Asset allocation and fund selection - thoughts please!

Snakey

Following on from my thread yesterday where I'm considering ditching my IFA but they've made me worried that my current portfolio is bad (and so I can't just DIY using the one I've got as a starting point), someone suggested I should post it up for comments, so here I am!

I'm not seeing how I can insert a table, so I've simplified it a bit by removing the actual percentages based on today's values and just putting what it is supposed to be (i.e. if I were to rebalance it).

For the pension I have put Xs next to the ones my potential new IFA says should be got rid of. There was no comment on my ISA ones.

However, that was just by way of passing comment as they want me to move to one of their portfolios which is completely different anyway (a lot more investments - one of the downsides of SL, they said, was that they didn't have the right things available and didn't let you invest in enough things).

They have said I need to change the asset allocation.
Current: 33% bonds, 10% property, 24% UK equity, 19% global equity, 14% alternative.
Proposed 11% bonds, 0% property, 20% UK equity, 35% global equity, 34% alternative.

So if people are bored on this lovely bank holiday weekend, I'd love to hear comments on any or all of:

• the fund selection
• the asset allocation, and
• the benefits or otherwise of staying with SL (which has a restricted list of things I can invest in and makes you invest in things through special "SL" wrappers, but it also has a 0.7% rebate on the charges).

SL pension, value £1.07m, percentages at the front:
10 SL M&G Global High Yield Bond X
7 SL Blackrock Gold and General X
19 SL Vanguard FTSE UK All Share Index X
3 SL Vanguard Pacific ex Japan Stock Index X
24 Standard Life Mixed Bond X
3 SL Vanguard US Equity X
6 SL Investec UK Special Situations
3 SL iShares Continental European Equity Index X
6 SL JP Morgan Emerging Markets
11 SL Aviva Investors Property X
5 SL Blackrock UK Absolute Alpha
3 SL Schroder Tokyo

GIA £45k
All in one holding, VLS 100 Acc

S&S ISA £200k
10 Blackrock UK Absolute Alpha
33 HSBC Global AM UK FTSE 250
10 iShares Core UK Gilts UCT ETF
10 iShares Physical M ISHS Physical Silver ETC
37 iShares MSCI World GBP Hedged UCITS

I'm 47 and potentially looking to access the pension at 55 (or 57), the ISA/GIA perhaps earlier, but at the moment I'm still paying money in to all those things (the pension because it's the only way to avoid the 62% tax band) and could easily just carry on working if there's an ill-timed crash.

Thanks for reading!

bostonerimus

The SL pension just has far too many funds IMHO. Slicing and dicing so you have quite a few funds at 3% is pretty ridiculous. As and example I have considerably more than the value of your pension invested in just 3 Vanguard index funds; an international equity index; a domestic equity index and a domestic bond index.

Also why do they want to increase your allocation to 34% alternative? what does that mean,..I bet the fees on those investments are higher than many others.

m_c_s

Is 20% UK Equity allocation typically what IFAs use now?

What does "alternative" typically cover?

Linton

I agree with Bostonerimus that the SL Pension has too many very small fund holidings though I am unclear what you are trying to achieve with it. It is very cautious, but then it is just above the LTA. Is your objective to avoid excess growth here? If so why not just go for few very cautious funds and forget all the irrelevent details?


The GIA account makes sense as a holding, though its very different to the other two.



The ISA again seems confused. What is the spectacularly wild Blackrock Gold & General doing there along side a global equity fund, hedged presumably because you think (incorrectly) that it is safer.



Mty first reaction is that the portfolio is very bad and that you need to redesign it all, probably with the assistance of an IFA. To DiY £1.25M with limited investment experience is extremely brave. However perhaps I am being unfair and missing something. Can you could explain your objectives and why they lead you to those allocations. Are the given % for the portfolio as a whole and then you choose to put particular assets in specific pots?


I prefer the proposed high level allocation but without seeing the objectives one cannot be sure. Like Bostonerimus I would like to see what "alternative" covers.



As regards SL: The platform does provide a good range of funds certainly enough to create a sensible portfolio. The choice of platform is very much a secondary problem.

DrSyn

Please read through my post 6 in your thread from yesterday.

I have always believed in the KIS (keep it simple) approach where ever possible.

There are just to many funds listed in to days thread.

Investing can be made as simple or as complected as you like.

What sprung to mind when I saw this was, its made to be complected in order make the customer think I must use an FA, because I could never do it by myself.

