.

redpete

Chrism03 wrote: »

Any comments gratefully received. Should I be looking further afield at funds or are these 5 enough to be starting with?

Several steps before considering a list of a few specific funs.

How long is long term for you? How flexible will you be in when you want or need to withdraw the investment?

What balance do you want between stocks, bonds or other classes of investment (property, precious metals...)?

Do you want potentially higher return and higher risk from managed funds vs tracker funds?

How much diversification do you want across sectors or geography?

If you favour trackers then, once you have the geographical spread you want, then little point in duplicating with different providers.

I'd maybe start with a core fund like the one of the VLS range then a small number of extras to get the balance you want (e.g. one each of US, Euro, Far East, Emerging Markets, Small Cap and Property) to get the overall balance you've decided on.

Your current choice does look somewhat random.

Herbalus

I tend to work on the n+1 principle in most things I become enthusiastic about, where n+1 is the optimal number of objects, and n is amount of objects I already have.

The n+1 principle is tempting in funds, because there is always a little bit of something extra that could spice things up a bit. It's how I ended up with an overflowing shed, and why an all-you-can-eat Chinese buffet results in a mishmash of everything crammed onto one plate. A hard motion to suppress, but ultimately not the best course of action.

I followed the n+1 theory tonight, where n is the number of glasses of red wine I've had, and n+1 is how many I would like. I shall pay for it tomorrow.