Portfolio Reassessment - Critique

AngieP61

In February this year, my husband and I decided to change platforms. We moved all our investments into cash because we also wanted to reassess our investment portfolio and make some changes. We have been investing on a DIY basis for a number of years with no particular strategy and up to now have only been invested in a 100% global growth portfolio in investment trusts and active funds. We now feel the time is right to reduce our risk exposure. We will still mainly invest in a global growth portfolio but with some wealth preservation funds for more balance. At this stage we do not require any income from our investments.  

 First of all I would like to give you some background information. My husband retired 6 years ago and is now 62 and for the past two years he has been drawing his personal allowance from his SIPP each year on a UFPLS basis and re-investing this into his ISA  – he is due his state pension in four years time. I am 59 and still working, I am self employed and love my work so hopefully I will carry on until at least my state pension age of 67. At the moment whilst I am still working we do not need an income from our investments as we can live on my wage. We also have five years income set aside in cash in the usual fixed bond ladders and regular savings accounts in case of emergencies or a market crash. We have two main ISA accounts (iWeb), a small ISA account (Fidelity) and two SIPP accounts (Fidelity) with a total investment value of just over £650,000.

We have selected the following trusts/funds for our portfolio and would like to hear any comments or critique, good or bad. We did consider whether we should just choose a world tracker with some wealth preservation funds or even go with a couple of multi asset funds such as HSBC Global Strategy Balanced and VLS60? However, as we have only ever invested in active funds it seems strange for us to go the passive route but yet again opinions on this would be most welcome. 

ISA’s

Trojan X – 26%

T. Rowe Price Global Focused Growth Q – 10%

Baillie Gifford Positive Change – 10%

Rathbone Global Opportunities – 7%

Scottish Mortgage Investment Trust – 5%

Total ISA values: £373,200

 

SIPPS

Capital Gearing – 16%

Polar Capital Technology IT – 10%

Monks - 6%

Edinburgh Worldwide – 5%

Smithson – 5%

Total SIPP values: £280,400

 * Percentages are of the overall investment value of just over £650,000

We don’t consider ourselves to be experienced investors so before we make any final decisions on the new portfolio we would be interested to hear any views on what we have in mind so that we can take any of your comments into consideration. Thank you.    

dunstonh

We have selected the following trusts/funds for our portfolio and would like to hear any comments or critique, good or bad.

In terms of risk, there is no consistency in the selection. Some are very very high risk. a couple are very defensive.

What level of risk are you looking for?  

broadly speaking, how much can you take the value falling by before you panic?  

 We did consider whether we should just choose a world tracker with some wealth preservation funds or even go with a couple of multi asset funds such as HSBC Global Strategy Balanced and VLS60?

Your chosen spread would appear to be much higher risk than VLS60 or HSBC GS Bal. 

Linton

It's a bar bell structure, high growth/risk at one end and pretty cautious at the other with not a lot in the middle. Nothing very wrong with that, it is a recognised approach.  After running it through Moringstar X Ray somewhat to my surprise I find it is pretty well diversified in its equity allocation. Over the past 5 years with an average annual return of about 16% its performance has been very good, compared with VLS60s 7%  So from my viewpoint it is fine if you can withstand the excitement.
In your position I would want to calm down a bit more especially as I guess you have more than enough money for your needs. However the 5 years cash answers at least some of the possible criticism in that area.  

Albermarle

In February this year, my husband and I decided to change platforms. We moved all our investments into cash

Your market timing to move into cash was very good , so maybe you do not need any advice 

Out of interest why did you change platforms ?

AnotherJoe

AngieP61 said:

In February this year, my husband and I decided to change platforms. We moved all our investments into cash because we also wanted to reassess our investment portfolio and make some changes. We have been investing on a DIY basis for a number of years with no particular strategy and up to now have only been invested in a 100% global growth portfolio in investment trusts and active funds. We now feel the time is right to reduce our risk exposure. We will still mainly invest in a global growth portfolio but with some wealth preservation funds for more balance. At this stage we do not require any income from our investments.  

 First of all I would like to give you some background information. My husband retired 6 years ago and is now 62 and for the past two years he has been drawing his personal allowance from his SIPP each year on a UFPLS basis and re-investing this into his ISA  – he is due his state pension in four years time. I am 59 and still working, I am self employed and love my work so hopefully I will carry on until at least my state pension age of 67. At the moment whilst I am still working we do not need an income from our investments as we can live on my wage. We also have five years income set aside in cash in the usual fixed bond ladders and regular savings accounts in case of emergencies or a market crash. We have two main ISA accounts (iWeb), a small ISA account (Fidelity) and two SIPP accounts (Fidelity) with a total investment value of just over £650,000.

