Fund selection sanity check please

Tommohawk

Apologies for yet another post - just trying to ensure I don't do anything too daft before pulling the trigger.

Summary: I have just retired, now getting state pension + annuities of approx 5k. I have 2 x 20k ISAs, one with VLS 60 and the other with BMO Universal MAP C. 
I also have DC pensions worth about 170k which I have yet to claim. Also cash reserves of about 30k

The immediate issue is I have about 100k to put in a GIA, and just trying to sort it. Over time this will get transferred into ISAs, for now its in my wife's name as she wont pay any income tax for the next 2 years.

I'm looking at HSBC global strategy balanced portfolio for the core of this 100k, so maybe 60k, plus 20k in Liontrust special situations and 20k in Troy Trojan X. 

TBH my head is spinning with all the data and graphs and articles I've read and I cant really process any more information. So could someone kindly tell me if this looks broadly sensible. I'll happily look at any other ideas and happy to suffer criticism or abuse. I just need to put it to bed! 

Many thanks in anticipation.

tacpot12

I think it looks broadly sensible. Solid selections that should produce good returns.  

DireEmblem

Why did you pick those three funds out of curiosity?

End of day it’s up to you, and your risk appetite.  If that’s what you hold in your ISA’s and plan to hold long term, then go for it.

george4064

Looks fine to me... could be better, could be worse.

JohnWinder

TBH my head is spinning with all the data and graphs and articles I've read and I cant really process any more information.

You (we, anyone) can make it a lot more complicated than it needs to be. It's easy to get the returns the market has to offer (less costs); reflect on why you should get more than that.

All you need to do is choose the proportions you will have in stocks, bonds and cash, based on your risk capacity; choose broadly diversified fund(s) that spread the risk widely; keep costs low.

"Investing is simple. To be sure, you can make it ludicrously complicated.” https://www.whitecoatinvestor.com/the-majesty-of-simplicity/

Rollinghome

Tommohawk said:

Apologies for yet another post - just trying to ensure I don't do anything too daft before pulling the trigger.

Summary: I have just retired, now getting state pension + annuities of approx 5k. I have 2 x 20k ISAs, one with VLS 60 and the other with BMO Universal MAP C. 
I also have DC pensions worth about 170k which I have yet to claim. Also cash reserves of about 30k

The immediate issue is I have about 100k to put in a GIA, and just trying to sort it. Over time this will get transferred into ISAs, for now its in my wife's name as she wont pay any income tax for the next 2 years.

I'm looking at HSBC global strategy balanced portfolio for the core of this 100k, so maybe 60k, plus 20k in Liontrust special situations and 20k in Troy Trojan X. 

TBH my head is spinning with all the data and graphs and articles I've read and I cant really process any more information. So could someone kindly tell me if this looks broadly sensible. I'll happily look at any other ideas and happy to suffer criticism or abuse. I just need to put it to bed! 

Many thanks in anticipation.

You've found some decent funds with nothing too wrong with any of them but, as John points out, it does seem to be unnecessarily complicated, and added together it's not clear what you're trying to do.

You already have two multi-asset funds that seem intended to be complete, ready-made portfolios, VLS60 and BMO Universal MAP C.  I'm not too sure exactly what the second is as BMO Universal MAP is a range of multi-asset funds covering Cautious through to Adventurous, and Income to Growth. All are available as Class C and appear to be presided over by Paul Niven, better known as the very able manager of F&C Iinvestment Trust. Which one do you have?

You now want to add two more multi-asset funds, HSBC Global pf, doing something similar to the first two, plus Troy Trojan, where again it's not clear what you are trying to add to the others. You then want a fund, Liontrust, that adds a big dollop of UK All Companies to throw out of kilter the balance of the other funds.  When Paul Niven was asked why he was under-weight UK he said it was because there was nothing there he wanted to hold.  You might be right and he might be wrong, but if so, why would you invest in one of his one-stop pf funds?

It's a bit like someone who wants to bake a cake buying three brands of Instant Cake Mix, mixing them all together, then adding extra cups of flour and sugar.  The cake might turn out to be delicious, but why do it that way?

Similarly, your selection could be fine but once you've decided what you hope to achieve, there could be a simpler, clearer, way. Multi-asset funds are supposed to make life easier, not more complicated.

Tommohawk

Hi and thanks for those comments and sorry for slow response - rare late night out!

tacpot12 said:

I think it looks broadly sensible. Solid selections that should produce good returns.  

Thanks for that reassurance.

DireEmblem said:

Why did you pick those three funds out of curiosity?

End of day it’s up to you, and your risk appetite.  If that’s what you hold in your ISA’s and plan to hold long term, then go for it.

VLS ISA: Vanilla/Goto/default proven diversified fund.

BMO Universal MAP C ISA: Diversified, low cost volatility managed, good Lipper and Trustment ratings, outperforms volatility managed sector.

HSBC global strategy balanced portfolio: Diversified, low cost volatility managed, less US centric, has real estate element, good risk/return ratio, good Lipper ratings.

Liontrust special situations: good risk return ratio, flexible investment, below average volatility, very good Sharpe ratio (but OCR 0.85%)

Troy Trojan X: Good risk return ratio, flexible, good Lipper rating, Morningstar analyst Gold rating, good record when markets unstable.

 george4064 said:

Looks fine to me... could be better, could be worse.

