Multi Asset Fund or Self Managed Portfolio?

OldMusicGuy

I have a large DC pot (my only pension money apart from SP) which is invested across three multi-asset funds to give me the global spread and bond/equity ratio I desire. It's simple and it's achieving my objectives. 

I prefer this approach because I originally paid a financial adviser to construct a multi-sector portfolio for me and it was over-complex and costly. It prompted me to look into investing on my own and I decided that for my objectives a simple approach is better.

older_and_no_wiser

OldMusicGuy said:

I have a large DC pot (my only pension money apart from SP) which is invested across three multi-asset funds to give me the global spread and bond/equity ratio I desire. It's simple and it's achieving my objectives. 

I prefer this approach because I originally paid a financial adviser to construct a multi-sector portfolio for me and it was over-complex and costly. It prompted me to look into investing on my own and I decided that for my objectives a simple approach is better.

Yes, I re-adjusted my work and personal SIPPs a few months ago. These are quite significant pots, both built up over 30 years. I was new to self-investing and learning about the different strategies. I (stupidly?) put a large percentage (almost 25%) into Baillie Gifford American which was a stellar performing fund at that point. I bought into it right at the height and then it slumped around 12% during the tech sell-off. Only in the last week or so has it picked up and is now 3% up on my initial purchase.

I'm contemplating selling a large chunk of BG American - now that's made money for me - and re-investing in BlackRock MyMap which will be more diverse and less stressful for me! I have around 6 years till retirement and then will leave the money invested during drawdown.

The rest of my funds are invested in the mainly in HSBC Global Strategy multi-asset and Fidelity Index World. Then a few (much small percentage) in emerging markets, UK and global small caps. 

Please don't lambast me for my crude and possibly misjudged investment. I learnt a valuable lesson about FOMO and have subsequently learnt so much about the whole investing sector!

OldMusicGuy

swleventhal said:

Please don't lambast me for my crude and possibly misjudged investment. I learnt a valuable lesson about FOMO and have subsequently learnt so much about the whole investing sector!

It's a great lesson to learn, for me it was the best lesson. FOMO makes you chase "star" funds and "better" returns, even though this may mean more risk and volatility. Some people like the "thrill" of more specialised investing but also have higher risk tolerances than others. Have clear objectives, identify a plan that meets those objectives (and lets you sleep at night) and stick with it.

Along my journey I gradually shifted from active to passive (or mostly passive in the case of multi-asset funds). At one point I thought having some of my pot in an income focused equity fund was a good way to generate income in retirement, so I chose that star performer Mr Woodward. Fortunately I saw the warning signs and got out before things went badly wrong but that convinced me that a multi-asset fund approach was the best for me and my objectives. But YMMV of course.  

older_and_no_wiser

OldMusicGuy said:

At one point I thought having some of my pot in an income focused equity fund was a good way to generate income in retirement, so I chose that star performer Mr Woodward. Fortunately I saw the warning signs and got out before things went badly wrong but that convinced me that a multi-asset fund approach was the best for me and my objectives. But YMMV of course.  

Yikes @OldMusicGuy! Glad you managed to get out. Yes, it does teach us when we make mistakes. I learnt to have those "diamond hands" and not panic when the price plummeted. The worst thing is to sell during a loss. However, for Woodford it was different and when a fund goes under, you have to know the warning signs and get out ASAP.

Linton

I have a self managed portfolio but agree that for most people a multi-asset fund would be best.  They are ideal when all your requirements can be expressed in a 1 to 7 risk value for example when you are investing in a pension that wont be touched for another 20 years or you have a pot of money that you dont need in the foreseeable future.  However in retirement when the pot is financing one's ongoing living costs and one is balancing a number of different requirements I have the need for a much finer degree of control.

dunstonh

However, for Woodford it was different and when a fund goes under, you have to know the warning signs and get out ASAP.

And for Woodford, the warning signs were present in at least 2017 (that is when the warnings were first issued).  That is 2 years before it failed.

MK62

If you build your own portfolio, and then track it's performance vs a global MA fund, you have to be careful that you don't inadvertently invest beyond the risk level of the MA fund.......very easy to do........but you wouldn't then be comparing apples to apples. You also need to rebalance regularly, or again the comparison's validity drifts out........

Linton

MK62 said:

If you build your own portfolio, and then track it's performance vs a global MA fund, you have to be careful that you don't inadvertently invest beyond the risk level of the MA fund.......very easy to do........but you wouldn't then be comparing apples to apples. You also need to rebalance regularly, or again the comparison's validity drifts out........

I dont track my portfolio's performance against an MA fund except for amusement.  All that is important is that it delivers to my requirements.  Comparison is not so easy as you may think.  An MA fund may be risk 5 - what does that mean in reality? My requirements may include having £50K close to cash  and £100K at significantly lower than 100% equity risk.  The rest can be 100% equity.  That is easy to set up and monitor with a self-built portfolio.  Far less easy to find an MA fund that provides this.

Yes you do need to review regularly (not necessarily rebalance).  But in retirement that is also the case with an MA fund.   It is likely that your actual returns will be very different from those on which you have based your retirement plan.  So you will be in the position where you have chosen say a fund of risk 5 and find you are accumulating beyond your planned needs. You need to do something rather than ignore it or not even bother to check - eg go down to risk 4, increase expenditure, or decide to just let it run.

Moe_The_Bartender

I track my portfolio against UK RPI. In retirement, that’s the one that matters if your pot is big enough.

OldMusicGuy

Moe_The_Bartender said:

I track my portfolio against UK RPI. In retirement, that’s the one that matters if your pot is big enough.

Agree, all I need to do is to be ahead of inflation. That's why getting market average returns is fine for me.