[deleted.]

Moe_The_Bartender

Linton wrote: »

The Man GLG fund is the best performing UK equity income fund over the past 5 years. It also happens to be the best performing fund of all my investments since I bought it 3 months ago as part of the re-organisation of my income portfolio. What makes you think it's full of dogs? What is the problem with Glaxo, Shell, IAG, L&G etc and a broad holding across all company sizes.



According to Morningstar, Man GLG is a "value" fund as opposed to both Lindsell Train UK Equity and Evenlode which are both "growth" focussed and so are not direct alternatives. A properly diversified portfolio needs both growth and value underlying investments. In any case Evenlode UK Income seems to be closed to new investors.

The OP is 30 years from retirement so the recommendation of an income fund seems inappropriate. The MAN fund may be the best performing fund in its sector over the last 5 years but there are plenty of funds in the UK All Companies sector which have produced superior returns and which would, in my opinion, be more suitable. Personally, I have an aversion to funds like the MAN one which are stuffed with oil, tobacco and other post-growth businesses who pay dividends which may be unsustainable.

The Evenlode fund was soft closed a while ago but was still available to new investors on certain platforms. Perhaps it no longer is.

Linton

Moe_The_Bartender wrote: »

The OP is 30 years from retirement so the recommendation of an income fund seems inappropriate. The MAN fund may be the best performing fund in its sector over the last 5 years but there are plenty of funds in the UK All Companies sector which have produced superior returns and which would, in my opinion, be more suitable.

As always with investing, the optimal policy is not a question of either/or but rather both/and at an appropriate balance. Income funds may be useful for people who want income, but in this case I believe it is a proxy for defensive/value as such companies are more likely to produce high dividends than say high growth tech companies.


Looking at performance, if Man GLG UK Income had been in the UK All Companies sector it would have been 26th out of 223 over the past 5 years so the vast majority of UK All Companies Funds underperformed it.

Thrugelmir

Moe_The_Bartender wrote: »

Personally, I have an aversion to funds like the MAN one which are stuffed with oil, tobacco and other post-growth businesses who pay dividends which may be unsustainable.

Unlike growth companies they sit on lowly undemanding ratings.

[Deleted User]

Linton wrote: »

As always with investing, the optimal policy is not a question of either/or but rather both/and at an appropriate balance. Income funds may be useful for people who want income, but in this case I believe it is a proxy for defensive/value as such companies are more likely to produce high dividends than say high growth tech companies.


Looking at performance, if Man GLG UK Income had been in the UK All Companies sector it would have been 26th out of 223 over the past 5 years so the vast majority of UK All Companies Funds underperformed it.

The fund was around between 2007 and 2009. It underperformed FTSE AllShare, aka dropped like a brick. How is that “defensive”?

In general, high dividend screen is a poor proxy for value.

Moe_The_Bartender

Deleted_User wrote: »

The fund was around between 2007 and 2009. It underperformed FTSE AllShare, aka dropped like a brick. How is that “defensive”?

In general, high dividend screen is a poor proxy for value.

To be fair, the fund got a new manager in 2013. It still wouldn’t be for me though.

[Deleted User]

Thanks, a few questions for my IFA that haven't already been covered.
The income funds are held as accumulation units though.

Doesn’t matter. There are elements of factor investing in this portfolio but the logic is very hard to follow. From “value” to “momentum”, from “quality” to “low volatility”, all of them have some basis and evidence. The “high dividend” factor, although somewhat linked to value, has little supportive evidence and is just an easily manipulated number.

My real question is why throw almost all UK allocation into large high div stocks and then add the other extreme (tiny growth companies) but exclude everything else, e.g. mid cap. By concentrating your holdings in this manner you are reducing diversification and increasing risk for no increase in the expected returns. It’s a bet.

SonOf

bostonerimus wrote: »

0.29% transaction fees were mentioned making 1.14%. Just trying to see what the fees might be overall.

Transaction fees are nothing to do with the IFA though. And in reality, most sensible investors ignore the transactions costs as its an artificial calculation that includes some profit and loss.

I'm dubious of any portfolio that includes single digit percentages of funds, the more the merrier I suppose.

You pretty much eliminate every single investment portfolio out there then.

The OP is 30 years from retirement so the recommendation of an income fund seems inappropriate.

No it doesn't. Returns come through income and growth. Income reinvested gives you a gain.

Approx £70k invested in:

30% HSBC FTSE all world
15% Scottish mortgage trust
15% Fundsmith
15% Lindsell Train IT
10% Lindsell Train UK Equity
7.5% iShares emerging markets
7.5% iShares global property


I am planning to review this at some point soon as it was not really that well thought out.

Crickey. You are certainly taking much more investment risk with your ISA compared to the pension. It doesnt appear to have a defined structure either with your allocations.

I believe the IFA uses FE analytics to analyse the portfolio. There is no exclusive link or conflict of interest.

