investment portfolio diversification

MK62

Alexland said:

ChesterDog said:

Those charts are price return, not total return.

To be fair I can see why DiggerUK forgot to factor in distributions as they don't occur in his world.

Every dog has it's day, so they say......over the last 5 years it now turns out that gold has been a decent investment, relatively speaking.....over 10 years, relatively poor.....over 20, very good.
As with many investments, if you pick the right comparison period you can often make them look good, bad, and anything in between.

Alistair31

bargainhunter888 said:

Dh6 said:

You had very similar questions to me when I first started my investing journey. If you haven’t already, take a look at Lars Kroijer’s investing demystified series for some excellent advice. 

already watched the 6 intro videos!

What, if anything, did you take from them?

bargainhunter888

Prism said:

DiggerUK said:

A  diverse portfolio that had no gold exposure will be severely depleted. Most markets show values below levels from 5 years back. I calculate that most who have been in equites from that time are barely treading water. 

The question of how to diversify has been a staple of these threads since I first came on MSE.  Our much ridiculed gold holding has served Digger Mansions well..._

Hmm that's not quite right (at least for me). I am still around 70% up over the last 5 years  ith a pretty diverse equity portfolio and I have never held gold. Not that gold hasn't been a good place to be too, but its not been the only way. 

Would you mind sharing a top line view of how your assets are diversified?
is it a handful of index trackers or just a simple one side fits all fund like a VLS XX

bargainhunter888

Alistair31 said:

bargainhunter888 said:

Dh6 said:

You had very similar questions to me when I first started my investing journey. If you haven’t already, take a look at Lars Kroijer’s investing demystified series for some excellent advice. 

already watched the 6 intro videos!

What, if anything, did you take from them?

You sound pretty condescending from all your posts, and yet i re-iterate i'm not begging yourself personally to respond should you not wish to rather than make comments like the above..

Takeout.....buy the cheapest world index tracker available as most private investors won't have the edge, rather than paying extra fees for an investment fund due to the fees,

Therefore switch to a fund instead of my ETF because i can make regular investments without the dealing charge?
eg HSBC FTSE all world index @ 0.19% - the only reason i picked ETF was because i could see the daily price fluctuation and buy when i wanted, rather than valuation point

Prism

bargainhunter888 said:

Prism said:

DiggerUK said:

A  diverse portfolio that had no gold exposure will be severely depleted. Most markets show values below levels from 5 years back. I calculate that most who have been in equites from that time are barely treading water. 

The question of how to diversify has been a staple of these threads since I first came on MSE.  Our much ridiculed gold holding has served Digger Mansions well..._

Hmm that's not quite right (at least for me). I am still around 70% up over the last 5 years  ith a pretty diverse equity portfolio and I have never held gold. Not that gold hasn't been a good place to be too, but its not been the only way. 

Would you mind sharing a top line view of how your assets are diversified?
is it a handful of index trackers or just a simple one side fits all fund like a VLS XX

My SIPP is mostly active funds although I sometimes use passive funds for sectors like tech, healthcare or bonds. Its basically 50% Fundsmith which doesn't change and 50% other stuff that changes a bit more - mostly smaller companies, sector funds and emerging markets. 

bargainhunter888

Prism said:

bargainhunter888 said:

Prism said:

DiggerUK said:

A  diverse portfolio that had no gold exposure will be severely depleted. Most markets show values below levels from 5 years back. I calculate that most who have been in equites from that time are barely treading water. 

The question of how to diversify has been a staple of these threads since I first came on MSE.  Our much ridiculed gold holding has served Digger Mansions well..._

Hmm that's not quite right (at least for me). I am still around 70% up over the last 5 years  ith a pretty diverse equity portfolio and I have never held gold. Not that gold hasn't been a good place to be too, but its not been the only way. 

Would you mind sharing a top line view of how your assets are diversified?
is it a handful of index trackers or just a simple one side fits all fund like a VLS XX

My SIPP is mostly active funds although I sometimes use passive funds for sectors like tech, healthcare or bonds. Its basically 50% Fundsmith which doesn't change and 50% other stuff that changes a bit more - mostly smaller companies, sector funds and emerging markets. 

Thanks - reading up on fundsmith - the returns do look strong despite only investing in crica 30 companies, but they are the strongest within their markets which is a good strategy, unless MSFT etc go bankrupt.

Audaxer

port_of_spain said:

Does having an "income" portfolio, in the sense that one aims to draw a hopefully relatively steady income from it, while worrying less about how volatile the capital value may be, give more control? I think it may only be the illusion of control. Yes, if set up in a reasonably cautious way, it will only fail in extreme circumstances; but that is also true of using VLSxx with a modest initial draw rate, so is there any fundamental difference? (And both methods become more robust if one is prepared to use a variable draw rate, i.e. to cut spending if it appears the current rate may be unsustainable.)

Using wealth preservation funds delegates part of the decision process, but doesn't fundamentally change the range of building blocks for the portfolio.

You have an interesting approach, but I'm not convinced its complexity is necessary.

I have held an income portfolio and also VLS funds for the past few years, with roughly the same percentage of equities. My VLS funds have held up better in the recent crash than the income portfolio, but I would still be happier to keep taking dividends from the income portfolio rather than selling VLS capital when it is falling.  Am I wrong thinking its better to take dividends from the income portfolio than sell VLS capital in a falling market?

Thrugelmir

port_of_spain said:

Thrugelmir said:

port_of_spain said:

And now you're just changing the subject again. As you always do when your previous claim has fallen apart.

I made no claims just factual observations. 

You don't seem to understand how conversations work. :shrug:

The Intelligent Investor was written in 1949. While dated. There's nuggets of wisdom that are as relevant now as then. Lars published his book in 2013. He had no foresight as to the extended bull market that would follow. Nor the trajectory of Government bond yields that would dip below inflation. Been an argument for decades as to whether passive or active funds are better. Buffett had an edge. BH owned an insurance company.  Leveraging with large stakes in companies such as the 6% of Coca Cola. These type of opportunities aren't available to small investors. One can hold passive index tracker funds while also allocating money to active investing. If retail investors (who in one form or another hold around 37% of issued equity in listed companies) only focus on the global majors through a passive index fund. Then opportunies will of course arise elsewhere. When there's little to no demand share prices do drift. That's the nature of markets. Doesn't mean that the fundamentals of the company are poor. Small companies in particular are extremely nimble, with management having skin in the game etc. Deep value investing for instance is a contrarian stance. Where patience might be required for months or even years. Ultimately the rewards are worth the wait. Investing is all about the end game. Not who is winning at half time. 

Alexland

bargainhunter888 said:
Thanks - reading up on fundsmith - the returns do look strong despite only investing in crica 30 companies, but they are the strongest within their markets which is a good strategy, unless MSFT etc go bankrupt.

How quickly we forget Lars. You can't buy into a return profile that has already occurred. Focus on what is most likely to meet your objectives going forward in evolving market conditions.

bargainhunter888

Alexland said:

bargainhunter888 said:
Thanks - reading up on fundsmith - the returns do look strong despite only investing in crica 30 companies, but they are the strongest within their markets which is a good strategy, unless MSFT etc go bankrupt.

How quickly we forget Lars. You can't buy into a return profile that has already occurred.

What i mean is that they have done well despite not tracking an index, and i know history is not a reflection of future, i still have my global tracker as Lars recommended, but may also buy into a OEIC so i can contribute more often without dealing charges and balance that with some bonds