Could my pension be working harder?

Thrugelmir

Prism said:

Deleted_User said:

Prism said:

Deleted_User said:

I started with nothing and invested through the tech stock crash, the early 2000s crashes, 2008. I did it in several countries and am now well into 7 figures. So, I am not exactly an “inexperienced DIY investor”. 

In fact, there is good consensus among experienced DIY investors and better advisors that tinkering with sectors is a mug’s game. Here is an example:
https://www.bogleheads.org/forum/viewtopic.php?t=288300

I think quite the opposite. Regional allocations don't especially interest me but avoiding some industry sectors and selecting others is the way I typically select my funds.

The point about “regional allocations” isn’t to tinker with them, with one exception (home market) but to stick with market caps. 

Avoiding industry sectors is an active decision which works well for people who know the future.  Wonder how many people made the right bets on sectors in this plot: https://www.bogleheads.org/forum/viewtopic.php?p=4701165#p4701165. And of the ones who guessed wrong, how many chased the winning sectors to only get hit with underperformance again. 

Well on that basis VLS 100 isn't doing a very good job as it is tinkering with the allocations beyond the home market. Europe is 10% lower than the index benchmark, the US is 20% lower, Canada is 80% lower and emerging europe is 20% higher. This is not just a home market allocation, its an actively managed alteration to the global index

I assume you meant to say Emerging Markets. That's the been the direction of capital flows recently with money being pulled out of developed markets. 

Linton

Deleted_User said:

Linton said:

Deleted_User said:

I started with nothing and invested through the tech stock crash, the early 2000s crashes, 2008. I did it in several countries and am now well into 7 figures. So, I am not exactly an “inexperienced DIY investor”. 

In fact, there is good consensus among experienced DIY investors and better advisors that tinkering with sectors is a mug’s game. Here is an example:
https://www.bogleheads.org/forum/viewtopic.php?t=288300

That link seems to be all about using sectors to guess next year's winners.  I use sector "tinkering" the other way round: the market is full of investors guessing next years winners and the market behaves accordingly. My aim is to avoid over-dependence on any particular company, or company type/size/location and industry.

As in “I have been trying to avoid too much FANG/technology”? 

The thing is that while Apple is large, its still a small fraction of the world cap so if something bad happens specifically to APPL, a couch potato portfolio would be just fine. 

My problem with the FAANGS is that they crowd out many other companies that are just as, if not more, likely to provide high returns.  From a quick check they represent perhaps 12% of a large company global index.  In terms of % return on investment is that the best use of one's money? 

So rather than the 3.6% devoted to Apple in the index my figure is about 1%.  The space saved enables the holding of a significant number of much smaller companies.  My % total tech holdings are fairly close to those in the global index.

Anther area where I significantly cut back on the index is US.   60% or so is to me too much of a single point of failure.  Reducing the % to 40% again gives more space to other opportunities.  One of my better performing funds over the past few years has been in Japanese Smaller Companies at 6% of my total portfolio.  What % would that be of a global all-cap tracker?

Prism

Deleted_User said:

What is your source? I am seeing 44.26% US within VLS100 (Trustnet). US makes 54.5% of the world. VLS gives 22% to UK instead of 5% (actual share of the world market cap).  The delta (17%) has to come from the US, Europe and others. And VLS appears to reduce them pro rata or very close.

I was looking at the Morningstar stats here using regional exposure vs index (MCSI ACWI)
https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000MLUS&tab=3
It seems that they reduced the US exposure more than other regions to account for the UK allocation

Prism

Thrugelmir said:

Prism said:

Deleted_User said:

Prism said:

Deleted_User said:

I started with nothing and invested through the tech stock crash, the early 2000s crashes, 2008. I did it in several countries and am now well into 7 figures. So, I am not exactly an “inexperienced DIY investor”. 

In fact, there is good consensus among experienced DIY investors and better advisors that tinkering with sectors is a mug’s game. Here is an example:
https://www.bogleheads.org/forum/viewtopic.php?t=288300

I think quite the opposite. Regional allocations don't especially interest me but avoiding some industry sectors and selecting others is the way I typically select my funds.

