Portfolio Critique Help

flopsy1973

Sorry maybe was a bit vague with my answers i accept the risk/reward balance I am not a complete newbie to this quite happily rode through the last few big dips in 2000,2008 and more recent. I just wanted to completely realign my PF as it was very sweet shop pick and mix. 
I spoke to a IFA a while back to see what they could offer me and scored a 6 on their risk rating if that helps the level of risk.
Was thinking of a allocation as follows approx. Do people have follow these allocations precisely? even in their satellite holdings?
UK equity 25%
US 25%
Absolute return 10%
bonds 15%
Europe 7.5%
Property 5%
Japan 2.5 %
Emerging markets 10%
 
Yes i realise my core HSBC GS fund does not replicate this exactly but i felt the balanced did not sit with my risk profile and i wanted something that was not so UK heavy hence staying off the Vanguard range
I just wanted a new PF that easier to manage with better performance with less volatility than what i had before and on a platform with less charges. Considering everyone saying about the delays with iweb should i consider another provider
Many thanks

eskbanker

flopsy1973 said:

Was thinking of a allocation as follows approx. Do people have follow these allocations precisely? even in their satellite holdings?

The normal approach to allocation is to consider it across the entire portfolio, so satellites would typically be used to fine-tune a portfolio to allow it to deliver the target allocation.

flopsy1973 said:

UK equity 25%
US 25%
Absolute return 10%
bonds 15%
Europe 7.5%
Property 5%
Japan 2.5 %
Emerging markets 10%
 
Yes i realise my core HSBC GS fund does not replicate this exactly but i felt the balanced did not sit with my risk profile and i wanted something that was not so UK heavy hence staying off the Vanguard range

You're aiming for 25% UK equities (out of 85% non-bonds), but this is more of a UK tilt than the Vanguard LifeStrategy range....

kuratowski

It does seem like you are putting yourself to unnecessary trouble.  I would echo Alex (and others) why not keep it simple and try and find a single fund that gets you close to your desired allocation, and where all the re-balancing etc is managed for you.

What about Legal & General Multi Index 7.  It's not far away from the above.  Think how much easier it would be to just invest in one fund.

flopsy1973

ok thanks will take look at that though its not one I have seen mentioned a lot on here ???
I dont want to be fully invested 300K into a single passive fund though and there is a lot of active funds have been considering what are peoples suggestions regarding this?
what do people think of my suggested allocations? I was too heavily UK allocated before  and I had read somewhere about the vanguard LS range being heavy in UK and just checked their allocations

masonic

flopsy1973 said:

ok thanks will take look at that though its not one I have seen mentioned a lot on here ???
I dont want to be fully invested 300K into a single passive fund though and there is a lot of active funds have been considering what are peoples suggestions regarding this?

L&G Multi Index is mentioned a fair bit and several forumites hold it.

If you invest in a sufficient number of active funds then you stand a chance of being able to replicate a passive multi-asset fund, but at higher cost. Investing in "a lot" of active funds is rarely a sensible thing to do - it comes down again to overlap. A small number of active funds where they are likely to add value can make sense.

flopsy1973 said:

what do people think of my suggested allocations? I was too heavily UK allocated before  and I had read somewhere about the vanguard LS range being heavy in UK and just checked their allocations

Your suggested allocations puts about 35% of your equities in the UK, which is higher than Vanguard LS. This has already been pointed out. The high UK weighting is not the main criticism I'd have of VLS.

flopsy1973

masonic said:

flopsy1973 said:

ok thanks will take look at that though its not one I have seen mentioned a lot on here ???
I dont want to be fully invested 300K into a single passive fund though and there is a lot of active funds have been considering what are peoples suggestions regarding this?

L&G Multi Index is mentioned a fair bit and several forumites hold it.

