Asset allocation ideas?

dunstonh

It's a learning journey and you never stop learning and things are always changing. Multi-asset is the fire and forget option. And if you really are interested in single sector portfolio investing then learn about it whilst you are investing in a multi-asset fund. Maybe create a virtual portfolio and monitor it over the years and see how it would have done. Never a year in isolation but longer term. See how things react to events. Go through a crash or two. The only thing you can really do wrong with a multi-asset fund is invest above your risk profile. And DIY investors do have a habit of going above their tolerance.

Tom99

AnotherJoe wrote: »

You don't know if a global equity index and a global bond index is diversified enough?
Perhaps ask Elon Musk what opportunities there are on Mars?

A global index tracker may well put 60% of your investment in the US which some investors would not regard as being diverse enough.

Aidanmc

Tom99 wrote: »

A global index tracker may well put 60% of your investment in the US which some investors would not regard as being diverse enough.

Yes, this was my perspective, global index trackers seem heavily weighted in US, with only a few % in UK and emg mkts

AnotherJoe

Aidanmc wrote: »

Yes, this was my perspective, global index trackers seem heavily weighted in US, with only a few % in UK and emg mkts

Well a global tracker should only have a few % in the U.K. its 6% GDP I think. Plus it's a gutsy call to put more that that in what with the B word.
Global trackers are weighted towards the US because that's the bulk of the economy. If you think you can do better, and no criticism meant, maybe you can, then you'd have to get very specialist and detailed much more than just adding a few % in one or two trackers. . No point for example just getting a U.K. tracker to increase the U.K. % because that would generally just bring in global companies that happen to be HQ'd here. BP let's say. Not really british in terms of where its revenue and profits come.
So you'd need to choose something else. Maybe the 250, maybe smaller companies. And then do that for multiple geographies. If you chose to increase Asia for example, a general tracker would be heavily weighted to the likes of Sony and Samsung so one scandal one issue with an major co would bump you back down.
Or perhaps then geographies isn't the best way to partition up the economy. Maybe do it my industries. Tech, pharma, healthcare, mining, drinks, leisure etc etc etc. Quite a rabbit hole. Where do you start .... and end?

darkidoe

The options for passive - active management for DIY investors are as such:

1) Multiasset funds eg, Vanguard Lifestrategy, Blackrock Concensus, L&G Mixed investment
-One stop solution. Single Fund solution.
-Passive as it can be.
-You just have to choose your risk tolerance, preference for bonds mix and pick an appropriate predetermined allocation and just invest regularly.
-Suitable for all size portfolios but particular smaller size portfolio as mentioned due to cost considerations

2) DIY Multiasset Portfolio
If you are not happy with the above allocations in the multiasset funds ie. you don't need bonds, or if you feel a sector/geographical market is overvalued, or you want to add property/gold as an asset. You make up your own multiasset fund according to your own research. You will be making those active allocation decisions and you will be responsible to stick to it in the years to come whilst managing it and reviewing it for rebalancing decisions.

This is when it gets messy and where DIY investors get into muddy waters, given all the options available from funds/IT/active funds. It takes a lot of time to get familar and to read up these funds and you might still end up not making much difference (It takes years of retrospective analysis to find out)

3) Active stock picking, making up your own 'Fund'
For this you will be picking individual stocks/bonds to make up your own portfolio. Definitely less diversified and risky.

As long as you can account for your lack of investing knowledge and be ready to make mistakes and accept that and learn from it, it can work out.

We all have to start somewhere and option 1 is a great place to start.

Tom99

AnotherJoe wrote: »

Well a global tracker should only have a few % in the U.K. its 6% GDP I think. Plus it's a gutsy call to put more that that in what with the B word.
Global trackers are weighted towards the US because that's the bulk of the economy. If you think you can do better, and no criticism meant, maybe you can, then you'd have to get very specialist and detailed much more than just adding a few % in one or two trackers. . No point for example just getting a U.K. tracker to increase the U.K. % because that would generally just bring in global companies that happen to be HQ'd here. BP let's say. Not really british in terms of where its revenue and profits come.
So you'd need to choose something else. Maybe the 250, maybe smaller companies. And then do that for multiple geographies. If you chose to increase Asia for example, a general tracker would be heavily weighted to the likes of Sony and Samsung so one scandal one issue with an major co would bump you back down.
Or perhaps then geographies isn't the best way to partition up the economy. Maybe do it my industries. Tech, pharma, healthcare, mining, drinks, leisure etc etc etc. Quite a rabbit hole. Where do you start .... and end?

Moving away from a global tracker does not have to be that complicated. You could use a World ex UK fund combined with say FTSE100 and FTSE250.
That way you get to choose the UK %age and you can water down the amount allocated to the likes of HSBC/BP/GSK/Shell by using the FTSE250.