I'm happy with the second bit... but "could do better"? Speaking as a novice I'm sure you're right of course, but do you have any specific deletion/switches/additions?

JohnWinder said:

TBH my head is spinning with all the data and graphs and articles I've read and I cant really process any more information.

You (we, anyone) can make it a lot more complicated than it needs to be. It's easy to get the returns the market has to offer (less costs); reflect on why you should get more than that.

All you need to do is choose the proportions you will have in stocks, bonds and cash, based on your risk capacity; choose broadly diversified fund(s) that spread the risk widely; keep costs low.

"Investing is simple. To be sure, you can make it ludicrously complicated.” https://www.whitecoatinvestor.com/the-majesty-of-simplicity/

Fabulous, thanks yes and I totally agree with the simplicity strategy for life in general. Great link, love those quotes! I've put some more comment on my general thinking following my reply to Rollonghome.  

Audaxer

To keep it simple but well diversified, I'd just keep VLS60 and HSBC GS Balanced in equal proportions. I'm not sure the other funds would give you any additional benefit. I've just sold Troy Trojan Income X as I've not been that happy with it's performance.

Tommohawk

Rollinghome said:

You've found some decent funds with nothing too wrong with any of them but, as John points out, it does seem to be unnecessarily complicated, and added together it's not clear what you're trying to do.

You already have two multi-asset funds that seem intended to be complete, ready-made portfolios, VLS60 and BMO Universal MAP C.  I'm not too sure exactly what the second is as BMO Universal MAP is a range of multi-asset funds covering Cautious through to Adventurous, and Income to Growth. All are available as Class C and appear to be presided over by Paul Niven, better known as the very able manager of F&C Iinvestment Trust. Which one do you have?

You now want to add two more multi-asset funds, HSBC Global pf, doing something similar to the first two, plus Troy Trojan, where again it's not clear what you are trying to add to the others. You then want a fund, Liontrust, that adds a big dollop of UK All Companies to throw out of kilter the balance of the other funds.  When Paul Niven was asked why he was under-weight UK he said it was because there was nothing there he wanted to hold.  You might be right and he might be wrong, but if so, why would you invest in one of his one-stop pf funds?

It's a bit like someone who wants to bake a cake buying three brands of Instant Cake Mix, mixing them all together, then adding extra cups of flour and sugar.  The cake might turn out to be delicious, but why do it that way?

Similarly, your selection could be fine but once you've decided what you hope to achieve, there could be a simpler, clearer, way. Multi-asset funds are supposed to make life easier, not more complicated.

I entirely take your point and love the cake mix analogy - excellent.

TBH I have started a few posts here on MSE, and have had some very helpful responses, your own included of course. I have tried to follow the mainstream view of majoring in "cakemix" diversified funds, but go some way to mitigate the risks of US and general volatility by including some active elements, whilst avoiding undue dependence on bonds to achieve stability.   

This seems to tick all the various comment that MSE folks have pointed out.

I bet there are other better ways to achieve this though - frankly it would be bizarre if my suggestion were best choice!

george4064

Tommohawk said:

Hi and thanks for those comments and sorry for slow response - rare late night out!

tacpot12 said:

I think it looks broadly sensible. Solid selections that should produce good returns.  

Thanks for that reassurance.

DireEmblem said:

Why did you pick those three funds out of curiosity?

End of day it’s up to you, and your risk appetite.  If that’s what you hold in your ISA’s and plan to hold long term, then go for it.

VLS ISA: Vanilla/Goto/default proven diversified fund.

BMO Universal MAP C ISA: Diversified, low cost volatility managed, good Lipper and Trustment ratings, outperforms volatility managed sector.

HSBC global strategy balanced portfolio: Diversified, low cost volatility managed, less US centric, has real estate element, good risk/return ratio, good Lipper ratings.

Liontrust special situations: good risk return ratio, flexible investment, below average volatility, very good Sharpe ratio (but OCR 0.85%)

Troy Trojan X: Good risk return ratio, flexible, good Lipper rating, Morningstar analyst Gold rating, good record when markets unstable.

 george4064 said:

Looks fine to me... could be better, could be worse.

I'm happy with the second bit... but "could do better"? Speaking as a novice I'm sure you're right of course, but do you have any specific deletion/switches?

You’re asking a very broad and open question, by asking these types of questions does really show that you are a beginner investor.

As others have pointed out, you don’t seem to have much method or reasoning to hold the Liontrust and Trojan alongside your core HSBC fund. With the Liontrust and Trojan both 20% allocation each I would say that’s significant enough to form part of your core portfolio, so you need to have good reason to hold them.

On the other hand, if you did indeed want to invest in those funds as your satellite funds I would adjust the allocations accordingly so that they are only satellite funds (at least from when you start this portfolio). Something like 85% HSBC GS Balanced as your core holding and 7.5% each in Liontrust and Trojan as your more ‘fun’ satellite holdings. Equally could do 90%/5%/5%, depending on how much belief you have in those two satellite funds.

Tommohawk

Audaxer said:

To keep it simple but well diversified, I'd just keep VLS60 and HSBC GS Balanced in equal proportions. I'm not sure the other funds would give you any additional benefit. I've just sold Troy Trojan Income X as I've not been that happy with it's performance.

Interesting.

I could certainly be talked out of Troy - but was looking for flexibility. Seem to get good review too. And returnd 8.5% cf 5.5% for sector, no? (3 years)

Maybe I should buy the dip?