Invesco

Huggy_Bear

newbinvestor wrote: »

Willl the "Index Tracker Fund (15%)" be a track one index fund (eg HSBC FTSE 100 Index Fund Accumulation) or a global index fund (eg Fidelity Index World Fund Accumulation)?

I am not too sure at the moment.

The invesco tactical bonds are 71% international and 26% UK bonds or Invesco corp bonds are 51% UK and 40% international bonds so I think it depends on which one of those I invest in. But tbh its all relatively new to me and I'm wondering if Im making it too complicated for myself as a newbie

DrSyn

Huggy_Bear wrote: »

so my thoughts are

VLS 40% Equity (35%)
Invesco Tactical or Corporate Bonds (30%)
Index Tracker Fund (15%)

Fundsmith Equity (10%)
Lindsell Train Global Equity (10%)

80% in low moderate risk and 20% in higher risk - well at least that is my understanding

Would I be better reducing the number of funds? Total being invested is 40k

Many thanks

I can understand the selection for the 20% higher risk funds.

Why don't you have the other 80% all in the VLS 40 or may be the HSBC Global Strategy Conservative Portfolio Fund?

For the other 80%, I would have thought using single low cost global multi asset fund at a risk level or share/bond split you are comfortable with, was all you needed . Your portfolio would be simpler & it would be easier for you to track it's performance and overall share/bond split.

The reason behind using a low cost global multi asset fund are best voiced in this:-
https://www.kroijer.com/

You write you are a complete novice. So this may be of interest to you:-

https://www.ifa.com/indexfundsthemovie/

Huggy_Bear

DrSyn wrote: »

Why don't you have the other 80% all in the VLS 40 or may be the HSBC Global Strategy Conservative Portfolio Fund?

Thank you, I'll take a look at the HSBC fund and the film too :beer:
I think I want to split the 80% a bit further, maybe just 2 funds to keep things simple

[Deleted User]

I cannot see an accumulation version of the Lindsell Train Global Equity fund. Strange as thought it was one of the most recognised. Only an income version ehich means the dividends would be paid out and not automatically reinvested into the fund (accumulation).

The Fundsmith and LTGE have mostly different holdings but the performance seems extremely similar.

Alexland

When you say long term 5+ years do you mean medium term 5+ years, or long term 15+ years? If you are only investing for the medium term then a balanced 60/40 asset allocation might be suitable (to reduce the damage from withdrawal at an unfortunate point in the cycle) but if long term then an 80/20 might be suitable if you can stomach the occasional market crashes.

As you have seem from your Invesco and Woodford experience what was once a hot active fund can underperform over time as things happen and market sweet spots change. So rather than including a few currently popular funds why not just go with a suitable VLS (60 or 80) or HSBC GS (Balanced or Dynamic) fund?

Then you can focus you efforts on where you can be most useful - making further contributions!

Alex

Huggy_Bear

Alexland wrote: »

When you say long term 5+ years do you mean medium term 5+ years, or long term 15+ years?

Alex

At this stage I am planning 5+ medium and then take stock

I'm now working with this

VLS 40% Equity (40%)
HSBC Global Strategy Balanceed (40%)

Fundsmith Equity (10%)
Lindsell Train Global Equity (10%)

bowlhead99

newbinvestor wrote: »

I cannot see an accumulation version of the Lindsell Train Global Equity fund. Strange as thought it was one of the most recognised. Only an income version ehich means the dividends would be paid out and not automatically reinvested into the fund (accumulation).

They only have a distributing version (unless you are buying the dollar or euro version of the fund, which both accumulate, but would require your broker to convert to and from sterling which would no doubt incur fx commission cost, so better not to go down that path).

It's not really a problem to receive the odd bit of income in the ISA, as if you have 4 different funds you will periodically rebalance between them anyway to keep the mix that you want, so having a bit of cash coming out of one of them from time to time is fine, it can just be reinvested back into whichever fund needs to have more invested in it.

Alexland

Huggy_Bear wrote: »

At this stage I am planning 5+ medium and then take stock

Tricky as market cycles tend to last longer than 5 years so you might do OK for the first 4 years then a nasty market crash occurs in year 5 before recovering in years 6 & 7 before doing really well in the next 5 years. Overall you might have done better than cash but evaluating in year 5 might conclude you would be better in cash.

So if the 5 year evaluation point is important then it might drive you to be more conservative in your asset allocation eg balanced risk 60/40 than you really need to be if you have a long term investment horizon.

I find the below graph from Nutmeg helpful, not that I am recomending them as there are better options, showing a 100% equties investor still has a nearly 10% probability of being in a net loss after 5 years but an almost 0% probability after 10.5 years.

https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/

Alex

arwain

Alexland wrote: »

https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/
Alex

I've seen this article a few times and makes interesting reading, does anyone know if they have taken inflation into account? Between 1971 and 2018 there have been 11 year periods with very high inflation.

So when they say that during this time the longest it would take to get back to break even is 11 years would that include taking inflation into account, or does it mean getting back to the amount one would have put into the market 11 years previously?

Alexland

arwain wrote: »

I've seen this article a few times and makes interesting reading, does anyone know if they have taken inflation into account? Between 1971 and 2018 there have been 11 year periods with very high inflation.

It's probably calculated on the chance of making an absolute loss rather than a loss against an assumed rate of inflation or possible cash return.

I have noticed that investment beginners tend to overestimate their long term rate of return by compounding nominal return rather than real return above inflation. When you understand that the stock market is only likely to deliver a few percent above inflation (or less at times when valuations are high or you are derisking towards withdrawal) then it makes you realise the importance of keeping fees low and making sufficient contributions to get the desired outcome.

Alex