Amateur investor seeks investment portfolio advice please

Woggy67

Hi,

I am an ‘amateur’ investor who through reading articles, listening to useful advice and some good fortune has managed to build up a reasonable investment portfolio, for just an ordinary guy. I have posted here a couple of times some years ago when I was looking to review what funds I held and try to regain some of the losses etc.  I got some helpful replies, for which I was thankful and used the insight to revise my investments.  Having added to them over the years I now find myself at another point in life where I would like to request the views of others again, in an attempt to help me move forward.

To recap, over the years I have invested in stocks and shares ISAs, with my portfolio held on the Hargreaves Lansdown platform.  I presently hold a pretty adventurous portfolio, with Asia, Emerging Markets, Specialist as well as North American, Europe, UK funds, Corporate Bonds and cash.  The current breakdown is approximately 65% invested fairly evenly across the funds and 35% held as cash, as I had just started to take some profit as the markets started to dive.

Overall I have been fortunate in a rising market and in general the funds have performed well, such as ASI Emerging Markets, AXA Framlington Health, Merian UK Smaller Companies etc.  These helped me recoup some of the losses from earlier years. However, there have also been some bad choices e.g. Woodford funds, where I fell for the HL marketing and hype.

For a while now I have been thinking about rebalancing my portfolio, as the investments seem to be towards high risk.  The present Coronavirus lockdown situation has brought this to the forefront of my mind.  I feel the reason I haven’t done anything is because I don’t really know where to start.  I have 50 funds which feels like too many to monitor and some level of duplication.  At least 6 are ‘Dogs’ according to latest Bestinvest report.  I am guessing that one thing I could do is sell these and consolidate by using the money to buy more of the better performing funds or new areas like Gold or low cost trackers etc.  I also have the issue of cash standing idle in my portfolio as I see now as a potential buying opportunity.

If I am honest I am concerned that I may not have enough time or knowledge to actively manage my investments and if I don’t take some sort of action now I will certainly be compromising my retirement fund and options when the time comes around.  Hence with retirement on the horizon, but still some years away, I am keen to hear others views as to what they see as my options in terms of managing a portfolio to aid retirement.

I should say at this stage that I am employed and fortunate to have enough money in a building society account to cover most events, so I am not reliant upon the investments for any income.  At present I am about 8 years away from when I would like to retire and have a modest pension provision.

I have listed a number of questions below and would appreciate any suggestions, especially from others who have had similar thoughts please:

Q1:  Would people advise paying a professional (IFA) to look over my portfolio and make recommendations or do they feel it is manageable in a DIY way? Q2:  If IFA is the preferred route are there any suggested preferred IFAs?  My previous experience has not been that great! Q3:  If DIY is the suggested route is there advice and guidance out there to help the DIY person undertake a portfolio review? Q4:  What are the views on adding some low cost index trackers?  Are there any recommended providers with good past history please? Q5:  I believe my portfolio lacks any direct funds for Gold, mining, property etc.  What are the thoughts on adding these specific funds?  Any particular recommended funds? Q6:  I have ISA cash in my portfolio that is just sitting there waiting to be invested. What are the thoughts on investing cash now and if so where would be the suggested areas? Once again any advice gratefully received and my thanks in advance to anyone who takes time to reply.

 

dunstonh

Q1:  Would people advise paying a professional (IFA) to look over my portfolio and make recommendations or do they feel it is manageable in a DIY way?

That is a personal thing.   Either you feel up to DIY or you don't.    Those that feel up to it will tell you its manageable.  Those that do not feel up to it will say it's not.   Only you can decide what you think.

I will just comment on this bit..

  I have 50 funds which feels like too many to monitor and some level of duplication

How many millions have you got that needs 50 funds?

10-15 on a portfolio of single sector funds suits most people.

Q2:  If IFA is the preferred route are there any suggested preferred IFAs?  My previous experience has not been that great!

It is either DIY or IFA.  Ignore other options.  When you say previous experience, was that an IFA or an FA? (over half of those seeing an FA think its an IFA when it isnt).   How far back was it?  (its a very different world today. However, IFAs run different business models.  So, some may not be suitable, others may be).   

Q3:  If DIY is the suggested route is there advice and guidance out there to help the DIY person undertake a portfolio review?

You learn by reading and understanding.  You will not get advice just opinion and discussion.    Sticking around here will help.

Q4:  What are the views on adding some low cost index trackers?  Are there any recommended providers with good past history please?

Some people are biased to trackers.  Some people are biased to managed. Many prefer the hybrid approach of using tracker where tracker is best and managed where managed is best.   Trackers are not really about past history as that could lead to bad investing.  Its how they are currently that matters.

