Comparing IFA managed portfolio to Vanguard LS60

Thrugelmir

barnstar2077 said:

Now that brexit is finally starting to get somewhere I wouldn't be surprised if the returns of the VLS 60 fund went up a bit.

Exclude UK fixed interest stocks and UK equities make up a relatively % of the overall fund. Too little to make a meaningfull impact overnight. 

d63

in their original post the OP said their total portfolio was up by 13.61% for the last 12 months in a cautious portfolio over 14 different funds mainly due to the  Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  in a subsequent post however the OP said that the BG fund amounted to some 12% of the total. -- which i do not quite understand, for then on its own would not the gain from the BG  be ~114.45 x (12/100) = 13.73%, which would then imply the remaining 13 funds overall contribution was -0.12%? 

AnotherJoe

d63 said:

in their original post the OP said their total portfolio was up by 13.61% for the last 12 months in a cautious portfolio over 14 different funds mainly due to the  Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  in a subsequent post however the OP said that the BG fund amounted to some 12% of the total. -- which i do not quite understand, for then on its own would not the gain from the BG  be ~114.45 x (12/100) = 13.73%, which would then imply the remaining 13 funds overall contribution was -0.12%? 

Perhaps not so bad as that since it would have been maybe 5% to start with, so I'm not sure if the maths shoudl be done on start or ending %, but yes you make a good point and possibly answer a Q I asked earlier, what happens if you take out one or two "lucky (or clever??) performers?

Cus

A_T said:

What is the full IFA portfolio? Without seeing it it's hard to say whether the outperformance over VLS60 has been down to taking significant extra risk.

OP had been investing in vls60. When OP went to this IFA a risk assessment should have been performed, so whatever the risk of the current portfolio is, it is the right one. (Assuming the IFA did his job)

One could argue that this is the point of employing an IFA.
If OP had stated that the IFA portfolio had underperformed versus VLS60, would we be questioning whether the underperformance was due to not taking appropriate risk? I doubt it..

enthusiasticsaver

d63 said:

in their original post the OP said their total portfolio was up by 13.61% for the last 12 months in a cautious portfolio over 14 different funds mainly due to the  Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  in a subsequent post however the OP said that the BG fund amounted to some 12% of the total. -- which i do not quite understand, for then on its own would not the gain from the BG  be ~114.45 x (12/100) = 13.73%, which would then imply the remaining 13 funds overall contribution was -0.12%? 

You make a good point and I would need to check the dates the IFA actually bought the fund and I note from the December update that for cautious portfolios they have reduced the percentage allocation to BG to 10%. The only fund which is in negative is L and G UK property feeder. Some of the funds have been changed over the last quarter so it is quite difficult to see how it would have performed without the BG. I am of the opinion that doesn't matter as it is not like they do an individual portfolio just for us. We are just following their cautious risk allocation strategy but sometimes they change the percentages. It may well be they have taken the ongoing fees from the BG. Also there were only 12 funds at the beginning of the year. They have added a cash fund and I need to see which others have changed. 

zagfles

AnotherJoe said:

d63 said:

in their original post the OP said their total portfolio was up by 13.61% for the last 12 months in a cautious portfolio over 14 different funds mainly due to the  Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  in a subsequent post however the OP said that the BG fund amounted to some 12% of the total. -- which i do not quite understand, for then on its own would not the gain from the BG  be ~114.45 x (12/100) = 13.73%, which would then imply the remaining 13 funds overall contribution was -0.12%? 

Perhaps not so bad as that since it would have been maybe 5% to start with, so I'm not sure if the maths shoudl be done on start or ending %, but yes you make a good point and possibly answer a Q I asked earlier, what happens if you take out one or two "lucky (or clever??) performers?

Indeed - plus one year is far too short a period to draw any meaningful conclusions. Perhaps the OP can update us this time next year, and the year after... maybe an annual update on this thread?

enthusiasticsaver

NottinghamKnight said:

enthusiasticsaver said:

BananaRepublic said:

enthusiasticsaver said:

This quite clearly says it is in the low to medium risk profiled portfolio but obviously only forms a percentage of the overall portfolio.  In ours it is 12% and is even present in the lowest risk but only 6% in that particular fund. No equity fund in isolation could be called cautious. 

They might argue that although constituent funds are higher risk, by diversifying over many geographical sectors and markets, they are reducing the risk to the desired levels. 

