Portfolio Critique Help

aroominyork

When you have a core of index funds and then a couple of large cap satellities - especially ones which cover major sectors such as tech - it is inevitable to have crossover. You are tilting your portfolio in a certain direction so it's a question of whether you are happy with the direction you are tilting it.

Your small cap and emerging markets funds look sensible enough, but everyone has their own choice so as long as they don't ring any alarm bells for people on here, go with what you are comfortable with.

Edit: I just had a look at your Rathbone fund. It is very growth-oriented according to its style box on Morningstar: 0% value, 31% balanced, 66% growth. If you like the fund's approach but want something a little more balanced, a little less volatile (FE 75 vs. FE90) but with similar past performance, good ol' Fundsmith would be worth a look.

Alexland

You might not like my answer if you are the naughty active sort but with plenty in cash products, an almost repaid property and 10-15 years until the money is needed I feel you could just keep the ISA/GIA super simple by investing in a single global equities fund (maybe HSBC FTSE All World, Vanguard Global All Cap or VLS100 for some home bias now the US is looking expensive) or an adventurous multi asset fund (VLS, HSBC GS or L&G Multi Index) for slightly less bad crashes.

We are happy on iWeb but understand the concern about their apparent transfer backlog delays so maybe take a signup incentive to go with Interactive Investor for the first year and then reassess going to iWeb in future? With those fund valuations either platform will be cheaper than staying with HL.

You do seem heavy in non-pension investments especially as you are getting nearer pension access age. We are the other way around with much more money in pensions than ISAs. Would it be tax efficient to increase the pension contribution rate even if that means burning down some of the GIA?

eskbanker

flopsy1973 said:

what about the funds would you do any changes ? what about the choices regarding small caps and emerging ? have I got a diversified PF or am i missing something

Being diversified is more of a means than an end - there are portfolios that could be described as diversified but if they don't actually deliver the objective then the diversification in itself isn't adequate.  I seem to recall that you struggled to articulate a clear strategy and objectives in previous threads, but perhaps it would be worth explaining your thought processes in constructing this portfolio, i.e. starting from identifying a multi-asset fund as a suitable core holding, what specifically are you looking to achieve by adding each of the other ones on top of that?

flopsy1973

aroominyork said:

When you have a core of index funds and then a couple of large cap satellities - especially ones which cover major sectors such as tech - it is inevitable to have crossover. You are tilting your portfolio in a certain direction so it's a question of whether you are happy with the direction you are tilting it.

Your small cap and emerging markets funds look sensible enough, but everyone has their own choice so as long as they don't ring any alarm bells for people on here, go with what you are comfortable with.

Edit: I just had a look at your Rathbone fund. It is very growth-oriented according to its style box on Morningstar: 0% value, 31% balanced, 66% growth. If you like the fund's approach but want something a little more balanced, a little less volatile (FE 75 vs. FE90) but with similar past performance, good ol' Fundsmith would be worth a look.

Tilting it certain direction ?? is it right direction I was not aware it was that heavily tilted.
I will look at the fundsmith option thanks

HeyYeah

I agree with the other poster that it could be more tax efficient to invest in your pension rather than add more to your ISA. For example, if you are going to invest your cash, you could contribute more of your salary towards the max allowable limit (£40K - but check the rules) and spend some of your cash instead, thus claiming the tax relief. You can also get money out of your pension as a tax free lump sum when you are 55 (subject to rules and restrictions). You should also consider which funds you are invested in from your company pension and think about them as part of your overall portfolio.Apologies for going off at a tangent, but I went through something similar when I was mid-forties and realised that pensions are actually a good deal!

flopsy1973

eskbanker said:

flopsy1973 said:

what about the funds would you do any changes ? what about the choices regarding small caps and emerging ? have I got a diversified PF or am i missing something

Being diversified is more of a means than an end - there are portfolios that could be described as diversified but if they don't actually deliver the objective then the diversification in itself isn't adequate.  I seem to recall that you struggled to articulate a clear strategy and objectives in previous threads, but perhaps it would be worth explaining your thought processes in constructing this portfolio, i.e. starting from identifying a multi-asset fund as a suitable core holding, what specifically are you looking to achieve by adding each of the other ones on top of that?

