How to construct my investment portfolio?


Comments
-
Your choice of a cash LISA is very sensible, given your time frame.In terms of your investment portfolio, you are going for a high degree of diversification so the details don't really matter.While Vanguard is very popular on this board, you might find that the HSBC GIF series offer you a slightly better deal.
For the actively-managed part of your portfolio, do consider Investment Trusts as well as funds. Once you have decided that you want active management for a particular region of the world (and you might also consider funds in particular sectors of the economy, such as Healthcare or Clean Energy), look at the information about each Fund/IT that is available on sites like Trustnet and Morningstar. Personally I pay a lot of attention to what are called Modern Portfolio Statistics, but you must make your own choices.0 -
Voyager2002 said:Your choice of a cash LISA is very sensible, given your time frame.In terms of your investment portfolio, you are going for a high degree of diversification so the details don't really matter.While Vanguard is very popular on this board, you might find that the HSBC GIF series offer you a slightly better deal.
For the actively-managed part of your portfolio, do consider Investment Trusts as well as funds. Once you have decided that you want active management for a particular region of the world (and you might also consider funds in particular sectors of the economy, such as Healthcare or Clean Energy), look at the information about each Fund/IT that is available on sites like Trustnet and Morningstar. Personally I pay a lot of attention to what are called Modern Portfolio Statistics, but you must make your own choices.
HSBC GIF looks interesting and I'll read into it more, thanks!
Investment trusts look good, but if I use Vanguard I can't use a trust can I, as I'm only allowed to use one ISA platform per year? Or have I gotten that wrong?
1 -
I too tried to construct the perfect potfolio, perfectly weighted according to region. Then I got stressed and decided I didn't really know what I was doing and dropped everything into lifestrategy 100 instead. I won't be maximising profits, but I figure Vanguards potential for getting it completely wrong is a lot smaller than mine!Think first of your goal, then make it happen!2
-
Investment trusts look good, but if I use Vanguard I can't use a trust can I, as I'm only allowed to use one ISA platform per year? Or have I gotten that wrong?
You can only add new money to one S&S ISA per year . You can open more than one and transfer another ISA in as that is not new money. You do not have to open a Vanguard ISA to hold Vanguard funds. Many other platforms offer them and also have a vast range of non Vanguard investments available .
As you are starting a job, then you will also be starting a pension . For retirement savings , pension beats ISA due to the beneficial tax treatment, although you will not be able to access any money until you are about 60. Even then you should at least consider making a decent % contribution to your pension ( above the minimum) and also think about which investments within the pension.
The above comments do not apply if you are lucky enough to be starting a job with a final salary type pension , although these are mainly confined to the public sector nowadays.
0 -
It isn't too hard to match the geographical split of the worlds market cap using tracker funds. You can use iShares who have indexes for pretty much any of the main regions. You can look at the MSCI index below:
https://www.msci.com/documents/10199/f7349d88-8c6f-46dc-bf0d-f2e02e1f5be5
However, this implies that the UK has only 4% global market cap. You should increase this to reduce currency risk.
The 'ideal' geographical split would take into account both market cap and country GDP. This would look something like the following:
North America: 50%
UK: 15%
Emerging Markets: 12.5%
Europe ex-UK: 10%
Asia Pacific ex-Japan: 7.5%
Japan: 5%
This would be a 100% equity allocation and would normally produce net of fees returns of circa 7% per annum.
Like Barnstar said above, Vanguard LifeStrategy 100 may be fine for your needs. Although this has a heavy home bias, which as I explained earlier is not necessarily a bad thing as it reduces currency risk.0 -
I think the time has passed for geographic splits, because of globalisation.Better to do sector splits if you believe in diversification.Geography maybe still works for smaller companies but even there its so much easier to be global these days that any company counted as "small" is still likely to be global in nature.2
-
dakofsta said:Investment trusts look good, but if I use Vanguard I can't use a trust can I, as I'm only allowed to use one ISA platform per year? Or have I gotten that wrong?
Or of course you could open a Vanguard ISA one year and a different ISA the following year, although then you might end up paying over the odds in platform fees.
0 -
That is correct (presuming that if you use Vanguard as a platform it only invests in Vanguard products: not something I have checked
Yes only Vanguard products on their platform
home bias' has been mentioned above but for many it is a disadvantage, and if you want a relatively low UK allocation then you are likely to need something other than Vanguard, such as the HBC gif.
If you just use index trackers then there will only be a home bias if you construct one . It is the Vanguard multi asset funds that have an approx. 25% home bias . Less than many traditional pension funds/portfolios but too much for some people.
0 -
dakofsta said:Even if the details don't matter I have no idea where to even start from - I'd imagine the logical process would be to determine which funds I want and then allocate weightings to each, but aside from the global all cap index and s&p 500 I can't choose which funds I'd like, nor do I know what weighting I'd give.
Then, you may find that a global tracker gives you adequate coverage of all the sectors for which you have chosen passive management, or if not it is likely to be easy to find a few trackers to do the job. It does not matter if there is some overlap.
For active management, choose ONE fund/IT for each sector or region.
It is unlikely to be worth allocating weightings.
1 -
Thank you all so much for your advice, this has been so helpful!
I think for now, the best option is to use either Vanguard LifeStrategy 100% equity fund or the FTSE Global All Cap for my 75% passive split as they give me coverage of many sectors (and if I can't decide on a weighting split myself, it makes sense to use a pre-determined one instead), and putting the other 25% into either the active global equity fund or global momentum factor fund. I think the simplicity of these funds would be good for the meantime, and I can do some reading over the next few months to see if I have a better idea of how I want to split my investments
0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 348.4K Banking & Borrowing
- 252.2K Reduce Debt & Boost Income
- 452.5K Spending & Discounts
- 241K Work, Benefits & Business
- 617.4K Mortgages, Homes & Bills
- 175.7K Life & Family
- 254.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards