Investment Portfolio Sense Check

lonewolf123

Alexland wrote: »

Sure you need to go to the party and get invested taking an appropriate level of risk but it takes some judgement on how the party's going before you strip off and start singing Bon Jovi to everyone. Sometimes it's totally appropriate and at other times you hold back a bit. You can still have a good time without losing your skin.

On the other point remember that US companies are very successful and operate globally.

Alex

Yes point taken that some sense is needed and need to consider the current market cycle.

Prism

lonewolf123 wrote: »

Yes point taken that some sense is needed and need to consider the current market cycle.

Another way to look at it is not to pay any attention to the market cycle, or politics, or current prices or trade worries. Just invest with a balanced approach for the long term and ignore all the noise.

Wildsound

Looks fine to me. What assets/funds have you used to come to this portfolio and what sort of monetary figures are we talking? That's usually a hot discussion point. Having a portfolio of 100 individual global stocks might look great on a portfolio scan, but when you come to actually implement it with just a few £thousand, then it's a terrible approach. I gather you already know this though.

bostonerimus

This strikes me as another navel gazing thread. The OP gives no detail of the actual portfolio so it's impossible to comment with any specificity, but owning a single global equity fund will work for the OP's needs. I'd worry far more about the level of regular saving than whether you have 40% or 60% in US equity.

Linton

lonewolf123 wrote: »

I mean stock sector allocation I completely agree with you, they can mess around with the numbers and jumble things around for presentation and there is little benefit for the average investor to try and get a good split between everything.

What I was more concerned about with your comment on just one fund was the fact that close to 60% of your holding will be in the US compared to my 40% if you buy that one HSBC fund.

Now everyone is different and 60% in the US to you may seem balanced but for me that is just too high and you kinda disregard the Euro and Pacific markets a little especially if trying to reduce risk by building a global balanced portfolio.

I agree with 60% US being too high for comfort as it seems to me to present a threat to diversification. A major US event could have a disproprtionate effect on the portfolio. My other reasons for preferring to grow my own allocation include being able to control excessive exuberance in particular sectors such as tech and finance and to have a higher % of small companies. It is easier to do this with a few well chosen focussed funds than to try to tweak a core fund by surrounding it with smaller holdings. Reducing the US allocation of a core fund being particularly difficult since one would need separate funds covering everything other than the US. In that case one might as well go for a US fund as well.



An important factor could be psychological. For me, if one is investing say 30% of ones worldly assets in a higher risk 100% equity portfolio it is important to feel one has some level of control.

Linton

Alexland wrote: »

I'm unconvinced there is any clear advantage to trying to make the tables look neater over a market cap lead approach. For example if they came up with a new analysis method that merged the consumer cyclical with consumer defensive sectors would you then decide your investments were overweight in the consumer sector?

Its not worth bothering about minor variability, but on the other hand if you dicovered your allocation was extremely high in tech or finance you probably should have some concerns. Sometimes the market does get things seriously wrong. You can avoid the dangers by following the sector allocation.

Thrugelmir

bostonerimus wrote: »

This strikes me as another navel gazing thread.

The quest for the Holy Grail will never cease.

Thrugelmir

lonewolf123 wrote: »

Call me by the book but I suppose you can turn that round and argue using the old saying "Time in the market and not timing the market"?

Providing you've a 20 year plus time horizon. Anything shorter than this has the potential to produce a negative return even with a passive investment strategy.

Don't dismiss the fixed interest sector out of hand. There's different ways to gain exposure. As with anything take the time to do research. If you don't fully understand the offering walk away.

If this your first foray into investing. Then choose the broadest possible fund to provide you with a diversified portfolio. Let the managers determine the allocation whether it be passive or active.

I'd recommend "Harriman's New Book of Investing Rules: The Do's and Don'ts of the World's Best Investors". A book to dip and out of.