The point about “regional allocations” isn’t to tinker with them, with one exception (home market) but to stick with market caps. 

Avoiding industry sectors is an active decision which works well for people who know the future.  Wonder how many people made the right bets on sectors in this plot: https://www.bogleheads.org/forum/viewtopic.php?p=4701165#p4701165. And of the ones who guessed wrong, how many chased the winning sectors to only get hit with underperformance again. 

Well on that basis VLS 100 isn't doing a very good job as it is tinkering with the allocations beyond the home market. Europe is 10% lower than the index benchmark, the US is 20% lower, Canada is 80% lower and emerging europe is 20% higher. This is not just a home market allocation, its an actively managed alteration to the global index

I assume you meant to say Emerging Markets. That's the been the direction of capital flows recently with money being pulled out of developed markets. 

No I did mean emerging Europe. It is only a small % of the whole but highlights a few areas where it seems that the active allocation part of VLS is used.

[Deleted User]

Linton said:

Deleted_User said:

Linton said:

Deleted_User said:

I started with nothing and invested through the tech stock crash, the early 2000s crashes, 2008. I did it in several countries and am now well into 7 figures. So, I am not exactly an “inexperienced DIY investor”. 

In fact, there is good consensus among experienced DIY investors and better advisors that tinkering with sectors is a mug’s game. Here is an example:
https://www.bogleheads.org/forum/viewtopic.php?t=288300

That link seems to be all about using sectors to guess next year's winners.  I use sector "tinkering" the other way round: the market is full of investors guessing next years winners and the market behaves accordingly. My aim is to avoid over-dependence on any particular company, or company type/size/location and industry.

As in “I have been trying to avoid too much FANG/technology”? 

The thing is that while Apple is large, its still a small fraction of the world cap so if something bad happens specifically to APPL, a couch potato portfolio would be just fine. 

My problem with the FAANGS is that they crowd out many other companies that are just as, if not more, likely to provide high returns.  From a quick check they represent perhaps 12% of a large company global index.  In terms of % return on investment is that the best use of one's money? 

So rather than the 3.6% devoted to Apple in the index my figure is about 1%.  The space saved enables the holding of a significant number of much smaller companies.  My % total tech holdings are fairly close to those in the global index.

Anther area where I significantly cut back on the index is US.   60% or so is to me too much of a single point of failure.  Reducing the % to 40% again gives more space to other opportunities.  One of my better performing funds over the past few years has been in Japanese Smaller Companies at 6% of my total portfolio.  What % would that be of a global all-cap tracker?

Appl makes up 1% of VLS. The other FAANGS make up less. Should be to your liking. I don’t know if they will return more or less than the other sectors. 

GSP

Reading some of the posts, how’s a newbie going to have any confidence when you boys are arguing over sectors, funds etc. Not quite backing the horses, but can someone end up with a bloody nose here if they have little knowledge in what they are doing?

AlanP_2

GSP said:

Reading some of the posts, how’s a newbie going to have any confidence when you boys are arguing over sectors, funds etc. Not quite backing the horses, but can someone end up with a bloody nose here if they have little knowledge in what they are doing?

If I recall correctly (apologies if I'm wrong) you transferred out from a defined benefit scheme and now you seem very worried about where you have ended up.

In hindsight would sticking with the DB scheme have been a better option for you?

In answer to your point, most comments on this thread are about tinkering at the margins. A sensible asset allocation, a sensible withdrawal rate and regular (1 - 2 - 4 times a year) to make sure things are broadly on track with your plan and that's it. Whether you go all passive via a multi-asset fund, all active via single sector managed funds or a hybrid will, in hindsight, make a bit of difference to your returns. But, if your chosen options allow you to live the life you want who cares?

OldMusicGuy

GSP said:

Reading some of the posts, how’s a newbie going to have any confidence when you boys are arguing over sectors, funds etc. Not quite backing the horses, but can someone end up with a bloody nose here if they have little knowledge in what they are doing?