FE Analytics is a cracking piece of software used by many IFAs. Its expensive for an IFA but worth it as it has fund data at a level above and beyond needs. FE also sell add ons to that which allows IFAs access to further data and analysis. Such as when they told IFAs to get out of Woodford back in 2017 because it was too high in illiquid assets.

Thanks, a few questions for my IFA that haven't already been covered.
The income funds are held as accumulation units though.

Be wary. Some of the comments on this thread suggesting you ask the IFA about them are not sensible questions. Some are but you have some posts on this thread that are just being negative for the sake of it.

Remember what I said early on. Investing is largely about opinion. I wouldn't invest the same way your IFA is but I can clearly see a structure and there is nothing wrong with it at all. Better to have structure rather than a random % in x number of funds with no particular structure.

[Deleted User]

“
I'm dubious of any portfolio that includes single digit percentages of funds, the more the merrier I suppose.
”
You pretty much eliminate every single investment portfolio out there then

That’s demonstrably false. These days many portfolios include a single fund which owns the world. In 3-6 funds you can personalise, tilt and factor and improve tax efficiency. Buffett recommends putting everything into a single fund and sleeping tight.

Portfolios with 4% in a micro growth fund need a bloody good reason.

Obviously it’s different for portfolios with individual stocks but that’s not what we are taking about.

SonOf

Deleted_User wrote: »

That’s demonstrably false. These days many portfolios include a single fund which owns the world. In 3-6 funds you can personalise, tilt and factor and improve tax efficiency. Buffett recommends putting everything into a single fund and sleeping tight.

Portfolios with 4% in a micro growth fund need a bloody good reason.

Obviously it’s different for portfolios with individual stocks but that’s not what we are taking about.

Lets look at such a single portfolio fund that owns the world. The Vanguard Lifetstrategy 60% equity. Here are the top 10 holdings.
Only four of the funds it holds make double digits.

VANGUARD GLOBAL BOND INDEX FUND 19.30
VANGUARD FTSE DEVELOPED WORLD EX-UK EQUITY INDEX A 19.10
VANGUARD FTSE U.K. ALL SHARE INDEX A ACC GBP 15.10
VANGUARD US EQUITY INDEX 14.00
VANGUARD UK GOVERNMENT BOND INDEX INC GBP 5.80
VANGUARD EMERGING MARKETS STOCK INDEX FUND 4.90
VANGUARD UK INFLATION-LINKED GILT INDEX AGROSSINCGBP 3.90
VANGUARD UK INVESTMENT GRADE BOND INDEX ACC GBP 3.80
VANGUARD FTSE DEVELOPED EUROPE EX-UK EQUITY INDEX A 3.50
VANGUARD JAPAN STOCK INDEX ACC GBP 2.10

The rest hold single-digit allocations. A similar position will exist with all investment portfolios that are set up sensibly.

Buffett recommends putting everything into a single fund and sleeping tight.

Yet he does the complete opposite for himself and his company.

[Deleted User]

SonOf wrote: »

Lets look at such a single portfolio fund that owns the world. The Vanguard Lifetstrategy 60% equity. Here are the top 10 holdings.
Only four of the funds it holds make double digits.

VANGUARD GLOBAL BOND INDEX FUND 19.30
VANGUARD FTSE DEVELOPED WORLD EX-UK EQUITY INDEX A 19.10
VANGUARD FTSE U.K. ALL SHARE INDEX A ACC GBP 15.10
VANGUARD US EQUITY INDEX 14.00
VANGUARD UK GOVERNMENT BOND INDEX INC GBP 5.80
VANGUARD EMERGING MARKETS STOCK INDEX FUND 4.90
VANGUARD UK INFLATION-LINKED GILT INDEX AGROSSINCGBP 3.90
VANGUARD UK INVESTMENT GRADE BOND INDEX ACC GBP 3.80
VANGUARD FTSE DEVELOPED EUROPE EX-UK EQUITY INDEX A 3.50
VANGUARD JAPAN STOCK INDEX ACC GBP 2.10

The rest hold single-digit allocations. A similar position will exist with all investment portfolios that are set up sensibly.



Yet he does the complete opposite for himself and his company.

You can equally look under the hood of FTSE 100 and claim that the index is based on individual stocks with circa 1% allocation. So? People who buy Vanguard LS buy a single fund. The fund holds 1000s of stocks under different wrappers. The number of wrappers within the fund is utterly irrelevant because it has no impact on diversification or complexity of managing this fund.

The wrappers in VLS are assigned allocations based on cap weightings rather than arbitrary “4% micro cap growth”. The recommended portfolio has a lot of small allocations to exotic things while missing massive chunks of the market altogether.

If an investor wants to use approaches similar to VLS, he would never buy all 10 funds. There are funds which group markets regionally or as developed vs EM. Saves pain and cost and unnecessary complexity