My proposed portfolio, or keep it simpler?

Thrugelmir

TelescopicWombat said:

Thrugelmir said:

Too elaborate. Which results in correlation rather than diversification. For example. 

VUSA, SMT and ECAR ~ All hold Tesla
VUSA, SMT ~ Both hold Amazon


High exposure to US $. 

Minimal exposure to Europe and the UK (Other than UK smaller companies) ? 

Yes, duplication in some areas as you have rightly pointed out, but difficult to get 100% diversification.

If your picks are on the basis of recent investment performance it's hardly surprising that the same holdings will crop up and the portfolio will become correlated. The danger with correlation is that it increases the volatility risk. 

Nebulous2

TelescopicWombat said:

Nebulous2 said:

My one had £10k in fidelity index world fund p acc up 9.77% 
£4k in Janus Henderson Japan opportunities down 1.83%
£2k in Lindsell train UK equity up 7.95% 
£2k in Liontrust UK smaller companies up 5.01% 
£2k still in cash, which hasn't been used. 

The other had £10k in in HSBC FTSE all world up 7.84%
£2k in Fidelity special situations W acc up 4.16%
£2k in Janus Henderson European small cos acc up 1.04
£3k in Jupiter UK mid cap ACC  up 0.45% 
£3k still in cash. 

It's always interesting to see what people plumb for in the end.

The Janus Henderson Japan is an interesting one - why did you go for that one? The Fidelity Index World has Japan as the second largest country in it's holding at 6.79%, but maybe you knew that?

Japan has not done well for a long time. It still has significant manufacturing capacity and some of the supply shortages should work for it. I'm a keen cyclist and Shimano simply cannot meet demand. I thought it was ripe for a move. 

TelescopicWombat

Thrugelmir said:

If your picks are on the basis of recent investment performance it's hardly surprising that the same holdings will crop up and the portfolio will become correlated. The danger with correlation is that it increases the volatility risk. 

How about a hybrid of the two portfolios I listed:

60 %   Lyxor Core MSCI World ETF (LCWL)
10 %   Chrysalis PE (CHRY)
10 %   BlackRock Smaller Companies IT (BRSC)
10 %   Pacific Horizon IT (PHI)
  5 %   iShares Electric Vehicle & Driver Tech ETF (ECAR)
  5 %   WisdomTree Commodity ETF (WCOB)

This should cut out a fair bit of correlation as you rightly pointed out Thrugelmir, and includes 4% UK, 14% EU, 6% JAP in the Lyxor Core holding. Only a little overlap with the Tesla in the ECAR holding now, but the holding is only 5% anyway.

I'm just slightly dubious about increasing to 10% for some holdings. I know most peoples opinion is 10% is the very maximum to go for for a satellite fund.

JohnWinder

Lyxor Core MSCI World ETF (LCWL) is unhedged for currency, and priced in $US. Is that risk ok for you?

bostonerimus

My bias (and that's what it is) is to keep things simple and cheap so that the admin of the portfolio is easy and your gains aren't eaten by fees. I would not have less than 20% in any fund. Set up core global equity and bond funds and maybe have a couple of satellites, but keeping them at at least 20% should stop you from taking silly risks. Why do people have to make things complicated? Just because there are thousands of funds out there doesn't mean you should be considering them. A few cap weighted funds from the likes of Vanguard or iShares or HSBC will work just fine.

DireEmblem

Why CHRY and not MNTN (I hold both).

TelescopicWombat

Deleted_User said:

Where are the bonds?

This is a very long term hold so decided to go with 100% equities. And adding bonds just creates another holding (unless I went for a multi-asset fund).

TelescopicWombat

JohnWinder said:

Lyxor Core MSCI World ETF (LCWL) is unhedged for currency, and priced in $US. Is that risk ok for you?

Yes, that is a slight concern, but I know people on MSE have held LCWL in the past (or still do). It would be interesting to find out others peoples thoughts on it though.

Also, I'd prefer an accumulation which LCWL is, and HMWO isn't - it's income.

TelescopicWombat

bostonerimus said:

My bias (and that's what it is) is to keep things simple and cheap so that the admin of the portfolio is easy and your gains aren't eaten by fees. I would not have less than 20% in any fund. Set up core global equity and bond funds and maybe have a couple of satellites, but keeping them at at least 20% should stop you from taking silly risks. Why do people have to make things complicated? Just because there are thousands of funds out there doesn't mean you should be considering them. A few cap weighted funds from the likes of Vanguard or iShares or HSBC will work just fine.

I would imagine most people start off with the KISS analogy, but then you read about 'keep it well diversified' and then feel you need to add some small cap, value, bonds, PE etc. It's about finding your personal investment 'equilibrium' I guess.

DireEmblem

I would generally go for unhedged for long term investment.  Fairly sure the likes of VWRP and so on are also 'unhedged'.