Is my SIPP diverse enough?

C_Mababejive

I currently have in my SIPP

HSBC FTSE All world acc
VLS80
CTY
A chunk of cash.
Outside of this i have a DB pension scheme with about 37 years in it and im maybe 10 years max from retirement.
The SIPP was started of course to provide more growth but also to manage/cut tax.

I dont have time or expertise to pour over investment data and pick individual funds.

Have i done enough or are there any glaring gaps in this simple allocation? CTY is currently set for divi reinvestment but i dont plan to pump any new money into it just yet.

Alistair31

You could have any percentage in each of them, without knowing your allocations to each then it’s pretty hard to comment.

Thrugelmir

There's probably a high duplication between the major equity holdings. VLS80 and CTY likewise with UK equities. 

C_Mababejive

IWell the allocation stands like this
BMO commercial property 5%
HSBC FTSE All world 17.1%
VLS80 15.4%
CTY 19.2%
CASH 43.6%

Im aware im overweight in cash but the issue is where and how to deploy it and am i diverse enough?

Thrugelmir

High weighting in CTY.  Even more so when you consider the other equity funds will hold similar UK shares.

C_Mababejive

Yes i cant cut the CTY just yet as they are running a loss so im banking the divis as its an IT and should be ok. Maybe the diversification could be in management style? i.e add a managed mixed investment fund?

Thrugelmir

BMO Real Estate cut it's dividend by 50% today due to issues with rent collection. One good reason to have income generated from a diversified portfolio. Commercial property may well face similar challenges. 

bowlhead99

C_Mababejive said:

Yes i cant cut the CTY just yet as they are running a loss so im banking the divis as its an IT and should be ok. Maybe the diversification could be in management style? i.e add a managed mixed investment fund?

I don't understand why you, "cant cut the CTY just yet as they are running a loss"? 

Do you  just mean that psychologically you don't like to sell something for less than you paid for it?

If you buy something for £1000 and it's now worth £800, but you can identify better things to hold, then just take the £800 and buy £800-worth of that other alternative investment, and that £800-worth of alternative investment  which you buy will eventually go up to £1000 and beyond.  Doesn't make a lot of sense to hold the £800 investment that you don't really want or need in your portfolio until it gets back to £1000, and only at that point switch it into the more suitable investment.

This is not to say that in my opinion the CTY fund is a good or a bad one. Just the observation that some people obsess over whether a fund shows a positive or negative in their portfolio summary and if something goes down, they feel they can't sell it because 'it owes then money' and to sell would be 'admitting defeat'. When actually, selling it as part of getting a better-structured portfolio containing the assets that will be most useful to them for long-term success, is absolutely fine.

If you don't have the time or inclination to pore over investment data about what is the exact best combination of things to hold as a complex portfolio, you have a lot in common with a lot of people. Keep it simple. As part of that, holding some CTY can be fine.

However, holding a particularly large amount of CTY that overlaps with other things in your portfolio doesn't seem a great choice, and it is good to recognise that you could sell some of your high exposure to that fund and get a better-structured portfolio. The argument that, well yes I should sell it at some point and get a more suitable portfolio, but "i cant cut the CTY just yet as they are running a loss" is just total nonsense.

If there were significant tax consequences of selling it, that's understandable and sometimes a tax benefit can outweigh a likely performance risk. But you are doing this in a SIPP, where there are no CGT or income tax when your pension fund buys or sells a holding. So when you realise the portfolio is not diverse enough, or is over-concentrated in one area, you can just cut and fix it, dispassionately and without adverse tax consequences.

Sue58

A you already have a longstanding DB pension in place, I would be tempted to invest it all in either VLS80 or the HSBC All World fund. All these funds hold similar company shares but with different allocations so personally there is not much point in holding all three and you don't really need the income/dividend from CTY?

Ceme3000

C_Mababejive said:

Yes i cant cut the CTY just yet as they are running a loss so im banking the divis as its an IT and should be ok. Maybe the diversification could be in management style? i.e add a managed mixed investment fund?

I certainly wouldn't hold something just because it has a paper loss. If you can identify another fund that you think is going to perform better then move to it now. You would find that the better performing fund returns you to profit sooner than leaving it in CTY.

AnotherJoe

I would switch the VLS80* into HSBC, dump the BMO**, sell the CTY (why on earth does it matter its running a loss presently????)  and switch whatever % of the cash you are comfortable with into HSBC.  

A good example of BH's explanation above about selling at a loss, rather than hang on and wait for it to get back where i bought it, i sold BYD a year ago at 50% loss, then bought Tesla which has gone up 3x since then.

* because of the over representation of oil and finance in it

**IMO property just has too many issues post covid