How many funds in a portfolio?

bearshare

Linton wrote: »

I dont see this need to spread fund risk by having multiple funds per sector. Sure, one fund may underperform its sector, but another one in a different sector may outperform. If you want to average everything you may as well use a tracker.


The only reason I would have for multiple funds in a sector is if the funds invest in very different assets. Many of the official sectors are very broad.

People say that (might as well use a tracker) but I don't see it. IF ( note the big if) you beleive you can identify an active fund that may outperform a tracker, then you are likely to have 2-3 that you think will be among the 'best'. So, investing in the 'top two' should reduce risk of a manager !!!!--up, but should also outperform the tracker for that sector.

Also called the "I can't make my mind up between these two funds so I will use both' approach.

NedS

bearshare wrote: »

Also called the "I can't make my mind up between these two funds so I will use both' approach.

Guilty as charged! :rotfl:

Sue58

talexuser wrote: »

OK, I'll bite.

ISA, 10 Funds, 4 OEICs, 6 ITs, one of those capital preservation, each ~50k.

Unwrapped, 15 funds, 1 OEIC, 11 ITs, three of those capital preservation, 3 ETF world sector trackers, each ~50k but trackers and capital preservation up to 70k.

I had a random figure of max 50k in any one fund, but have 3 duplications in ISA and unwrapped of the best current active performers. One of each fund in ISA and unwrapped is a greater punt without a history yet (Smithson and Evenload Global).

Unwrapped are sold and rebought each tax year to the CGT limit and transferred into the ISA limit.

No specific bond funds except those funds which have whatever proportion of bonds in their makeup.

Basically there aren't enough long term success active funds justifying their fees left to take a punt on, so trackers have been included the past 5 years or so.

SIPP can only be funded from unearned income with 1 OEIC and just taken out for the tax relief, ~30k.

Each total portfolio is doing better than Lifestrategy 100% over 5 years which is my arbitrary benchmark which I have in the daughters ISA for the grandkids, but "hopefully!" have less volatility than the Lifestrategy come the next crash.

In general,you favour IT's to OEIC's in both your ISA and unwrapped portfolio's. Is there any particular reason or do you just feel the IT's are more suited to your strategy/requirements?

ArchBair

Sue58 wrote: »

In general,you favour IT's to OEIC's in both your ISA and unwrapped portfolio's. Is there any particular reason or do you just feel the IT's are more suited to your strategy/requirements?

I can’t speak for talexuser, but I prefer close ended funds to open ended for a number of reasons. One of these is I like to know the exact price I am buying and selling at.

talexuser

Sue58 wrote: »

Is there any particular reason or do you just feel the IT's are more suited to your strategy/requirements?

Not in that sense of one vs the other. I've always been an active investor for 25 plus years, there are not enough active funds with long term records justifying their fees now compared to low cost trackers (which were not available for many years when I started). For the first decade or so I was in OEICs, including bond funds, as per diversity recommendations, because I didn't know anything else. After years (and corrections) decided the loss of growth in bond funds compared to well performing income/growth funds was not worth the supposed volatility gain, so gave up on them.

Then just learnt about ITs, including on this forum, with good wealth preservation funds, which seemed a better bet to me for diversity. The only downside with ITs is the stamp duty so far as I can see, never being in the position where you have to sell e.g. at a greater discount, given you do the same research.

SonOf

The only downside with ITs is the stamp duty so far as I can see,

Broadly speaking, ITs can be a notch or two higher on the risk scale compared to their UT/OEIC equivalent.

Gearing can add to the risk. As can not realising the impact of the NAV.

It is a knowledge issue. If you understand ITs and can carry out sensible research, then nothing wrong with using ITs at all. If you are inexperienced and of general low knowledge when it comes to investing, then ITs are best avoided.