Just a couple thoughts in passing:-

(a) Compare the HSBC Global Strategy Balanced Portfolio below with the one you have just supplied.
https://www.trustnet.com/factsheets/o/g1hd/hsbc-global-strategy-balanced-portfolio-c-acc

(b) You might get comfort in put some of your money where other rich families do, for wealth preservation. Somewhere like this,
https://www.moneyobserver.com/fund/Capital-Gearing-Ord

Aminatidi

That SL portfolio looks a nightmare. Not sure it means much but I'm in Royal London "out the box" company pension and that doesn't hold anything like the same number of individual funds.

For what it's worth I only started investing around 18 months ago and it's amazing how quickly you pick things up.

I've gone from zero to around £150K which is across 8 different investment trusts.

I may get slated for saying this but I try not to overthink things too much i.e. 3% in Tokyo wouldn't be something I'd know to focus on, I tend to think more in terms of volatility/risk and diversity.

I also have a personal habit of trying to choose fund managers who have their own money invested in their funds as I believe it means their interests are aligned with my own.

Of course if you went passive and just wanted to "set and forget" much of the above doesn't apply and you could arguably do something with way fewer funds/trusts.

A_T

I'd focus on the platform fees you're are paying - especially in that pension. If it's in the thousands per annum you are just throwing money down the drain. You could transfer the pension to Fidelity or Hargreaves Lansdown and by holding ETFs/ITs or shares only pay just £45 or £200 a year respectively.

Snakey

Hi all, thanks for the comments so far! I appreciate your time on this sunny afternoon.

The pension and the ISA were both put together by the old IFA, the pension was stated to be "moderate risk" and the ISA "high" (Risk appetite was based on a questionnaire plus I'd also said I'd prefer more risk outside the pension than in it because of the LTA).

The GIA is all down to me, no IFA involved.

SL has no platform charge (must be hidden in the fund fees then?) and according to this IFA bumf I've got the "weighted portfolio charge" is 0.687%. (Presumably that's with the rebate, so perhaps I'm being blinded by the rebate when in fact all it does is bring down an overpriced charge to a reasonable level.)

The proposed new one has 0.2% platform charge and 0.85% weighted portfolio charge. But the 0.2% goes through the roof if I ever ditch the IFA, and once I leave SL I can't get back into it on the same terms.

[vent] The whole point of paying for an IFA in the first place was supposed to be that it would be better - safer! - than me stabbing a fund list with a pin. If the consensus is that the pension and ISA are badly-done then, well, so much for that experiment. I'm not going to pay again to a new IFA who might be just as bad. Might as well get my pin back out, at least I won't feel ripped off! [/vent]

(For the amusement of anybody really bored, here's a thread from me nearly five years ago with what I had in my pension at that time - unadvised by anybody and generally not having a clue: ) m_c_s, I have a scribbled note saying that "alternative" includes gold and absolute return funds. They probably said other things but I wasn't fast enough to write them down." rel="nofollow">https://forums.moneysavingexpert.com/discussion/5114797The IFA came along in about May of 2016 I think. I must research it some time to see whether I'd have done better or worse if I'd embraced my ignorance and left it as it was! By the way an extra thank you to Linton who I see has been helping me throughout )

m_c_s, I have a scribbled note saying that "alternative" includes gold and absolute return funds. They probably said other things but I wasn't fast enough to write them down.

DrSyn

Thought these might be of interest to you:-

http://www.comparefundplatforms.com/

https://monevator.com/compare-uk-cheapest-online-brokers/


Once you know what the total yearly charge is, stick the numbers into this and get your T-Rex score.

https://larrybates.ca/t-rex-score/

DrSyn

Snakey wrote: »

SL has no platform charge (must be hidden in the fund fees then?).

The proposed new one has 0.2% platform charge and 0.85% weighted portfolio charge. But the 0.2% goes through the roof if I ever ditch the IFA, and once I leave SL I can't get back into it on the same terms.

If there is no platform charge, you can be sure they will recover it elsewhere. When its hidden I always think it must be high. If it was low they would be shouting about it from the rooftops.

If the platform charge goes up when you ditch the IFA, then just use a different platform. These may be of help:-

http://www.comparefundplatforms.com/

https://monevator.com/compare-uk-cheapest-online-brokers/


Once you have the total yearly cost, the you can find your T-REX score. It shows why costs matter:-

https://larrybates.ca/t-rex-score/


Oops, I must have pressed the wrong. Sorry about the repeat.

aroominyork

Aminatidi wrote: »

I also have a personal habit of trying to choose fund managers who have their own money invested in their funds as I believe it means their interests are aligned with my own.

How do you know if they invest in the fund they manage - from the marketing bumph? My guess is that most managers hold the funds they manage, if for no other reason than in case they are asked the question in an interview. And how much do you want them to hold? If the manager of a European smaller companies fund had half his personal wealth in his fund - in fact anything much over 5% - I'd be concerned that he doesn't understand diversification and perhaps his fund is poorly diversified, eg between sectors.