Amateur investor seeks investment portfolio advice please

cloud_dog

Woggy67 said:

1)    Firstly consider my strategy for the next few years, so that I am clear about what I would like to achieve between now and retirement, then;

In my humble opinion, I feel you shouldn't progress with anything until you have addressed item 1.

You need a clear understanding of your goals, your timelines, and your risk appetite.  It may also mean that different goals, different timelines could support slightly different risk profiles but, that is really getting low level and assumes you may have different goals, i.e. near term (repay the mortgage) and long term (retirement).

I know IFAs are capable of teasing this information out but I feel it would be useful for you to have a clear understanding of what you are trying to achieve even before discussing with IFAs.

Sailtheworld

Woggy67 said:

Sailtheworld – It’s a sensible point, but upon reflection I feel that I don’t have ‘an investment edge’ in terms of actively selling underperforming and buying those likely to perform.

No not many people do have an investment edge and even fewer like to admit it. However, despite this you've still been investing like someone who does have a knowledge / skill advantage over everyone else. Every time you buy a fund that has an allocation different to where the aggregate of the World's investors place their capital you're claiming you either have a better information than the market or are better at interpreting all the available information than the market.

Go to seen an IFA by all means but do some research first so you get more out of it. Also, as per other posts, have a really good think about risk - not a BS risk rating like 'cautious balanced' and all that nonsense that's just about attaching a label. 

Why not have a look at https://www.kroijer.com/ and the videos that accompany his book Investing Demystified? Some interesting comments on risk that people maybe don't consider - the main one being that when something goes wrong it tends not be in isolation. i.e. say there's a pandemic (very unlikely I know) and you lose all or some of your income. That's probably just the start; your house is going down in value; your shareholdings go down; that BTL which seemed like a good idea and is, say, 30% of your net worth has gone down in value, the tenant has stopped paying the rent and the government say you can't throw them out. The bank that holds your savings might be less robust; the creditworthiness of the government falls - can they pay out if the bank goes bust and, if they have to print money to do it, what does that do to the value of your savings? 

You have little control of some/all of the above but they're worth considering ahead of time. 

Mutton_Geoff

Which Magazine publish interesting articles showing asset classes vs risk. They used to have a range of 8 from Very Defensive to Agressive x2 but now suggest four based on different heat of chili.

https://www.which.co.uk/money/investing/how-investing-works/building-an-investment-portfolio/how-to-invest-money-our-investment-portfolios-ahtcz1s1ynb2

The problem with too many funds is you start to get a lot of overlap and it's harder to rebalance.

m_c_s

Interesting the Which portfolios all use 15%  Property funds (except their high risk all equities portfolio) and bias to UK equities. Seem to follow some of the NEST Retirement year funds.

wanna_make_some_dough

HarryGray said:

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. 

What is considered a good weighting on market cap? (large cap/med cap/small cap) What would you consider a good split sector wise?

dunstonh

m_c_s said:

Interesting the Which portfolios all use 15%  Property funds (except their high risk all equities portfolio) and bias to UK equities. Seem to follow some of the NEST Retirement year funds.

15% property is very high by todays standards but not so much for a decade ago. 
Are the Which portfolios fluid allocations or static?  If static, then it is one of the risks of not following change.

Linton

wanna_make_some_dough said:

HarryGray said:

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. 

What is considered a good weighting on market cap? (large cap/med cap/small cap) What would you consider a good split sector wise?

There is no universally applicable best weighting though there are plenty of bad ones.  So I suggest you focus on avoiding the bad ones.

A bad weighting is one where you have excessive focus in a small number of areas so that if one of those fails you lose out big time and if some other area succeeds which you dont own you dont gain. So look for breadth across all aspects of your portfolio.

My criteria in assessing weightings are not to have any country more than 40%, and the only one anywhere near that level is the US, not to have any sector more than 25%, and to have significant holdings in all of large, medium and, small companies.  This makes global trackers unsuitable for me.   Other people may take a different view, each to his own.