Suggested portfolio

Nosmo_King_2

I have been provided with a suggested portfolio for my £380K pension pot, and whilst I have no reason to doubt the suggestions by the IFA but wondered whether any should be avoided for any reason?

 

IamWood

Sounds very complicated fund of funds to me. I prefer simple funds personally.

dunstonh

I am not even going to try and work out what style of investment strategy that is meant to be.  Looks a complete mess.

Mixing the multi-asset funds with an excessive list of single sector funds seems pointless.  I know some people use a multi-asset fund as core and a couple of single sector funds as satellite funds but that isn't happening here.

If it was a mix of a single multi-asset fund for 40% and 60% with a DFM, it could explain the quantity of funds.

How has the IFA explained the investment strategy?

tigerspill

I had an IFA do something similar with me (I wrote a thread way back on it), but not as bad as yours - maybe 15-20 funds.

This looks like a a standard portfolio from the IFA - They trot one of a few different risk portfolios out to each customer.

I could se no good reason for mine so I binned the lot and build my own much simplified portfolio using Vanguard VLS (40 & 80) and Developed world index funds.  And a couple of equivalent HSBC funds for no good reason other than it made me feel better to use two different fund managers.

I kept tracking my IFA portfolio just to see what happened.  My own has done way better than that of the IFA, but equally importantly, my own did not get hit as hard when Covid hit and markets dropped in 2020.

I think my IFA was just lazy - as I mentioned above - he had a few fixed portfolios and he used one to match the risk level of the customer.

IamWood

tigerspill said:

I think my IFA was just lazy - as I mentioned above - he had a few fixed portfolios and he used one to match the risk level of the customer.

Do you think some may deliberately complicate things to justify their hefty commissions? The simpler the better.

tacpot12

I would start by checking the charges on each fund. Anything charging more than 1% really needs to be offering stellar returns or fulfil a 'vital' role in the portfolio. I can't see that any such funds are doing so. The average fund charge for the portfolio is brought artifically low by Vanguard. Effectively Vanguard are subsidising all the expensive fund managers. 

MX5huggy

Someone’s trying to look clever. I have no idea how you decide to invest 0.83% in one fund then 1.35% in another nether is going to make any significant difference to the outcome. Get a plot of past performance is there any difference to just lumping it all in LS 60 or 80? 

The the fee on LS60 looks high it’s 0.22%  normally. 

dunstonh

This looks like a a standard portfolio from the IFA - They trot one of a few different risk portfolios out to each customer.

I know a number of the models and strategies they recommend and it certainly doesn't tie in with any of those.

There are some DFM portfolios that go into dozens or even hundreds of funds but they are typically aimed at multi-million pound investors where diversification of funds and fund houses is as important as diversification of assets.    Howver, I have seen some wealth managers use them for smaller investors.

Do you think some may deliberately complicate things to justify their hefty commissions? The simpler the better.

There is no commission.  That was banned at the end of 2012.  
Simpler is not better.    That is oversimplifying it.

The the fee on LS60 looks high it’s 0.22%  normally. 

The fee is correct.     It is the OCF plus TC.     Whilst most of the time people talk OCF only, it is normal to see the disclosures include OCF+TC+IC+other.

Audaxer

I would definitely question the fact why he has 40% in VLS60 and the rest split between about 40 other funds. It doesn't seem to make sense to have so many funds. Interesting to know the total charges you are being quoted?

Thrugelmir

Is this how it was presented to you?  

cfw1994

Thrugelmir said:

Is this how it was presented to you?  

Just what I was thinking: what a badgers dinner of funds!

I would run a mile from any IFA who presented that to me.  Crazy!

Audaxer said:

I would definitely question the fact why he has 40% in VLS60 and the rest split between about 40 other funds. It doesn't seem to make sense to have so many funds. Interesting to know the total charges you are being quoted?

Yup….weird.
Might as well take the https://kroijer.com/ approach and check it all in a few “world tracker passive” funds.  

As tigerspill said:

I had an IFA do something similar with me (I wrote a thread way back on it), but not as bad as yours - maybe 15-20 funds.

This looks like a a standard portfolio from the IFA - They trot one of a few different risk portfolios out to each customer.

I could se no good reason for mine so I binned the lot and build my own much simplified portfolio using Vanguard VLS (40 & 80) and Developed world index funds.  And a couple of equivalent HSBC funds for no good reason other than it made me feel better to use two different fund managers.

I kept tracking my IFA portfolio just to see what happened.  My own has done way better than that of the IFA, but equally importantly, my own did not get hit as hard when Covid hit and markets dropped in 2020.

I think my IFA was just lazy - as I mentioned above - he had a few fixed portfolios and he used one to match the risk level of the customer.

I bet that was a lower cost way to do things too 👍

Good luck OP, & HNY all for later 🎉🥂