Help with ISA portfolio

2unlimited91

The current portfolio is approximately:

Equities 43%

Bonds: 36%

Property: 12%

Absolute Return Funds: 9%

That has to be higher risk than VLS40 (which holds, as you know: Equities 40%, Bonds 60%). Generally, more equities is higher risk, more bonds is lower risk. Property sits somewhere between equities and bonds in risk, but probably nearer to equities. "Absolute return" can mean anything.

So it is not surprising that it has fallen more than VLS40 when equities have been falling sharply. What is disappointing is that it has (apparently) failed to outperform in rising markets, which is what you would hope for after taking on greater risk.

(It is not a problem that some individual holdings are higher risk than your own risk tolerance. Equities generally will be higher risk, and the idea is that you achieve your target risk level for the whole portfolio, with a mix of higher and lower risk holdings.)

So VLS40 is a valid alternative, but it is dialling down the risk a little. VLS60 might be nearer to the risk level of the current portfolio.

I'm not a fan of absolute return funds. It's not a asset class, just a promise (often unfulfilled) that the managers will do something smart.

If you can't currently sell the property funds (I don't know about their status), you could still replace the rest of the portfolio with a VLS fund. I'd agree that 12% in property is on the high side.

tigerspill

2unlimited91 said:

The current portfolio is approximately:

Equities 43%

Bonds: 36%

Property: 12%

Absolute Return Funds: 9%

That has to be higher risk than VLS40 (which holds, as you know: Equities 40%, Bonds 60%). Generally, more equities is higher risk, more bonds is lower risk. Property sits somewhere between equities and bonds in risk, but probably nearer to equities. "Absolute return" can mean anything.

So it is not surprising that it has fallen more than VLS40 when equities have been falling sharply. What is disappointing is that it has (apparently) failed to outperform in rising markets, which is what you would hope for after taking on greater risk.

(It is not a problem that some individual holdings are higher risk than your own risk tolerance. Equities generally will be higher risk, and the idea is that you achieve your target risk level for the whole portfolio, with a mix of higher and lower risk holdings.)

So VLS40 is a valid alternative, but it is dialling down the risk a little. VLS60 might be nearer to the risk level of the current portfolio.

I'm not a fan of absolute return funds. It's not a asset class, just a promise (often unfulfilled) that the managers will do something smart.

If you can't currently sell the property funds (I don't know about their status), you could still replace the rest of the portfolio with a VLS fund. I'd agree that 12% in property is on the high side.

Thank you for your response.
Like you, I felt this was probably a bit above my risk level (though some would argue my tolerance to risk should be a bit higher).  But I am risk averse about most things in life.  I have wondered about VLS 60.  
My over plan was 5 years in cash to support our DB pensions - which I have (actually more than).  And VLS40 for after that.  Just wondering for 15 years out when I am getting SP - would VLS 60 be better for that "bucket".  
But this is my general thinking.
In todays money value, we have enough money across pensions and savings/investments.  I know I will lose a bit on savings due to inflation erosion.  So I am not looking to get rich quick.  What I need from my investments is to cover inflation and maybe a wee bit more to cover the savings inflation loss if possible.  I dont think I am greedy on this.  So maybe VLS 40 is for me all the way.