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xpc

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AnotherJoe

I know it is very heavy on UK stocks, I am told this is because the IFA (or the analytics company they use) has a belief that these are currently under priced and will provide a buffer against leaving the EU

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Neil Woodford said similar things About UK shares , plus I don't understand how holding uk shares acts asa buffer against leaving the EU?
On a more general level once you start questioning your IFA maybe it's time to DIY? From what I see you'd get about a 1% boost due to dropping them ?

SonOf

I know it is very heavy on UK stocks, I am told this is because the IFA (or the analytics company they use) has a belief that these are currently under priced and will provide a buffer against leaving the EU.

It has been noticeable that the UK allocation has been creeping up in many models in recent times. With Sterling having fallen so much, the risk on global assets is a bit higher and with risk targetted portfolios, removing "direct" currency risk helps reduce volatility and keep it iwthin your risk profile.

The bond allocation is currently higher than usual, again due to a potential global slowdown and jitters around a recession (the bond allocation was only introduced when the yield curve inverted a few months ago).

Its not as simple as that. For example, our lower risk portfolios have nothing or virtually nothing allocated to bonds. Only gilts. However, on higher risk portfolios, the allocations swing towards bonds away from gilts. Your spread is at the higher risk end. So, you would expect a small allocation to bonds and not gilts.

What do people think about this allocation?

Investing is about opinion. No-one will agree with that allocation and fund choice. They will have their own views.

I have all the documentation regarding this and the reasons for the allocation, but I'm not sure it is a better approach than using a global tracker with satellite funds.

Only time will tell. However, expectations are that Sterling will begin to rise again. So, that will reduce returns on global assets. The future is unknown of course. But if you were to do that, you would be doing the opposite of what most fluid asset allocation models are doing.

[Deleted User]

SonOf wrote: »

However, expectations are that Sterling will begin to rise again.

Too much masterclass.

£ rises every day, when it's not falling.

Malthusian

What is your ISA invested in?

[Deleted User]

Very aggressive active portfolio with a lot of bets and questionable logic. For example:

- why such a high allocation to income funds? Why have any at all unless you need income now?
- what does he have against developed countries other than UK and US? He is allocating zero to countries like Canada and Australia while France and Germany are so underweight, he shouldn’t have bothered.
- why did he split US between two similar active funds?
- the way he is slicing UK is downright weird. Mostly high dividend income funds but then he throws in micro/growth stocks.

[Deleted User]

By the way, even if you know for a fact that GBP will rise (you don’t), it does not mean that UK stocks will do better than Australian stocks. Many UK companies have sales in the other currencies while most of the costs are often in GBP.

Linton

Nothing stands out as unreasonable. At first sight having 2 UK income funds seemed odd, but further checking revealed that they are very different with the Unicorn fund focusing on Small Companies whilst the Man fund has more than 50% Giant and Large The UK allocation being significantly biased to small companies corresponds to the strategy of investing in the UK as large companies are more a proxy for the global market. So all-in-all it looks to me like a sensible well bahanced high equity portfolio.


The key question is whether it is sutable for you. Roughly how much money are you investing and what is your objective?


PS I have just checked the performance:
The portfolio (77% equity) returned 11.7% annual over the past 5 years
VLS80 returned 9.4% annual.

Linton

AnotherJoe wrote: »

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Neil Woodford said similar things About UK shares , plus I don't understand how holding uk shares acts asa buffer against leaving the EU?

The UK shares are strongly weighted towards Small Companies. They underperformed UK large companies when the £ fell after the BREXIT vote as they are less influenced by the value of the £. With the BREXIT uncertainty possibly being resolved in the not too distant future one would expect the £ to recover. UK Small Companies would at least partially provide protection against the resultant fall in the UK index and the world indices in £ terms.

bostonerimus

So are you saying the fund fees are 0.79% and additionally you will have platform and IFA fees of around 1.14%?

SonOf

bostonerimus wrote: »

So are you saying the fund fees are 0.79% and additionally you will have platform and IFA fees of around 1.14%?

I make the IFA charge 0.50% and the platform charge 0.35% which is 0.85%. Not 1.14%.