3 questions

bowlhead99

DrSyn wrote: »

I have looked at the share/bond split of some well re-guarded wealth preservation trusts, non of them have anywhere near 60% shares in them. In my opinion 60% shares is too high for your stated aim.

FWIW, the popular RIT Capital Partners plc, which has a £3bn net asset value and capital preservation within its remit, is over 60% equity.

Still, that's one of the more aggressive investment trusts within the universe of funds that keep an eye on preserving capital (compared to, e.g., Personal Assets Trust or Capital Gearing Trust which are generally more conservative).

I do agree with the general comment that it is all too easy to focus on the upside potential - especially making the mistake of liking the look of recent performance and thinking it will continue - rather than looking at the downside risk in a bear market. For CGT I covered the costs question and linked financial statements in post 25. It's only a very small holding of mine, which I don't follow closely.

DrSyn

Yes, I held RCP once. The share volatility I thought did not match well with "sleep at night" statement, so I limited it to the more conservative trusts.

gudda96

WOW !!!

Where do I start in my answers, so many replies, and the way I read them, all well intentioned, so I thank you all.

First, an update...
Pacific has gone >>bought LS60
L&G has gone>>increased my LTGE
LS 80 has gone>>bought LS60

I probably will sell SMT at the right time to decrease my equity amount

CGT is mentioned a lot, but with me changing to LS60, is there less need to consider it. Also RIT ?

On a personal note, the many comments are noted in gratitude, especially Seacaitch, I do respond to posters as I recognise that you all know more than me, After saying that, I dont think I can "get up to speed" and learn as you suggest, we are all good at what we know.

Keep talking guys, I won't be offended, I remember the phrase "there is no such thing as a silly question".

So correct me if I am wrong>>
I have now gone more defensive changing 80/20 to 60/40 (enough?)
I have concentrated my equity choice with LTGE who I like
Decision needs to be made on SMT (it will go) and FS (who I like and have done with it.

Malthusian

gudda96 wrote: »

CGT is mentioned a lot, but with me changing to LS60, is there less need to consider it.

Impossible to say as you don't want to discuss the amount you have.

It depends on how much you have invested outside tax-free wrappers (i.e. ISAs).

gudda96

Post 29 tells you, and anything in Vanguard is in a ISA

bowlhead99

gudda96 wrote: »

gudda96 wrote: »

I have now gone more defensive changing 80/20 to 60/40 (enough?)

Malthusian wrote: »

Impossible to say as you don't want to discuss the amount you have.

Post 29 tells you, and anything in Vanguard is in a ISA

Not sure post #29 is the right reference.

But if I followed correctly, you moved the health fund and the VLS80 fund into VLS60 (which is 60% equity and 40% bonds). So you now have 25% of the portfolio in a 40% bond fund, so 10% of the portfolio is in bonds and 12 5% is in cash, at the moment - but you might buy something with the cash.

Really, 10% in bonds and the rest in global equities (including some quite volatile equities such as SMT) does not sound like a particularly defensive portfolio where you are trying to preserve capital to give to the kids.

Of course, the kids might be happy receiving a much-devalued pile of equity funds at the bottom of a stock market crash, because they can hold them for another ten years and hopefully make a nice profit when the funds bounce back from recession prices. It depends whether they (or you) need the cash in the next decade or two, or want to have a long term investment for their own retirements. In the latter case 90% equity for the portfolio as a whole might be fine, but it will be a bumpy ride.

gudda96 wrote: »

I probably will sell SMT at the right time to decrease my equity amount

What's the best time? I guess right at its all time peak just before it goes through a 50-70% peak-to-trough drop. Well, good luck identifying that 'right time' without the benefit of seeing the huge drop and having a time machine to go back and get out at just the 'right time' before it.

CGT is mentioned a lot, but with me changing to LS60, is there less need to consider it. Also RIT ?

You don't need to buy every idea that people throw out there for you to see. Both of those funds are more conservative than any of the 100% equity funds you hold, and one is more conservative than the other.

If you are keeping 10% bond exposure (via a 25% holding of VLS60) and 12.5% cash exposure, and you are investing for the long long term without too many worries about volatility, then maybe you don't mind keeping the other 77.5% in global equities without using any defensive funds - just keeping the VLS bond index element, and cash, to take the edge off the equity swings in value.

However it may make more sense to trim the cash down a bit and put the rest of the cash, and the Scottish Mortgage money, and the Fundsmith money, into something more defensive.

Decision needs to be made on SMT (it will go)

If you have decided that, sell it. Otherwise I predict you will see it go down at some point before you get around to selling it, and be disappointed that it lost money when you already decided you didn't even want it. And then you may decide that you no longer want to sell it because it owes you.

and FS (who I like and have done with it.

The fund itself doesn't know or care that you have done well with it, because it doesn't know when you bought. Making the right portfolio for the next couple of decades is not about whether something used to be lower in price and is now worth more than you paid for it. It is about looking forward about what kind of an asset mix you want from now. Rather than what asset mix you used to get you the £40k in the first place by luck or good judgement.

If you already decided you would go with LT instead of FS for your highly concentrated, manager conviction-driven global fund, you might as well sell FS. Whether you buy more of one of the other funds such as LT or Vanguard LS60, or something else entirely, is up to you.

gudda96

Bowlhead99

Not sure post #29 is the right reference.(it answers his question about amount of portfolio??)

I thank you for a very comprehensive reply, and I listened to your points, although I think at times you were smiling at my comments? but as admitted requently, I am not as experienced as you guys.

Although I owe no obligation to you members, am taking note, and I am making changes as you have ALL correctly pointed out, I have not been into defensive fund enough. Well, as shown, I am taking steps, and will sell SMT first and FS next, but even with all the comments, I dont think either will go bust tomorrow, so I am not going to panic.

DrSyn

gudda96 wrote: »

I dont think either will go bust tomorrow, so I am not going to panic.

That's exactly what many said and thought about

ENRON SHARES

Bernie Madoff fund

You should read up on both of these major scandals. Then you will never be so certain again.

Malthusian

DrSyn wrote: »

That's exactly what many said and thought about

ENRON SHARES

Bernie Madoff fund

You should read up on both of these major scandals. Then you will never be so certain again.

Neither Scottish Mortgage nor FundSmith are individual shares and neither of them are Ponzi schemes. What do Enron and Madoff have anything to do with?

gudda96

As an ameuture, I would answer the same, we are talking about
FS
Paypal
Microsoft
Est!e Lauder
Intuit
Stryker
Idexx
Facebook
Philip Morris
Amadeus
McCormick

and SMT
Amazon.com 9.3%
2 Illumina 7.1%
3 Tencent 6.5%
4 Alibaba 6.1%
5 Tesla Inc 4.4%
6 ASML 3.4%
7 Kering 3.3%
8 Ferrari NV 3.0%
9 Netflix Inc 2.8%
10 Ant International Co Limited Class C Ord. 2.6%

If they are all shaky, we may as well pack in and buy Premium bonds