Yes exactly. Even if I were using my own DIY approach I would not pick funds all in one sector or all the one asset type or geography. The VLS 60 is obviously spread across different asset types and globally diversified. It follows that not all the funds in an IFA managed portfolio if viewed in isolation would all be at the same risk level. There are significant sums invested in bonds to bring the risk level down of the portfolio. 

Are you convinced that the bond allocation is actually bringing the risk level down? 

I think it is bringing the volatility down but as said previously I don't have enough investment knowledge to know for sure hence why we are using an IFA. The performance of the bonds is not great (average 5% to 8%) but I assume they are there to balance the portfolio against the equities but the experts would know this better than me. 

enthusiasticsaver

Cus said:

A_T said:

What is the full IFA portfolio? Without seeing it it's hard to say whether the outperformance over VLS60 has been down to taking significant extra risk.

OP had been investing in vls60. When OP went to this IFA a risk assessment should have been performed, so whatever the risk of the current portfolio is, it is the right one. (Assuming the IFA did his job)

One could argue that this is the point of employing an IFA.
If OP had stated that the IFA portfolio had underperformed versus VLS60, would we be questioning whether the underperformance was due to not taking appropriate risk? I doubt it..

Indeed the IFA  did do a risk assessment and actually moved us down from medium risk to low to medium risk because my husband is more risk averse than me.  When  I was managing our investments and invested in the VLS60 I never risk assessed him but on the online risk assessment the IFA did he came up considerably more risk averse probably because he is not at all knowledgeable or confident re investments. I actually was prepared for the portfolio to do worse than the VLS60 not only because it is supposedly a lower risk profile which I always assume means lower performance but because obviously the ongoing fees could reduce the valuation. I was therefore surprised pleasantly this morning when I checked the Fidelity performance report to see the 13.61%. 

There are four  Strategic bonds Jupiter, Rathbone, Royal London and Merian Global amounting to a total of 46%. Equities are split across Lindsell Train UK, Castlefield UK Buffetology, Baillie Gifford American, Man GLG continental Europe, Legg Mason Japan, Fidelity Asia Pacific, Fidelity Emerging Markets and Ninety One American Franchise totalling 54%. It is rebalanced quarterly so I cannot say that we have been invested in these funds for the whole year without drilling through all the many transactions. It is actually 12 funds still plus a cash fund. 

NottinghamKnight

enthusiasticsaver said:

NottinghamKnight said:

enthusiasticsaver said:

BananaRepublic said:

enthusiasticsaver said:

This quite clearly says it is in the low to medium risk profiled portfolio but obviously only forms a percentage of the overall portfolio.  In ours it is 12% and is even present in the lowest risk but only 6% in that particular fund. No equity fund in isolation could be called cautious. 

They might argue that although constituent funds are higher risk, by diversifying over many geographical sectors and markets, they are reducing the risk to the desired levels. 

Yes exactly. Even if I were using my own DIY approach I would not pick funds all in one sector or all the one asset type or geography. The VLS 60 is obviously spread across different asset types and globally diversified. It follows that not all the funds in an IFA managed portfolio if viewed in isolation would all be at the same risk level. There are significant sums invested in bonds to bring the risk level down of the portfolio. 

Are you convinced that the bond allocation is actually bringing the risk level down? 

I think it is bringing the volatility down but as said previously I don't have enough investment knowledge to know for sure hence why we are using an IFA. The performance of the bonds is not great (average 5% to 8%) but I assume they are there to balance the portfolio against the equities but the experts would know this better than me. 

There has been a lot of debate around whether bonds actually offer any value, interest rates and QE have pushed values up but there's a limit and potential for large loss of capital; bond yields are very low (well under the 5 to 8% you quote) which means such rises must have been due to capital appreciation which is very unlikely to occur again. This certainly doesn't look like a cautious approach to me.

Prism

enthusiasticsaver said:

Equities are split across Lindsell Train UK, Castlefield UK Buffetology, Baillie Gifford American, Man GLG continental Europe, Legg Mason Japan, Fidelity Asia Pacific, Fidelity Emerging Markets and Ninety One American Franchise totalling 54%. It is rebalanced quarterly so I cannot say that we have been invested in these funds for the whole year without drilling through all the many transactions. It is actually 12 funds still plus a cash fund. 

They seem pretty decent active funds. I would several of those myself if I went regional rather than global.