Portfolio review please

segovia

aroominyork wrote: »

I’d appreciate a review of the equity part of my portfolio before my planned move from all invested in active funds*, to a passive core with satellite active funds. This is a combination of my and my wife’s SIPPs and ISAs totalling around £450k intended for retirement in about 10 years. We may retire before then but I will have a lump sum (currently invested in property and low risk assets) coming in beforehand so I consider these SIPPs/ISAs a medium-term investment. I have stripped out the bonds as it is only the equity allocation I am interested in at the moment.

I started DIYing in summer 2017 intending to give it a couple of years to see how I did against the index. I’ve outperformed by a few percent but this year I’ve been gradually de-risking and this move is another step in that process, the reasons being:
- It is currently too growth oriented. I have added a couple of value oriented funds but feel I have been trying to balance two ends of a see-saw and it would be better to sit closer to the middle.
- I have around 40% in Fundsmith/Lindsell Train funds/ITs (it was about 55% until recently). I remain a fan of their approach but, in case the tide turns against them, I do not want to feel over-exposed.
- With active funds there is too much temptation to meddle, especially in a bear market. I want a portfolio that discourages this.
- And overall, I want a portfolio where I am not trying to be too clever. If the markets crash and I come out worse than average, I want to feel I was sensibly positioned and it was more bad luck than bad judgement. Sounder sleep.

I plan for active funds in areas where they usually outperform the index: Emerging markets; Japan; European and UK smaller companies. I will reduce but not ditch my Fundsmith/LT holdings. Below are my current and my planned portfolios, keeping similar geographic allocations of UK 16%, Developed Europe 14%, US 39%, Japan 10%, Emerging markets 13%, Developed Asia Pacific 8%.

Current portfolio:
- Fundsmith 17%
- Artemis Global Growth 10%
- Smithson IT 10%
- S&P 500 ETF, hedged (XDPG) 18%
- Lindsell Train UK 5%
- Liontrust UK Smaller Companies 5%
- Barings Europe Select 6%
- Lindsell Train Japanese 9%
- Stewart Investors Asia Pacific Sustainability 8%
- Vanguard Global Emerging Markets 8%
- BlueStar Israel Technology ETF 4%

Proposed portfolio:
- Vanguard LifeStrategy 100 30%
- Fundsmith 12%
- Smithson IT 7%
- S&P 500 ETF, hedged (XDPG) 13%
- Liontrust UK Smaller Companies 5% (a bit more than I want but given its 3% bid-offer spread I will hold on and let it reduce when I add new money to other funds next year)
- Barings Europe Select 6%
- Lindsell Train Japanese 7%
- Stewart Investors Asia Pacific Sustainability 8%
- Vanguard Global Emerging Markets 8%
- BlueStar Israel Technology ETF 4% (geographically included in Developed Asia Pacific, and bought in Dec 2017 just before MiFID II put it out of reach – currently nicely up 35%)

Thanks in advance.

* A very late edit. It's not currently all active. XDPG is an index fund.

Seems overly complex to me, stick with 1 or 2 funds, 3 max.

talexuser

segovia wrote: »

Seems overly complex to me, stick with 1 or 2 funds, 3 max.

Depends on the amounts. You may not want a million spread between only 2 or 3 funds. Personally I have a max of 50 to 70k in any one fund. For smaller amounts probably fair enough but not as an absolute.

segovia

talexuser wrote: »

Depends on the amounts. You may not want a million spread between only 2 or 3 funds. Personally I have a max of 50 to 70k in any one fund. For smaller amounts probably fair enough but not as an absolute.

True with a million I would probably stretch to maybe five.

AlanP_2

The number of funds is not critical, it is the match to the desired asset allocation and overall objectives that matters.

So which 3 or 5 from the proposed list would you choose and why?