Vanguard LifeStrategy 60% Equity suitability?

ChilliBob

In my view diversifying with managers but via the same passive fund strategy isn't a bad idea. I think I may do the same. The results won't differ (much) but as you say you have the peace of mind that it's not all eggs in one basket. Much like the bank account scenario really. 

Thrugelmir

ChilliBob said:

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

A thematic portfolio doesn't mean not holding global equities, i.e. tech. Just a different means of allocating your money. Around 1% of global companies generate all the returns. The remaining 99% probably won't even outperform cash over the longer term. 

ChilliBob

If you take that route for most of your portfolio though isn't that either:
 * you saying you feel you do have the edge to choose the right themes and proportions at different times
* You don't have this egde therefore you need to cover all themes, which would be more expensive and time consuming than going down the passive index route?

To be clear, that's a question, not a statement, I'm a million miles knowledge on the subject! Plus I might be missing your point, I'm tired and putting down a toddler for the second time of the evening! 

Thrugelmir

A thematic portfolio would either require external guidance or a considerable time committment aided by access to quality research. That's why VLS60 and the like are so popular. Straightforward and cost effective. Learn to walk before you start running. There's a bewildering choice of investments available in the wider markets. In terms of holdings a thematic portfolio would ideally contain 15-20 holdings, with each holding worth in the region of 3% to 7% of the total portfolio. 

Edges only have to be small. An odd % or two compounded over many years adds up. 

BananaRepublic

Thrugelmir said:

ChilliBob said:

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

A thematic portfolio doesn't mean not holding global equities, i.e. tech. Just a different means of allocating your money. Around 1% of global companies generate all the returns. The remaining 99% probably won't even outperform cash over the longer term. 

What is the source for that claim? 

In 2017 there were 40,000 listed companies in the world, 10,000 of those represented 90% of market capitalisation. (It’s probably much more now given US market growth.) In the UK the FTSE 100 has ten times the market capitalisation of the FTSE 250. Clearly the former dominates in terms of returns. However the returns from the FTSE 250 are much higher in percentage terms, hence a better option for private investors.  I suspect you confuse total and percentage terms, although I don’t know what data you base your statement on. It’d be interesting to see it. 

Thrugelmir

BananaRepublic said:

Thrugelmir said:

ChilliBob said:

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

A thematic portfolio doesn't mean not holding global equities, i.e. tech. Just a different means of allocating your money. Around 1% of global companies generate all the returns. The remaining 99% probably won't even outperform cash over the longer term. 

What is the source for that claim? 

No confusion. There's comprehensive research papers on the topic. In relation to the major cap stocks in the US and globally.  

BananaRepublic

Thrugelmir said:

BananaRepublic said:

Thrugelmir said:

ChilliBob said:

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

A thematic portfolio doesn't mean not holding global equities, i.e. tech. Just a different means of allocating your money. Around 1% of global companies generate all the returns. The remaining 99% probably won't even outperform cash over the longer term. 

What is the source for that claim? 

No confusion. There's comprehensive research papers on the topic. In relation to the major cap stocks in the US and globally.  

Do you have a link? And what is your figure for percentage returns? 

ChilliBob

Thrugelmir said:

A thematic portfolio would either require external guidance or a considerable time committment aided by access to quality research. That's why VLS60 and the like are so popular. Straightforward and cost effective. Learn to walk before you start running. There's a bewildering choice of investments available in the wider markets. In terms of holdings a thematic portfolio would ideally contain 15-20 holdings, with each holding worth in the region of 3% to 7% of the total portfolio. 

Edges only have to be small. An odd % or two compounded over many years adds up. 

Very much so, thinking you can successfully emulate companies with access to that much information, that many smart people etc is rather naive!

Now, one area which is your pet area or so, different ball game, bug obviously still a challenge big time

Thrugelmir

BananaRepublic said:

Thrugelmir said:

BananaRepublic said:

Thrugelmir said:

ChilliBob said:

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

A thematic portfolio doesn't mean not holding global equities, i.e. tech. Just a different means of allocating your money. Around 1% of global companies generate all the returns. The remaining 99% probably won't even outperform cash over the longer term. 

What is the source for that claim? 

No confusion. There's comprehensive research papers on the topic. In relation to the major cap stocks in the US and globally.  

Do you have a link? And what is your figure for percentage returns? 

Has nothing to do with returns. Research these papers by Hendrik Bessembinder for starters. 

Do stocks outperform Treasury bills?

 

Wealth Creation in the U.S. Public Stock Markets 1926 to 2019 

mark55man

Thanks - will have a look.  That means by picking individual shares you have a 1 in a 100 chance of hitting the growth company (big enough to effect the global weighing machine, rather than a tiddler doubling), unless you have an edge - poor odds unless you use a tracker where you will pick up the growth through association