Advice on using a wealth preservation fund

JohnWinder

the value of WP funds only really becomes apparent when circumstances take a significant turn for the worse, as that's the scenario that investors in these products will typically be planning for....

In god we trust; others bring data.

jamei305

Anyone who relies solely on past performance when selecting funds is sure to be in for a surprise, because the the only thing we can know about the future is that it's guaranteed not to be the same as the past. There's plenty of information that would indicate how various WP holdings would perform in various future scenarios, so it's not blind trust.

Aminatidi

I have 50% of my portfolio (so around £135K as I figure real numbers might give some context) in "wealth preservation".

That 50% is roughly a 60/40 split between Ruffer and Capital Gearing Trust.

I used to hold Personal Assets Trust but got rid simply because I moved some money into Fundsmith and there's a bit too much similarity in stock selection.

I don't approach it very scientifically I just think of that 50% as something roughly similar to VLS40 on the risk scale but with a few more tools at their disposal than stocks and bonds.

I have recently been pondering whether to open a Vanguard account and move some of that across (probably the Ruffer allocation) into VLS40 or VLS60 so this thread is timely.

eskbanker

JohnWinder said:

the value of WP funds only really becomes apparent when circumstances take a significant turn for the worse, as that's the scenario that investors in these products will typically be planning for....

In god we trust; others bring data.

Data is obviously preferable to trust but only if it's relevant!

Albermarle

Aminatidi said:

I have 50% of my portfolio (so around £135K as I figure real numbers might give some context) in "wealth preservation".

That 50% is roughly a 60/40 split between Ruffer and Capital Gearing Trust.

I used to hold Personal Assets Trust but got rid simply because I moved some money into Fundsmith and there's a bit too much similarity in stock selection.

I don't approach it very scientifically I just think of that 50% as something roughly similar to VLS40 on the risk scale but with a few more tools at their disposal than stocks and bonds.

I have recently been pondering whether to open a Vanguard account and move some of that across (probably the Ruffer allocation) into VLS40 or VLS60 so this thread is timely.

There has been mention on other threads that there is a growing case for actively managing  bonds in the current environment rather than a passive approach( not everybody agrees of course )  As all the investments mentioned contain significant % of bonds then by moving from WP to VLS you would be moving from active to passive.

tebbins

Albermarle said:

Aminatidi said:

I have 50% of my portfolio (so around £135K as I figure real numbers might give some context) in "wealth preservation".

That 50% is roughly a 60/40 split between Ruffer and Capital Gearing Trust.

I used to hold Personal Assets Trust but got rid simply because I moved some money into Fundsmith and there's a bit too much similarity in stock selection.

I don't approach it very scientifically I just think of that 50% as something roughly similar to VLS40 on the risk scale but with a few more tools at their disposal than stocks and bonds.

I have recently been pondering whether to open a Vanguard account and move some of that across (probably the Ruffer allocation) into VLS40 or VLS60 so this thread is timely.

There has been mention on other threads that there is a growing case for actively managing  bonds in the current environment rather than a passive approach( not everybody agrees of course )  As all the investments mentioned contain significant % of bonds then by moving from WP to VLS you would be moving from active to passive.

I'm sceptical for 2 reasons. 1. Yields are so low that unless the TER is equivalent or lower (plenty of overpriced bond index and good value active bonds funds) any skill/luck would struggle to breakeven with the index. 2. The return on bonds is the yield to maturity, that's it. Unless you get lucky with a selection of higher-yielders, I'm not aware of a way to generate more return than an equivalent index aside from straw man arguments like comparing a particularly successful bond fund or fund with a high bond allocation ie CGT, with a "total" bond index. They are obviously not comparable anymore than CGT is comparable with the FTSE 100.
 I've heard it suggested that, mechanically, active managers can somehow pick or "ride" bonds in such a way as to exploit the weaknesses in a passive approach and manage rising interest rates risks, this isn't convincing.
I agree that there is an argument for actively avoiding negative and low yielders when equivalent positive/higher yielders are available. That is easy and obvious. I also agree that there is an argument for timing your bond allocation which can generate outperformance, but this is mostly luck.

Albermarle

I agree that there is an argument for actively avoiding negative and low yielders when equivalent positive/higher yielders are available. That is easy and obvious. I also agree that there is an argument for timing your bond allocation which can generate outperformance, but this is mostly luck.

You have to take into account even less people understand the bond market than the stock market , so even people who are otherwise reasonably experienced investors could well prefer a fund manager to do it for them . 

fizio

Just got back and hugely appreciate all the replies and some very useful links that I will followup on to better understand WP funds. I would say the primary reason I started looking was simply to minimise risk of a correction over next 6 months but its also looking like a way to further diversify my portfolio. I would say that I'm looking at 20-30% of my portfolio in WP with the bulk being a combination of mainly WW tracker, some UK and some EM - with vanguard. 
I have also been struggling with bonds on the basis of most reports being very negative but from a balanced portfolio I think I need some bonds so have about 10%. Interestingly the Trojan guy was talking about selecting bonds - index linked etc so some element of selection versus my tracker style. 
I will do some analysis of the various WP funds mentioned to better understand which would suit me and the relevant charges before picking one to make an initial investment. 
I am also interested in the points about value investing etc as I expect I don't have much exposure in my current portfolio but I am trying to avoid getting into too many segments outside of trackers so maybe there is a value tracker somewhere.

Thanks again...

tebbins

fizio said:

Just got back and hugely appreciate all the replies and some very useful links that I will followup on to better understand WP funds. I would say the primary reason I started looking was simply to minimise risk of a correction over next 6 months but its also looking like a way to further diversify my portfolio. I would say that I'm looking at 20-30% of my portfolio in WP with the bulk being a combination of mainly WW tracker, some UK and some EM - with vanguard. 
I have also been struggling with bonds on the basis of most reports being very negative but from a balanced portfolio I think I need some bonds so have about 10%. Interestingly the Trojan guy was talking about selecting bonds - index linked etc so some element of selection versus my tracker style. 
I will do some analysis of the various WP funds mentioned to better understand which would suit me and the relevant charges before picking one to make an initial investment. 
I am also interested in the points about value investing etc as I expect I don't have much exposure in my current portfolio but I am trying to avoid getting into too many segments outside of trackers so maybe there is a value tracker somewhere.

Thanks again...

iShares do a global value tracker ETF, Vanguard do a Ftse all world high dividend yield ETF. These buy companies whose vakuation metrics (PE, PB) and dividend yields ars above average. Even if you don't believe that value and yield will outperform over the long run, there is a view that because these two factors have performed so poorly lately, they will revert to the mean or bounce back.
The UK, Japan, Asia-Pacific and EM are currently relatively cheap areas of global equity, so you could pick value based on geography rather than global value.

fizio

tebbins said:

iShares do a global value tracker ETF, Vanguard do a Ftse all world high dividend yield ETF. These buy companies whose vakuation metrics (PE, PB) and dividend yields ars above average. Even if you don't believe that value and yield will outperform over the long run, there is a view that because these two factors have performed so poorly lately, they will revert to the mean or bounce back.
The UK, Japan, Asia-Pacific and EM are currently relatively cheap areas of global equity, so you could pick value based on geography rather than global value.

Thanks - I have often mulled about high yield dividend and do have a UK one in my portfolio - though only a small amount. Same with UK FTSE all share in that I have a decent percentage. I will look at the vanguard global tracker as that seems an obvious one to checkout..