We have selected the following trusts/funds for our portfolio and would like to hear any comments or critique, good or bad. We did consider whether we should just choose a world tracker with some wealth preservation funds or even go with a couple of multi asset funds such as HSBC Global Strategy Balanced and VLS60? However, as we have only ever invested in active funds it seems strange for us to go the passive route but yet again opinions on this would be most welcome. 

ISA’s

Trojan X – 26%

T. Rowe Price Global Focused Growth Q – 10%

Baillie Gifford Positive Change – 10%

Rathbone Global Opportunities – 7%

Scottish Mortgage Investment Trust – 5%

Total ISA values: £373,200

 

SIPPS

Capital Gearing – 16%

Polar Capital Technology IT – 10%

Monks - 6%

Edinburgh Worldwide – 5%

Smithson – 5%

Total SIPP values: £280,400

 * Percentages are of the overall investment value of just over £650,000

We don’t consider ourselves to be experienced investors so before we make any final decisions on the new portfolio we would be interested to hear any views on what we have in mind so that we can take any of your comments into consideration. Thank you.    

Sounds like the sort of thing I'd go for so maybe its a bit risky ! 

AngieP61

Albermarle said:

In February this year, my husband and I decided to change platforms. We moved all our investments into cash

Your market timing to move into cash was very good , so maybe you do not need any advice 

Out of interest why did you change platforms ?

Its wise to listen to other people's views so advice/views are always appreciated and considered.
We changed platforms to reduce our overall costs.

AngieP61

Linton said:

It's a bar bell structure, high growth/risk at one end and pretty cautious at the other with not a lot in the middle. Nothing very wrong with that, it is a recognised approach.  After running it through Moringstar X Ray somewhat to my surprise I find it is pretty well diversified in its equity allocation. Over the past 5 years with an average annual return of about 16% its performance has been very good, compared with VLS60s 7%  So from my viewpoint it is fine if you can withstand the excitement.
In your position I would want to calm down a bit more especially as I guess you have more than enough money for your needs. However the 5 years cash answers at least some of the possible criticism in that area.  

Thanks for your input Linton and running the portfolio through the Morningstar X Ray. It's good to know its pretty well diversified in its equity allocation. As dunstonh mentioned some of it is 'very, very high risk' but we remained invested during the crash in 2008 and any of the major corrections since.   
If you were in our position can I ask how you would 'calm down a bit more' on this portfolio? We don't need to have such high annual returns so maybe we should consider a less riskier portfolio even though we feel we could cope with it. Thank you.

AnotherJoe

I'd have thought you would "calm down a bit more"  (though I'm not convinced you need to with 5 years cash and a wage coming in) simply by adjusting the ratio of your capital preservation investments vs growth ones.

More in Trojan X, less in Polar, that sort of thing? But do you need to? 

And since you mentioned it, nothing in VLS please, if you go that route, choose a different multi investment fund that doesn't have the arbitrary 25% "UK" weighting which in reality means too much in a very few sectors (that are also looking dodgy right now.)

You've chosen a positive change fund, dont mess that up by adding extra Shell and BP via VLS. Other mixed funds are available.

StellaN

I agree with Linton & AnotherJoe, you are used to holding a 100% equity portfolio and have experienced  a crash/corrections. Therefore, bearing in mind you have plenty of cash reserves and an income the new portfolio although high risk seems to fit your requirements/risk tolerance. As the others have said you can always put more into your wealth preservation funds if you felt it was necessary? 

Linton

ISTM there are 2 rational reactions to having more money than you need:
1) You have spare money and so can afford to take extra risk.
2) You have no need for more money so you can afford to reduce your risk.
As I get older I am moving more towards (2)

AngieP61

Linton said:

ISTM there are 2 rational reactions to having more money than you need:
1) You have spare money and so can afford to take extra risk.
2) You have no need for more money so you can afford to reduce your risk.
As I get older I am moving more towards (2)

If we moved towards 2, would we as AJ & StellaN suggested just increase the amount we have in the wealth preservation funds? At the moment its about 42% of the overall proposed portfolio.