If you invest in a sufficient number of active funds then you stand a chance of being able to replicate a passive multi-asset fund, but at higher cost. Investing in "a lot" of active funds is rarely a sensible thing to do - it comes down again to overlap. A small number of active funds where they are likely to add value can make sense.

flopsy1973 said:

what do people think of my suggested allocations? I was too heavily UK allocated before  and I had read somewhere about the vanguard LS range being heavy in UK and just checked their allocations

Your suggested allocations puts about 35% of your equities in the UK, which is higher than Vanguard LS. This has already been pointed out. The high UK weighting is not the main criticism I'd have of VLS.

yes and i want add value where i believe some actives will perform better than passives especially in emerging markets and UK small comp ? Am i right in believing that?, and just wanted some suggestions there apart from the ones i had mentioned 

So what is your criticism of the VLS range? as they are the ones most often used
What would you people on this forum do?

eskbanker

flopsy1973 said:
i want add value where i believe some actives will perform better than passives especially in emerging markets and UK small comp ? Am i right in believing that?

Nobody can tell in advance whether actives will perform better than passives in these areas. either as a generalisation or for specific funds, so it isn't possible to say whether that's right or wrong as such, as investment choices are all about opinions!  So, why not share your thinking, in terms of exactly what's led you to those conclusions?

flopsy1973

passive following an index have to buy all the good the bad and the ugly where a active surely can pick niche companies or sectors have more involvement in picking the right companies????
from what i see actives perform better than passives I may be wrong here as i have never used them before but from the performance data I have looked at so far 
Any other viable suggestions for what I am trying to do ?

Prism

flopsy1973 said:

passive following an index have to buy all the good the bad and the ugly where a active surely can pick niche companies or sectors have more involvement in picking the right companies????
from what i see actives perform better than passives I may be wrong here as i have never used them before but from the performance data I have looked at so far 
Any other viable suggestions for what I am trying to do ?

You would think right? But what often happens is that many active fund managers have almost no interest in trying to pick the right companies nor time to even try. They sometimes run 10s if not 100s of funds with slightly different names each. Those ones you should avoid. Then you have the fund managers who try to pick good companies but don't seem very good at it. You should try and avoid those too. So then you have what is left to select from. Oh, and fees. If you find two equally good funds in your opinion then select the one with the lower fees. I rarely find that to be a decision point though.

If you are finding that in general active funds outperform passives then you are looking at the wrong data. Try looking for bad active funds - you will find plenty.

masonic

flopsy1973 said:

masonic said:

flopsy1973 said:

ok thanks will take look at that though its not one I have seen mentioned a lot on here ???
I dont want to be fully invested 300K into a single passive fund though and there is a lot of active funds have been considering what are peoples suggestions regarding this?

L&G Multi Index is mentioned a fair bit and several forumites hold it.

If you invest in a sufficient number of active funds then you stand a chance of being able to replicate a passive multi-asset fund, but at higher cost. Investing in "a lot" of active funds is rarely a sensible thing to do - it comes down again to overlap. A small number of active funds where they are likely to add value can make sense.

flopsy1973 said:

what do people think of my suggested allocations? I was too heavily UK allocated before  and I had read somewhere about the vanguard LS range being heavy in UK and just checked their allocations

Your suggested allocations puts about 35% of your equities in the UK, which is higher than Vanguard LS. This has already been pointed out. The high UK weighting is not the main criticism I'd have of VLS.

yes and i want add value where i believe some actives will perform better than passives especially in emerging markets and UK small comp ? Am i right in believing that?, and just wanted some suggestions there apart from the ones i had mentioned 

So what is your criticism of the VLS range? as they are the ones most often used
What would you people on this forum do?

I don't know whether or not VLS is the most often used multi-asset fund. Popularity shouldn't drive an investment decision. That's how you end up in funds like Woodford Equity Income. My main criticism of VLS is that it has too much in the US index, which has not been so overvalued since just before the dot-com crash. It was an asset allocation that worked perfectly over the past decade, but even Vanguard favours a lower US allocation now as evidenced from the new range of funds it has recently launched.

On your point about adding active emerging markets and UK smaller companies funds to a multi-asset fund, this is a viable option so that you end up with 3 funds, but VLS would not be a great choice in this regard as it is already overweight UK large companies, so as you've stated you want something 'not so UK heavy', this would leave you unable to achieve this objective.