Smaller companies fund - passive or active?

green_man

Deleted_User said:

I use EWI and SSON as the mid/small caps in my portfolio. Although how EWI can be described as mid cap when it has Tesla in there!
I did own Herald at one point , but I have rationalised that bucket of my portfolio to IWFQ (World Quality Factor ETF - in effect a sort of passive Fundsmith) as the core with Fundsmith and BG Long Term Growth as the active large caps and EWI and SSON as the active mid/small caps.
I am 40 days or so from retirement, so organising my portfolio now (transferring in a lot of DC and DB pensions). (for reference this is in-effect bar-belled by CGT, PNL and MyMap3) - there is another bucket in the middle but not relevant for this

Thanks for the info.  I don’t really consider EWI or SSON as smallcap funds, so not exactly what I’m looking for, but they should complement your Fundsmith and BG funds.

Are you keeping a cash buffer as well?  I had a thread a few weeks ago asking about CGT, PNL usage and whether they were used as an alternative to cash. The consensus seemed to be that It should not be used that way. I plan 3 years of cash buffer, but had considered 1 year cash and 2 years PNL/CGT.

[Deleted User]

green_man said:

Deleted_User said:

I use EWI and SSON as the mid/small caps in my portfolio. Although how EWI can be described as mid cap when it has Tesla in there!
I did own Herald at one point , but I have rationalised that bucket of my portfolio to IWFQ (World Quality Factor ETF - in effect a sort of passive Fundsmith) as the core with Fundsmith and BG Long Term Growth as the active large caps and EWI and SSON as the active mid/small caps.
I am 40 days or so from retirement, so organising my portfolio now (transferring in a lot of DC and DB pensions). (for reference this is in-effect bar-belled by CGT, PNL and MyMap3) - there is another bucket in the middle but not relevant for this

Thanks for the info.  I don’t really consider EWI or SSON as smallcap funds, so not exactly what I’m looking for, but they should complement your Fundsmith and BG funds.

Are you keeping a cash buffer as well?  I had a thread a few weeks ago asking about CGT, PNL usage and whether they were used as an alternative to cash. The consensus seemed to be that It should not be used that way. I plan 3 years of cash buffer, but had considered 1 year cash and 2 years PNL/CGT.

1 year cash and 2 years PNL/CGT/ (+MyMap3 as the cheap "passive"). - exactly what I am using.
Then the middle bucket is 60/40 (6 years)

noClue

It's interesting regarding PNL/CGT. To my understanding they are ITs? Are they regarded low risk as a good place for "non-immediate" cash?

[Deleted User]

noClue said:

It's interesting regarding PNL/CGT. To my understanding they are ITs? Are they regarded low risk as a good place for "non-immediate" cash?

Investment trusts which, in the case of PNL, purpose is to (in their terms) "Its investment policy is to protect and increase (in that order) the value of shareholders’ funds per share over the long term."
They will flex their investments in order to do that, currently Gold 10%, Index linked Bonds 28%, Cash 20%, US Equity 27%, UK Equity 9%....
I wouldn't hold them as a replacement for immediate cash, PNL dropped 11% during March and didn't recover until Mid May

StellaN

Deleted_User said:

noClue said:

It's interesting regarding PNL/CGT. To my understanding they are ITs? Are they regarded low risk as a good place for "non-immediate" cash?

I wouldn't hold them as a replacement for immediate cash, PNL dropped 11% during March and didn't recover until Mid May

Trojan X the OEIC fund version of PNL dropped less. In fairness though, PNL dropped less than CGT during the March downturn. 

noClue

I see. So PNL is like a 36/64-ish split... I might consider something like this for non-immediate cash...

AnotherJoe

El_Torro said:

Regarding other Smaller Companies funds, I've been in ASI Smaller Global Companies for a few years now. It makes up about 5% of my SIPP. It has performed more or less as I expected it to, good long term returns but pretty volatile. Over the last 5 years it has grown about 120%. Compare that to the 70% growth of VLS 100 (just to use an example). 

Throwing Herald Investment Trust in the mix, it has followed a similar pattern to ASI Smaller Global Companies, though Herald appears to have considerably outperformed it in the last year or so. Its 5 year growth is 140% (so higher than ASI's 120%). ASI is only about 10% UK so that may (or may not) account for the difference in performance.

Yep I bought ASI a year ago, been very happy with it and just increased the % I hold by decreasing a Vanguard Global index 

StellaN

ASI Global Smaller Companies has been a decent performer over the past 5 years but EWI and HRI have done better. Smithson and Montanaro Better World are relatively new but they have also outperformed ASI over their short existence. Although, you would expect all global smaller company funds/IT's to be pretty volatile so they are investments for the longer term.  

Thrugelmir

Smaller companies historically have provided a negative correlation to large companies. 

StellaN

But surely its all about diversification