Core of the Portfolio

asitaram

Hi,

I have recently started investing in both ISA and SIPP (couple of grands in each) through HL. Started with just 2 global funds i.e. Fundsmith and Royal London Global Sustainable Equity. Not making any changes.. but in the background I have been researching/looking at lot of articles and forum posts to increase my knowledge for long term journey. I should have done this years ago at the beginning of my career (I know I am late to the game). This question is just part of my research so please don't tell me off for talking about "this and that" already.

I understood that a lot of long term investors here and everywhere, have this Core + Satellite strategy which seems interesting and kind of makes sense to someone like me. So, I was looking at what funds can be "Core".. found a lot of Global Index funds to serve this purpose.  Again, since I have looked at Fundsmith, Bluewhale etc in Active category, their approach is simple, quality and companies which are very big with cash in hand. So, I was looking at what kind of Global indexes come near to this approach.

Vanguard LS100, Vanguard FTSE Dev World - Ex UK, Fidelity Index World, HSBC FTSE All World - are the Global Index funds everyone talking about. But, these funds have 1000's of all sorts of companies in them.. I read (and agree) that "Concentration" is the way to Win (or loose). Then based on this philosophy, I started looking into not-so-famous Global Index funds and found "L&G Global 100 Index" fund which seems to be trying to track the S&P 100 which has Dev World coverage with heavy US bias and the companies in this fund seems to be very large. 

Q1) If I am to construct a "keep an eye" virtual Core + Satellite portfolio and want to make the Core an Index fund.. is this "L&G Global 100 Index" a good option or better than other funds i have mentioned or have I failed the test already ? I would like to know your thoughts on this fund, whether you agree with Index funds or not.. I just want to know how you see this.. 

Q2) What % you guys normally allocate to the Core of your portfolio ? 50% good or bad ?

Thanks

AnotherJoe

Whilst some would advocate a core and then some focussed investments, not everyone would have the focussed. And  not everyone would recommend a core, some might say pick 10 or 20 investments and run them equally. Especially people who say you have to concentrate to get ahead fir whom 100 probably is 5x-10x too many. 

And if you want a core, matter of opinion if it is 100 or 1000 companies. 

I could tell you what I'd do but others do very different. Heck even I do it different, I run 2 SIPPs quite differently, and an ISA thats also different to those!
So work out what you think would work for you. Three no right answer except in hindsight, though I think most would agree that with £2k or is it £4K you are overthinking it, wait unti, youve got  say £10k before branching out. 

asitaram

@AnotherJoe

Thanks for your reply. I am not moving the money from the funds I have invested in.. I am learning for the day when I have £10k or more. I am not building the core + satellite portfolio yet.

What do you think about the "L&G Global 100 Index" fund ?

Prism

I use Fundsmith as my equities core - around 50% of the total. The rest is made up of smaller company funds, emerging markets, sectors (like tech and health) and microcaps - not all at the same time though.
Others might go for a passive fund core and then add some extra funds as satellites. 

asitaram

@Prism
Thanks for your reply. I was also looking at Fundsmith & Bluewhale as Active Core funds. But, say if I want to look into an Index either part of Core or on it's own Core.. what do you think about ""L&G Global 100 Index" ?

MinuteNoodles

I think you need to read Tim Hale's Smarter Investing book first.

AnotherJoe

asitaram said:

@AnotherJoe

Thanks for your reply. I am not moving the money from the funds I have invested in.. I am learning for the day when I have £10k or more. I am not building the core + satellite portfolio yet.

What do you think about the "L&G Global 100 Index" fund ?

Not heard of it before you raised it here. The numbers don't look bad at a quick glance. A bit Better than the much overhyped here VLS100. As with many of these things it's more important to get invested in roughly the right area than spend too long fussing over the exact investment.  

But core and satellites is just one of many possible investment approaches.  

Alz1986

I researched much of Vanguards range before I invested into L&G Global 100. Its focused on 100 of the largest caps, which is what usaully drive the markets. I use satellite shares and Trusts at smaller % to boost my exposure in other areas.

Linton

asitaram said:

@Prism
Thanks for your reply. I was also looking at Fundsmith & Bluewhale as Active Core funds. But, say if I want to look into an Index either part of Core or on it's own Core.. what do you think about ""L&G Global 100 Index" ?

It is rather unbalanced, 70% US, 27% Tech.  So I would not consider it for a core holding.  In my view if you use a core it should be as broad as possible covering the bulk of your desired allocation.   Then the satellites add a relatively small bias to align the portfolio to  your objectives/preferences. Following an index does not automatically make a fund suitable for a core, it all depends on which index.

Albermarle

Also a core fund could be a low cost multi asset fund at your preferred level of risk , rather than a 100% equity index fund.

asitaram

Albermarle said:

Also a core fund could be a low cost multi asset fund at your preferred level of risk , rather than a 100% equity index fund.

Okay, do you think "BG Managed" can be one of them or are there any other multi-asset core-friendly multi asset funds avoiding Lifestrategies ?