Here you go - FOBP. Fear of a better portfolio. A newbie can easily end up with a perfectly adequate, low cost portfolio. But newbies get obsessed with the idea that there is always a "better" fund and the so called "experts" must know what the "best" funds are. So newbies get paralysed because they feel they are somehow missing out. They tend to chop and change funds chasing returns when the best strategy is to make choices based on your objectives and risk profile and then leave well alone.

It's a hard lesson to learn. It took me a few years to learn it. You can spend too much time reading these threads which will just add to your confusion. You need to decide what you want to do:

1 Decide it's all too complicated and stick with an IFA.
2 Decide you want to go for a simple, low cost approach a la Edwards and Kroijer. Make some simple choices and stick with them.
3 Build up your knowledge of different funds, sectors and companies. Get very focused on the composition and performance of funds/investment vehicles and build a more complex portfolio. Post a lot on MSE to say how well your portfolio is performing 

No right or wrong approach. Just what suits you and how much time you are prepared to invest in learning (or how much money you are prepared to invest with an IFA if you don't want to learn).

Rich1976

Linton said:

Deleted_User said:

Linton said:

Deleted_User said:

I started with nothing and invested through the tech stock crash, the early 2000s crashes, 2008. I did it in several countries and am now well into 7 figures. So, I am not exactly an “inexperienced DIY investor”. 

In fact, there is good consensus among experienced DIY investors and better advisors that tinkering with sectors is a mug’s game. Here is an example:
https://www.bogleheads.org/forum/viewtopic.php?t=288300

That link seems to be all about using sectors to guess next year's winners.  I use sector "tinkering" the other way round: the market is full of investors guessing next years winners and the market behaves accordingly. My aim is to avoid over-dependence on any particular company, or company type/size/location and industry.

As in “I have been trying to avoid too much FANG/technology”? 

The thing is that while Apple is large, its still a small fraction of the world cap so if something bad happens specifically to APPL, a couch potato portfolio would be just fine. 

My problem with the FAANGS is that they crowd out many other companies that are just as, if not more, likely to provide high returns.  From a quick check they represent perhaps 12% of a large company global index.  In terms of % return on investment is that the best use of one's money? 

So rather than the 3.6% devoted to Apple in the index my figure is about 1%.  The space saved enables the holding of a significant number of much smaller companies.  My % total tech holdings are fairly close to those in the global index.

Anther area where I significantly cut back on the index is US.   60% or so is to me too much of a single point of failure.  Reducing the % to 40% again gives more space to other opportunities.  One of my better performing funds over the past few years has been in Japanese Smaller Companies at 6% of my total portfolio.  What % would that be of a global all-cap tracker?

What funds do you invest in out of interest as I assume you're actively managed from what you're saying?

[Deleted User]

OldMusicGuy said:

GSP said:

Reading some of the posts, how’s a newbie going to have any confidence when you boys are arguing over sectors, funds etc. Not quite backing the horses, but can someone end up with a bloody nose here if they have little knowledge in what they are doing?

Here you go - FOBP. Fear of a better portfolio. A newbie can easily end up with a perfectly adequate, low cost portfolio. But newbies get obsessed with the idea that there is always a "better" fund and the so called "experts" must know what the "best" funds are. So newbies get paralysed because they feel they are somehow missing out. They tend to chop and change funds chasing returns when the best strategy is to make choices based on your objectives and risk profile and then leave well alone.

It's a hard lesson to learn. It took me a few years to learn it. You can spend too much time reading these threads which will just add to your confusion. You need to decide what you want to do:

1 Decide it's all too complicated and stick with an IFA.
2 Decide you want to go for a simple, low cost approach a la Edwards and Kroijer. Make some simple choices and stick with them.
3 Build up your knowledge of different funds, sectors and companies. Get very focused on the composition and performance of funds/investment vehicles and build a more complex portfolio. Post a lot on MSE to say how well your portfolio is performing 

No right or wrong approach. Just what suits you and how much time you are prepared to invest in learning (or how much money you are prepared to invest with an IFA if you don't want to learn).

Right. Which is why the simple answer to OP’s question is that VLS100 is a good solution.