Portfolio construction

ChilliBob

Hey everyone,

I've just skim read the recent thread about Japan and China and noticed some comments about new investors perhaps not knowing about portfolio construction.

I'm a new investor, and to an extent, this perhaps (almost certainly!) is something I could benefit from knowing more sbout.

Content online either seems to focus on 'Just go passive Global Equities and choose bonds' 'Active thar be dragons'. Or 'Choose this active fund for this reason ' Trustnet type articles.

There doesn't seem to be much content on the popular sites, or I have not found it, on the actual mechanics of portfolio construction and maintenance/rebalancing.

I'm aware of the need to diversify, but I'd be interested to read articles others think are decent, or learn how more experienced investors on here would construct and maintain a portfolio. Especially in the current climate where the concept of 60:40 is claimed to be dead by many a manager, and the role of gov bonds not behaving as they have been for ages. 

Yeah, that's sbout it! 

For what's its worth I intend to use a combination of passive and active funds. 

Prism

Here are some to look through

Portfolios – Portfolio Charts

bostonerimus

Here's something from a Boglehead perspective.

https://www.bogleheads.org/wiki/Investing_from_the_UK

You can make investing as easy or as hard and complex as you want. You need to decide if you lose anything by keeping it simple or gain anything by complicating things, or vis a versa. Bear in mind everyone has their own biases, mine is for simplicity and passive indexes, but I also have one active income fund. So stay flexible, don't be too dogmatic, and don't do anything you don't understand.

ChilliBob

Prism said:

Here are some to look through

Portfolios – Portfolio Charts

Cheers, I came across that site quite a while ago and thought it was just for entering your own portfolio really, I didn't give it too much of a look. I'll give it some proper attention this time. 

ChilliBob

bostonerimus said:

Here's something from a Boglehead perspective.

https://www.bogleheads.org/wiki/Investing_from_the_UK

You can make investing as easy or as hard and complex as you want. You need to decide if you lose anything by keeping it simple or gain anything by complicating things, or vis a versa. Bear in mind everyone has their own biases, mine is for simplicity and passive indexes, but I also have one active income fund. So stay flexible, don't be too dogmatic, and don't do anything you don't understand.

I'm certainly sticking to the last point, in so much as I fully grasp what I have invested in, and for this reason thinks like Bitcoin are fully off the table for now, I need to focus my attention on the more conventional side of things.

As regards easy of complex, I'll lie somewhere in the middle, closer to simple I hope  

Prism

ChilliBob said:

Prism said:

Here are some to look through

Portfolios – Portfolio Charts

Cheers, I came across that site quite a while ago and thought it was just for entering your own portfolio really, I didn't give it too much of a look. I'll give it some proper attention this time. 

I would just use a few of the professional ones as ideas but not use them directly. Many are quite defensive, with lots of bonds, and all are US focused.

ChilliBob

Also I'd be interested to hear what people think of construction in the current climate, where investors chronicle proclaimed the role of government bonds was very different to the past.

A crib sheet of correlations would be good, alongside one's that typically do well or bad in inflationary and higher interest rate environments.

Clearly diversified equities which are all say 'growth orientsted' is still very narrow, in the current climate what are good combinations (besides say value focused funds).

E. G. Real Estate, gold, commodities, infrastructure, corporate bonds etc. Or should one just look to wealth preservation type things like cgt/pnl/ruffer? I'd considered these kind of things, and also considered stuff like REITs, TRIG etc. 

ChilliBob

Prism said:

ChilliBob said:

Prism said:

Here are some to look through

Portfolios – Portfolio Charts

Cheers, I came across that site quite a while ago and thought it was just for entering your own portfolio really, I didn't give it too much of a look. I'll give it some proper attention this time. 

I would just use a few of the professional ones as ideas but not use them directly. Many are quite defensive, with lots of bonds, and all are US focused.

See I worry this, and lots of books, are somewhat outdated right now with lots of what I'm reading about bonds at the moment. Finding the negative correlation assets with some return seems to be the challenge. 

coyrls

By definition, you can't have a negative correlation betweeen two assets and have both make a positive returns at the same time.

ChilliBob

Indeed, but that's not what I'm thinking about. Bonds cushioned the blow for those invested when the pandemic hit. That's what I'm talking about, and the claim is that its only gov bonds which have this correlation, but now they basically have negative yields in most cases.

It does make me think perhaps I should leave it to an active manager in a WP fund instead, at the expense of higher returns in a global tracker or other active funds. 

noclaf

Op, hopefully this isn't against forum rules and just for transparency I have no affiliation but there is a YouTube channel called Pensioncraft or similar.
The guy sounds like he knows his stuff, very in depth analysis which sometimes goes over my head but I like the way he articulates investment concepts and am fairly sure he has covered portfolio allocations. I haven't had time to watch a lot of the videos but so far liking the content.