I do want a mix of other investments to create a broad range across the different sectors to provide a above average return. I had a lot of funds before in small amounts not really giving me anything so a more concentrated PF, I did not have much exposure to the US before, and I think wrongly or rightly actives will perform better in UK small caps and emerging markets ???? please comment if you feel otherwise. I just wanted to get some suggestions as you guys on here have lot more experience than me even though i have been doing this wrongly the last 20 years!!!!!!!

aroominyork

Small caps and emerging markets are where I also choose active funds. I think many others would agree.

eskbanker

flopsy1973 said:

eskbanker said:

flopsy1973 said:

what about the funds would you do any changes ? what about the choices regarding small caps and emerging ? have I got a diversified PF or am i missing something

Being diversified is more of a means than an end - there are portfolios that could be described as diversified but if they don't actually deliver the objective then the diversification in itself isn't adequate.  I seem to recall that you struggled to articulate a clear strategy and objectives in previous threads, but perhaps it would be worth explaining your thought processes in constructing this portfolio, i.e. starting from identifying a multi-asset fund as a suitable core holding, what specifically are you looking to achieve by adding each of the other ones on top of that?

I do want a mix of other investments to create a broad range across the different sectors to provide a above average return.

What do you consider to be 'average', i.e. what benchmark are you using?  There is generally a risk/reward trade-off, so in order to have a chance of achieving above-average returns, this will typically entail taking above-average risks, are you happy to do that?

flopsy1973 said:
I did not have much exposure to the US before

As covered in previous threads, what you had before doesn't really matter much, but you need to invest according to your current objectives.  Your core HSBC fund has about 47% US equities, but obviously if you add other funds then this percentage (of your overall portfolio) will change - how much US exposure do you feel happy with?

flopsy1973 said:
I think wrongly or rightly actives will perform better in UK small caps

Your core HSBC fund will be light on small caps, so that's certainly a gap to be filled if you feel that UK small caps are an omission you wish to address.

flopsy1973 said:
and emerging markets ????

Your core HSBC fund already has about 10% emerging markets - what's your target allocation to this?


There's nothing wrong with adding a UK small cap fund and an EM one to the core holding, but this would normally be done with small satellite additions rather than substantial ones that significantly change the overall weightings.  It still comes across as a bit of a pick'n'mix approach though rather than anything structured - have you considered defining a target allocation, by geography, sector, capitalisation, active/passive, etc?  The point was that the core multi-asset fund has such an allocation, but every time you add other satellite funds, you're changing the overall allocation of your portfolio, so having a clear view about this would probably help.

aroominyork

Deleted_User said:

... let me suggest that there are advantages in not going for the most complex portfolio that you are able to manage, but for something a bit simpler than that. If you try to invest at the limits of your current knowledge, then each new thing you learn about investing may tempt you to modify your portfolio, and frequent changes to a portfolio tend to lead to less good outcomes.

This is wise advice, but damn difficult to follow. How do you do it? Maybe by going 100% index and, no more than once a month, adding satellite funds you feel you need. Don't worry about what gains you might be missing in those formative months - they will be minimal.

Linton

Deleted_User said:

AIUI, you're trying to replace a portfolio with so many holdings that it's too difficult to make sensible decisions about how to manage it, with a portfolio simple enough that you can make decisions about it.

This is good, but let me suggest that there are advantages in not going for the most complex portfolio that you are able to manage, but for something a bit simpler than that. If you try to invest at the limits of your current knowledge, then each new thing you learn about investing may tempt you to modify your portfolio, and frequent changes to a portfolio tend to lead to less good outcomes.

Agree broadly but would want to be more precise......

Your portfolio should be as complex as it needs to be, but no more, to achieve your investment strategy - ie what underlying assets in what proportions do you want to hold and how do you want to manage them.

 Your investment strategy should be as complex as it needs to be, but no more, to achieve your objectives - ie how much cash do you want to extract and when.

The OP appears to have no objectives. "above average return" is not a real objective if it is meaningful at all.  Average of what?  All people with saved money?  All equity investors?  If everyone else had a negative return would you be happy with one also?  More return means more risk, what balance do you want?

If you have no meaningful objectives, except perhaps to beat inflation, just put the money in a single global tracker or single multi-asset fund as being the simplest well diversified options available.