investment portfolio diversification

Thrugelmir

bargainhunter888 said:

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.

Not a question of going bankrupt. What expectations do you have for MSFT going forward? The shares currently trade on a p/e in excess of 28 and yield just 1.28%. Well above the price they were just 12 months ago. 

bargainhunter888

i would like to think a company of that size will continue with innovation making peoples lives a bit more easier and efficient.

Prism

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 so focus on what is most likely to meet your objectives going forward.

I thought that might happen as I was writing it
For a bit of balance I also like the 'quality' passive funds like iShares Edge, Xtrackers World Quality and WisdomTree Global Quality

Alexland

Thrugelmir said:

Not a question of going bankrupt. What expectations do you have for MSFT going forward? The shares currently trade on a p/e in excess of 28 and yield just 1.28%. Well above the price they were just 12 months ago. 

Yes even a safe asset can become risky and underperform if it becomes too expensive. The risk with active funds is you end up chasing the next one to disappoint. OP you don't need to go with active stock pickers to avoid ETF trading fees as trackers and multi asset funds are available as OEICs.

Username999

bargainhunter888 said:

i would like to think a company of that size will continue with innovation making peoples lives a bit more easier and efficient.

MSFT has gone sideways for a lot of it's existence.
eg, the period from 2000 to the end of 2013.
You could say that it's currently in a bubble, which may deflate quickly or slowly.
It can't go parabolic for ever.
IMHO 

bargainhunter888

Alexland said:

Thrugelmir said:

Not a question of going bankrupt. What expectations do you have for MSFT going forward? The shares currently trade on a p/e in excess of 28 and yield just 1.28%. Well above the price they were just 12 months ago. 

Yes even a safe asset can become risky and underperform if it becomes too expensive. The risk with active funds is you end up chasing the next one to disappoint. OP you don't need to go with active stock pickers to avoid ETF trading fees as trackers and multi asset funds are available as OEICs.

yep, so i could go with the HSBC ftse all world OEIC in parallel to SWDA i suppose, there is no harm in having both, i guess the active ones is just more about marketing and the fact they have the experience to manage the detail - against LARS opinion lol.
do most people choose ETF because its exchange traded, because the OEICs have FSCS protection, where as the former doesnt?

bargainhunter888

bargainhunter888 said:

Alexland said:

Thrugelmir said:

Not a question of going bankrupt. What expectations do you have for MSFT going forward? The shares currently trade on a p/e in excess of 28 and yield just 1.28%. Well above the price they were just 12 months ago. 

Yes even a safe asset can become risky and underperform if it becomes too expensive. The risk with active funds is you end up chasing the next one to disappoint. OP you don't need to go with active stock pickers to avoid ETF trading fees as trackers and multi asset funds are available as OEICs.

yep, so i could go with the HSBC ftse all world OEIC in parallel to SWDA i suppose, there is no harm in having both, i guess the active ones is just more about marketing and the fact they have the experience to manage the detail - against LARS opinion lol.
do most people choose ETF because its exchange traded, because the OEICs have FSCS protection, where as the former doesnt?

Currently using MS teams for work, it's great

Alexland

bargainhunter888 said:

do most people choose ETF because its exchange traded, because the OEICs have FSCS protection, where as the former doesnt?

People have their own reasons but our larger accounts are in ETFs as some platforms cap their fees on exchange traded assets. But I prefer OEICs.

bargainhunter888 said:

Currently using MS teams for work, it's great

Ok how about putting a few percent of your account into MS shares? Oh that's what the global tracker did....

bargainhunter888

Alexland said:

bargainhunter888 said:

do most people choose ETF because its exchange traded, because the OEICs have FSCS protection, where as the former doesnt?

People have their own reasons but our larger accounts are in ETFs as some platforms cap their fees on exchange traded assets. But I prefer OEICs.

bargainhunter888 said:

Currently using MS teams for work, it's great

Ok how about putting a few percent of your account into MS shares? Oh that's what the global tracker did....

so with HL, with an ISA ETFs are capped at £45 a year, where as OEIC is 0.45% up to £250k - No Cap so does make ETFs better value? could you expand on your preference to OEICs?

Alexland

bargainhunter888 said:

so with HL, with an ISA ETFs are capped at £45 a year, where as OEIC is 0.45% up to £250k - No Cap so does make ETFs better value? could you expand on your preference to OEICs?

Well assuming you want to invest £250k in a developed world tracker (either Fidelity World fund or Lyxor LCWL ETF both at 0.12%) on HL then the total ongoing charge would be £1425 pa for the fund option or £345 for the ETF option. So as the account gets bigger there is a point at which the higher trade fees become less significant than the ongoing savings.

However for small accounts then funds is usually the best option due to the lower trade fees (zero on HL but their ongoing percentage fee is high to compensate). Single price funds are more straightforward with no initial bid/offer spread and the FSCS protection. Still on a large ISA account valuation then iWeb have no ongoing charge so we hold my preferred option of funds there but ETFs on our Fidelity and AJ Bell accounts for similar capped fees.