Q5:  I believe my portfolio lacks any direct funds for Gold, mining, property etc.  What are the thoughts on adding these specific funds?  Any particular recommended funds?

How is your portfolio built?  Sector allocation?  Asset allocation? High yield or pretty much no structure.

Do you need niche funds for those things? - i.e. do your core holdings not cover those areas automatically?

Q6:  I have ISA cash in my portfolio that is just sitting there waiting to be invested. What are the thoughts on investing cash now and if so where would be the suggested areas?

You invest it in whatever strategy you are following to achieve your objectives.  

You are asking us for solutions but we don't know what strategy you are following.  Or your knowledge, behaviour, capacity for loss or risk profile.   No amounts mentioned either.   50 funds on £3 million pounds may be suitable.  Whereas 1 fund on £50,000 would be more suitable.

We cannot jump to solutions without knowing the details and what you are trying to achieve and how.

Alistair31

50 funds ? 

george4064

If you are able to list the 50 funds you are invested in, I’m sure some posters (including myself) can take a look and give you some pointers etc.

Alexland

IFAs work to a regulated process of determining your circumstances and suggesting suitable investments. I don't get the impression that many or any would be willing to work backwards and do a portfolio review of your unusual collection of 50 funds. At best they might give you the time to explain and say "nice, one of our model portfolios would be more suitable".

It's good you accept you fell for the HL marketing and hype on some of the absolute dogs but did you also do the same for some that are not so obviously failing? How have all your equity funds collectively measured against a simple global tracker fund over the same period? Do you know if this collection is under or over performing for the risk you have taken? If you don't have much time to manage them do you really want all this complexity?

HarryGray

50 funds is way too much. Generally with tracker funds you are invested in so many different companies you do not need many. Without the fund breakdown I can't say too much, however most people weigh their portfolio to coincide with the 'MCSI weightings and global market cap'. Below is roughly a good portfolio weighting:

48% North America
14% EM
10% Asia Pacific ex-Japan
8% Japan
7% UK
13% Europe

Then you can generally just look for cheap tracker funds to map this. So for example you could have 48% in 'iShares US Equity fund'. 1 tracker per region. 6 funds. Most platform have Vanguard/iShares trackers. Obviously leave a small amount in cash. 

Malthusian

Alexland said:

IFAs work to a regulated process of determining your circumstances and suggesting suitable investments. I don't get the impression that many or any would be willing to work backwards and do a portfolio review of your unusual collection of 50 funds.

They would, and would have no option if they were advising the OP. If hypothetically an adviser recommended the OP sell their current 50 funds and invest in their model portfolio, they would have to justify why it is more suitable for the OP than their 50-fund portfolio. To do that they need to look at the same things they would for any other portfolio, i.e. what is its risk level, asset allocation, costs, are there any benefits it offers that our proposed new investment doesn't. And if they didn't recommend selling it, they would have to be able to justify why it was suitable for the OP to stick with it, as if they'd recommended it themselves.

The fact that the OP's portfolio has 50 funds in doesn't make this a particularly complex job. Inputting 50 funds into Morningstar doesn't take that much more time than 20.

The only circumstance in which an IFA engaged by the OP would not review his 50 funds is if the OP told them they specifically didn't want advice on it, in which case the IFA would have to caveat all their advice accordingly.

OldMusicGuy

That's exactly what I got, a full review of existing funds. I asked an FA from HL to do a review of my investments and they went through every fund in every pension that I had, commented on them and then came up with their own recommended portfolio of funds and percentage splits (and there were no HL Multi-Manager funds recommended.....). IIRC I probably didn't have more than about 10 funds spread over 6 pensions, but they still did a very thorough review.

Alexland

Malthusian said:

The fact that the OP's portfolio has 50 funds in doesn't make this a particularly complex job. Inputting 50 funds into Morningstar doesn't take that much more time than 20.

OK I'll expand my summary to "nice, that's not great because of x y z and one of our model portfolios would be more suitable" as the chance of the OP having exactly or very near the portfolio that the advisor would otherwise suggest seems pretty remote.

Sailtheworld

My only comment would be that 50 funds does seem rather a lot of complexity and faff. If the OP is happy with the asset allocation then it's probable that similar exposure can be achieved using trackers with lower ongoing cost. 

Of course, if the OP has an investment edge and can really sell 6 funds that will underperform in the future and use proceeds to top up those that won't then none of this applies because the fund costs probably be worth it.

kinger101

50 is too many.  I'll leave out the argument over whether active is better than passive, but with 50, you're going to get reversion toward the mean in terms of overall performance.  Leaving you with what is effectively an expensive pseudotracker.