3 questions

gudda96

Bowlhead99 (where the h... did you get that user name from ?

It's fine. You could put the whole £40k in it. It just depends what you are trying to achieve.

Thats nice to know, would you be using HL or elswhere as a platform when /if buying that fund?

gudda96

I should also ask, where does my Vanguard VWRL figure in this discussion, is that not a comparable defensive fund?

bowlhead99

gudda96 wrote: »

It's fine. You could put the whole £40k in it. It just depends what you are trying to achieve.

Thats nice to know, would you be using HL or elswhere as a platform when /if buying that fund?

If I was buying £40k of it, I wouldn't personally use HL, because they are one of the more expensive providers, out of the ones which charge on a percentage basis for holding open-ended funds. On £40k of the HSBC fund, their fee of 0.45% of net assets is £180 a year, and the figure will rise as the £40k grows.

You would find it cheaper with a provider who charges a lower percentage rate (for example, AJ Bell Youinvest charges £1.50 to buy the fund and then 0.25% a year to hold it), or a provider with flat fees instead of a percentage-based charge.

There are a number of platform comparison tools, though price isn't everything. I only mentioned AJ Bell as an example because I have accounts with them and they're fine. Others here don't like them due to some fee hikes in the past, but they suit my needs. My dad still uses HL as he hasn't got around to taking my advice to move, a few years after suggesting it. If you can afford the fees, the service is quite decent, but there's no need to pay close to £200 a year on a £40k account.

gudda96 wrote: »

I should also ask, where does my Vanguard VWRL figure in this discussion, is that not a comparable defensive fund?

No it is not at all a defensive fund. It is a fund that targets to deliver the performance of the world stock market index (less running costs). The world stock market index is constructed by allocating a value to the biggest few thousand companies in the world, weighted to 'free float market capitalisation', i.e. putting more money to the companies that have the most stock available on the stock market, with no thought to whether the companies are good or bad or average.

So, you couldn't possibly call it a 'defensive' fund, as it quite deliberately doesn't try to 'defend' against anything. Your investment would be diversified across lots of companies in lots of parts of the world, but all the investments are company equities, and the value of an investment in that tracker will ride the rollercoaster of the international stock markets up and down. The performance will simply be whatever the performance of the FTSE All-World index will be, less a bit for fees.

As an example of the potential volatility, the biggest peak-to-trough drawdown in value of that index in the last twelve years was in the 'global financial crisis / credit crunch' between October 2007 and March 2009. Even including receipt and reinvestment of dividends, the index lost 57.8% of its peak value when measured in US dollars. The fund would have lost a bit more, because of fees on top.

https://www.ftse.com/Analytics/FactSheets/Home/DownloadSingleIssueByDate?IssueName=GEISLMS%20&IssueDate=20170929&IsManual=%20False

For us investing in pounds from the UK, the drop in value was not as large as that, because dollars strengthened in value at the time the index was falling, meaning US investors felt a greater loss from their international investments than people investing pounds felt. But theoretically a future global crash could hit pounds investors harder instead.

Funds with potential short term losses of that magnitude couldn't be called 'defensive'. It doesn't mean it is a bad fund, and it's cheap to run. But if you are already resolved to do your global equities investing through (e.g.) Lindsell Train, Vanguard Lifestrategy 60% equity, and potentially some actively managed mixed asset fund, I don't see why you would buy it (or keep it if you already had it).

gudda96

BH99

I am very impressed and grateful for the time you have spent (and others) and the very detailed answers, thank you.

I will not do EXACTLY what you have all suggested, as I want to keep some independance, but you may be glad to know, I have sold VWRL and have bought HSBC, am now sitting back waiting for pending actions.

bowlhead99

gudda96 wrote: »

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I will not do EXACTLY what you have all suggested, as I want to keep some independance, but you may be glad to know, I have sold VWRL and have bought HSBC, am now sitting back waiting for pending actions.

It would be impossible to follow everyone's advice at the same time because the advice will differ. Primarily because we would all be guessing your particular objectives, risk tolerance, capacity for loss etc etc, but a lot of investing is about opinion; there are different ways to skin a cat.

It is not a bad idea to poll the 'wisdom of the crowd' for guidance, but you don't want to look back in a decade and think, "damn, I shouldn't have blindly followed what the anonymous strangers on that website told me". So, good to hear you are learning a little, but ultimately whatever you settle on will be your own solution, for which you can take your own responsibility.

gudda96

I totally agree, all down to me, but comments FROM ALL have been welcome.

badger09

I didn't give any [STRIKE]advice[/STRIKE] suggestions, just asked you to define your objectives.

FWIW, I think what you now hold is less 'random' than what you held before, but I'm not sure it fits with your stated objectives. Just sayin;)

gudda96

Right guys, this is my final portfolio

CGT 25% (AJB)
HSBC G STRATEGY BAL 25% (AJB)
LS 60/40 25% (VAN)
LTGE 25% (HL)

My only concern is that 60/40 and HSBC are similar in quota of bonds and equities.

bowlhead99

gudda96 wrote: »

Right guys, this is my final portfolio

CGT 25% (AJB)
HSBC G STRATEGY BAL 25% (AJB)
LS 60/40 25% (VAN)
LTGE 25% (HL)

My only concern is that 60/40 and HSBC are similar in quota of bonds and equities.

It should not be a 'concern' that two funds are similar in what they hold if your overall objective for that 50% of your portfolio is to hold what they hold and you prefer to split the difference between two managers rather than one.

I'm curious why you would choose to hold the LT Global Equity fund via HL when most of the rest of your money is with AJB. HL offers a version of the LT fund with a lower ongoing charge, but the saving of 0.15% on the annual charge of that particular fund by buying it through HL does not cover the fact that HL's platform fee is 0.20% higher (£45 per £10000 invested at HL, vs £25 per £10000 invested at AJB).

seacaitch

bowlhead99 wrote: »

I'm curious why you would choose to hold the LT Global Equity fund via HL when most of the rest of your money is with AJB. HL offers a version of the LT fund with a lower ongoing charge, but the saving of 0.15% on the annual charge of that particular fund by buying it through HL does not cover the fact that HL's platform fee is 0.20% higher (£45 per £10000 invested at HL, vs £25 per £10000 invested at AJB).

Following on from this...

If gudda96 has now settled on this portfolio(!) he can look at absolutely minimising the platform costs by getting to the following position, incurring some xfer costs but achieving savings over time:

1. hold CGT, HSBC Glbl Strat Bal and VLS60 at IWeb
2. hold LTGE at AJBell

Because he currently holds HL's "customer lock-in" D Class of LTGE he cannot do an in-specie transfer and would instead have to sell, transfer the cash, then purchase the B Class. In order to avoid adverse price movements over a few days, then if he has the liquidity (spare cash) he could perhaps simulate a transfer (in the new tax year if this year's ISA allowance has already been used up...) by simultaneously selling LTGE D Class at HL and buying B Class at AJB.

At this portfolio size, 3 separate providers/platforms is OTT; 1 would be fine, but for costs minimisation 2 is necessary here since LTGE is unavailable at HSDL (IWeb).

EDIT:
Just to add... at this portfolio size then I see no real point in holding both HSBC GS & VLS, and would likely consolidate to one or the other. With large portfolios then strategy diversification between the managers of similar/comparable funds is easier to justify IMO. NB having said that, there's no harm in having both if you really cannot decide which to choose.