How many Global Funds or IT's?

Sally57

I'm interested in views on how many Global Funds or IT's one should hold in a portfolio?

I've had an interesting conversation with my brother who has been investing for over 30 years and mainly holds IT's in his portfolio. I was very surprised to hear that Global IT's/Funds account for about 55% of his overall portfolio - is this usual (is four too many)?

Bankers - 20%
Fundsmith - 15%
Monks - 10%
Edinburgh Worldwide - 10%

Interested to hear how many global funds or IT's other forum members hold in their portfolio's?

Prism

In my SIPP I have one global fund - Fundsmith - which is 50% of my portfolio.
I also have two global smaller companies funds accounting for another 30%

talexuser

I moved more into global after the referendum result and it has worked out well. More than 3/4 of my funds are each more then 50% outside the UK. ISA total is 29% UK (generally the highest dividend payers in the ISA), unwrapped 19% UK and SIPP 19% UK, according to Trustnet.
I have 3 of your brother's funds with Edinburgh on my watch list, eg Bankers is 75% global, Fundsmith 82% global, Monks 94% global last time I looked.

bowlhead99

I have commented on a few threads recently where studies from a decade ago were cited showing that institutional investors are increasingly appointing managers with global rather than regional mandates.

While countries and regions have borders, companies have assets and revenues across borders and the stock market they select for their primary listing is not always the principal determinant of their performance (though it can be determinant of valuation, given market sentiment from time to time).

As such, giving a global mandate to your fund manager allows them to pursue their investment approach (industries, themes, trends, valuation, preferred investment criteria and other factors etc) across borders. So global funds make sense. In an increasingly borderless world it may be a stranger approach to limit fund managers to working in regional silos; if you appoint 5 managers in 5 regions and none of them know what the other is doing while trying to get the best result out of their own region, your overall portfolio may be overexposed or underexposed to particular themes or industries.

And you will probably decide that entrusting one manager to use their investing style for all your global equity needs does not make sense because then you are at the mercy of their style and investment preferences going in and out of fashion and becoming more appropriate or less appropriate for different parts of an economic cycle. So if you do not want to be 'hands on', chopping and changing your global investment manager from time to time based on your own world view, you would appoint multiple managers. Clearly if you only have a £10k investment you do not need to mess around finding four different global equity fund managers and buy them all. Whereas if you have been investing for over 30 years it is likely you have rather more assets than that, and appointing multiple managers with a global remit is not at all crazy.

You may still prefer to stay away from truly global funds in some areas; for example emerging markets are often considered separately from developed markets as they have their own quirks and may benefit from local knowledge not always held by those with a broad global mandate. For example Fundsmith Equity doesn't bother with emerging markets, and Bankers sold down their direct emerging markets (other than China) holdings last year.

Likewise it is fair to say that some people will look 'regionally' when looking for smaller companies which are not necessarily operating as internationally or are simply less well known and less likely to be on the radar of a manager exploring broad global themes. When creating some 'home bias' to your investing (valid approach IMO), people would generally look at smaller companies in their home market as being different from the largecaps that happen to be domestically headquartered.

So if your brother is someone that has for example 20% bonds and property or other non-equities; 5-10% EM, 15% home-biased equity including smallcap, 5-10% other smallcap, he will have 45-55% for other global (UK and international) mandates. While it would be possible to do that global investing through four or five separate regional funds, there wouldn't seem to be anything 'wrong' with using four global funds he likes instead.

It is obviously difficult to comment on the specifics of what he holds without knowing what he is trying to achieve with what model and how he ensures that the portfolio is giving him the right risk and rewards. The percentages I mentioned are just a 'for example' and not plucked from a particular model. But fundamentally the idea of having 55% in global equity funds doesn't seem 'off'.

takesyourchances

As far as IT's and Global funds are, I hold


Bankers IT
Scottish American IT
Murray International IT


I also hold BNY Mellon Global Income which I often top up with dividend payouts.

Sally57

talexuser wrote: »

I have 3 of your brother's funds with Edinburgh on my watch list, eg Bankers is 75% global, Fundsmith 82% global, Monks 94% global last time I looked.

So in total how many global funds or IT's do you hold?

talexuser

Sally57 wrote: »

So in total how many global funds or IT's do you hold?

16 if the criteria is more than 50% outside the UK, 12 if the criteria is 75% plus outside, plus 3 different sector world trackers, these obviously zero UK. But as Bowl has pointed out it does depend on your total investment, having so many each with small amounts is not reasonable.

Sally57

talexuser wrote: »

16 if the criteria is more than 50% outside the UK, 12 if the criteria is 75% plus outside, plus 3 different sector world trackers, these obviously zero UK. But as Bowl has pointed out it does depend on your total investment, having so many each with small amounts is not reasonable.

Gosh that's quite a lot. Do you not find there is any crossover or duplication in any of your global funds? As an example if you were to hold SMT as well as Monks?

bostonerimus

I have one global equity fund that is the world excluding the US and a US domestic equity index. I also own a US biased multi-asset income fund and a bond index.

talexuser

Sally57 wrote: »

if you were to hold SMT as well as Monks?

I don't for that very reason, and buying SMT at this price is risky. You can't help crossover, it's inevitable, but can make sure everything does not have huge slices of Apple or Amazon etc. Whereas a cap tracker will guarantee it relative to everything else.

I started with a random figure of not having more than 50k in any one fund, though the sector trackers now surpass that by a significant margin. Since I have several wealth preservation funds, which will obviously not be top of table ever, and my criteria for success is to beat a world tracker, I'm placated till whatever the next crash brings.

OldMusicGuy

I have a large DC pot spread across three global multi-asset funds.