Wealth Preservation Funds - Do you use them? Current Views?

ChilliBob

Albermarle said:

ChilliBob said:

Albermarle said:

Managing a mixture of different assets to achieve the objective is beyond my capabilities and so I am happy to pay a manager who has a similar objective and a convincing track record in a wide range of economic conditions to do it for me.

This is also why I invest in them .

Due to the low (but hopefully low volatility!) returns the Inv Trust idea with the stamp duty of 0.5% is a bit of an irritation, so OEICs are preferred, 

Over the long term for a buy and hold investor the one off 0.5% is not important. 
However for the IT's ,using a platform with a capped platform charge for exchange traded products can keep ongoing costs down .

I guess regarding ITs and stamp its just if I were to put say  100k into one and its only getting say 2% return then that 0.5% takes a while to break even! I get the point it's short in the grand scheme of things!

It's odd, I'm happy to pay it for something spicy like EWI etc, but I feel WP should be cheaper, but that's clearly irrational so I'm trying hard not to listen to thay part of myself! 

A better comparison for the WP funds , would be a multi asset fund with about 30/40% equity . So something like Mymap3 , HSBC global strategy balanced , VLS 40 etc . Then you have to decide whether the extra 0.4/ 0.5% ongoing charge was worth it for the WP funds/IT's
Or you can hedge you bets and have a couple of multi asset fund(s) and a couple of WP funds/IT's.

I think that's what I'll do tbh, the fees can really stack up if you're not careful, if paying 1% or over its got to really earn its place in a portfolio imo! Some of these PE ITs with mad fees, performance fees and stamp duty, mental! 

Thrugelmir

ChilliBob said:

I think that's just a discussion on phrasing tbh. If ts pretty clear thay say CG or PNL are less risky than a Global Tracker.

Don't confuse volatility with risk. Volatility is a measurement of risk i.e. the potential deviation away from average returns that an investment will move and the frequency with which it will do so. Resulting in defined objectives not being met with any certainty. 

Linton

ChilliBob said:

Thanks, I thought it was you but I couldn't be sure, I'd had a couple of beers when I was reading!

What risks am I wanting to avoid? I guess loosing a substantial percentage, like say 50% as you say.

Essentially my planning is along the lines of I'm nearly 40, I may not work again (the plan will assume I won't, for simplicity). I'm fortunate enough to have enough cash to cover my lifestyle.

So, one may think wp alone is enough, however, I have enough capital that I could arguably put most of it at risk of dropping say 30% and probably have enough. If I don't *need* to take this risk to t get to some magic fire number, should I take this risk? 

My decision is somewhere in the middle, take the risk to grow more capital, should I need it due to bad calculations, massively unexpected things, or to pass on to my son etc. But, don't be 100% risk on as I reckon I'd get a bit stressed if a pot that's everything dropped by 50%!

Obviously cash will form a substantial chunk of my portfolio, to both cover day to day and for opportune investing 

Why ae you worreid about a 50% drop?  Is it just that you dont like the idea of losing money or is that you would go hungry?

Rather than try to choose the right % you could put the money you need somewhere safe eg cash for the first 5 years and a lowish equity investment for afterwards.   You could then put the rest of your money into 100% equity with no (rational) worries.

ChilliBob

Yeah, I do appreciate the difference, but they are very closely related in some circumstances. If for example a global tracker and a highly concentrated active fund eith 28 holdings had the same 3yr volatility (SD), the concentrated one is more risky, well, in my view, I guess others may disagree. 

ChilliBob

Regarding the fund choice, it does seem a pretty closed shop, but as a new investor, it does look like some of the lower volatility choices like the MyMap3 etc might fit the bill.. However, if experienced investors thought the same surely they'd opt for them, so, I'm clearly missing something! 

bostonerimus

ChilliBob said:

Regarding the fund choice, it does seem a pretty closed shop, but as a new investor, it does look like some of the lower volatility choices like the MyMap3 etc might fit the bill.. However, if experienced investors thought the same surely they'd opt for them, so, I'm clearly missing something! 

Experienced investors often make poor decisions because of ego and hubris. With so much choice it is easy to second guess yourself. Don't do that because it will only lead to madness. 

ChilliBob

Hmm, I think that's true sometimes, but not eith some of the experienced people on here who have said some very useful stuff 

talexuser

My best WP funds have been CGT and PNL which proved their worth during last years drop. I dropped Ruffer too a while ago but changed to RIT which is a little bit of a preservation fund. Over the last year most of the dividends from growth funds have gone into to WP because I felt the market was too toppy for this level of debt and printing and a crash is overdue with ridiculous valuations like Tesla and bitcoin. It all depends on your horizon, more than 10 to 15 years and a 50% drop will be nothing - unless it comes right at the end!  

coyrls

If you construct your own portfolio, you typically don't use multi-asset funds, as then you can't control the asset allocation of the whole portfolio.  I know there's been a spate of posts with people mix and matching multi asset funds with other funds but except in very limited circumstances, it doesn't make sense to me.  I would suggest it should be one thing (a multi-asset fund) or another (a portfolio of funds) and I suspect that is why people who are constructing their own portfolio don't opt for multi-asset funds.

ChilliBob

coyrls said:

If you construct your own portfolio, you typically don't use multi-asset funds, as then you can't control the asset allocation of the whole portfolio.  I know there's been a spate of posts with people mix and matching multi asset funds with other funds but except in very limited circumstances, it doesn't make sense to me.  I would suggest it should be one thing (a multi-asset fund) or another (a portfolio of funds) and I suspect that is why people who are constructing their own portfolio don't opt for multi-asset funds.

I see where you are coming from, however, surely something like CGT is multi asset as it invests on bonds, cash, gold, property etc.