My potential Portfolio. Bonkers or thumbs up?

mears1

I have £120k built up from the inception of ISA waiting to mature in a cash isa.    These are my selection to invest.
 Fidelity Index world P Acc      £30k as low cost, avoids China, good previous performance
 L& International Index I Acc   £30k  as low cost, good previous performance. Previously, I wanted to avoid UK because of its lower performance but not sure now.
 Fundsmith Equity  Acc           £20k  as good reputation or Rathbone Global Opportunities or Smithson.

I have chosen two Global Funds chosen instead of one for FSCS protection. 
 Please comment on how this selection and allocation can be improved. My intention is to buy & hold for more than 10yrs for a complete novice with a risk rating of 6? 
My allocation of these funds are based on easy arithmetic . Please suggest other OEIC funds or investment trusts for the other £40K? I have some BTL as well.
 
 

 

NedS

Fidelity Index World and L&G International Index have near identical performance and both are good choices for global equity trackers and are good choices to form the core of a global equity portfolio. I'd also consider some smaller companies funds as satellite holdings which will add further diversification away from the predominantly large cap holdings in the global trackers.

Thrugelmir

Don’t construct a portfolio on past performance. Nor dismiss the Uk out of hand. That’s a sure way of ending up with a riskier unbalanced portfolio.

dunstonh

Thrugelmir said:

Don’t construct a portfolio on past performance. Nor dismiss the Uk out of hand. That’s a sure way of ending up with a riskier unbalanced portfolio.

And the forum is seeing plenty of posts from people who have done just that and now worrying about their losses.

AlanP_2

Both the index funds are good options.

FS and RGO have a similar approach, small number of selected companies across the globe. Holding both wouldn't be a totally stupid idea.


SSON is a "smaller companies" version of FS at heart.

Personally I hold FS and SSON and wouldn't worry about holding RGO alongside.

None of the above give you any real "small cap" exposure as even the SSON assets are largish companies, nor much Emerging Market exposure.


What mix do you have in mind as a target?

JohnWinder

avoid UK because of its lower performance

Avoid or include UK stocks? They’re about 5% of the global market by capitalisation, so being better or worse than other stocks by 2 percentage points/year would affect your returns by 5% of 2% ie 0.1%/year. Since we’re not sure whether you’d be gaining or losing that 0.1%/year with UK stocks, and perhaps you’d gain in some years and lose in others, it’s really not worth losing too much sleep over is it?  And if you hold bonds or gold or cash etc, it further reduces that 0.1%/year.
There are reasons other than performance to consider holding local stocks, like currency movement impacting your returns and matters considered here, but at the end of the day it’s small beer.  https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/

I wanted to avoid UK because of its lower performance

That line of thinking is a bigger issue, and a dangerous one. If you wanted to avoid bonds in favour of equities because of lower performance we’d have some sound basis for your thinking, both theoretical and empirical. But to imagine you can foresee one country’s equity returns compared to some others’, particularly based on past performance is just guessing. As a rational, diversified, index following investor I can’t see the basis for your belief that I quoted. If you think you can justify it, as we’ve missed it, let us know. Otherwise, I'd give up basing anything on past performance unless it’s an active manager with lots of runs on the board, or bonds vs stocks - and even then it questionable.
Otherwise, it looks as good as anyone else’s.

mears1

NedS said:

Fidelity Index World and L&G International Index have near identical performance and both are good choices for global equity trackers and are good choices to form the core of a global equity portfolio. I'd also consider some smaller companies funds as satellite holdings which will add further diversification away from the predominantly large cap holdings in the global trackers.

Useful advice, thank you. Have you any suggestions of Small and Medium cap global trackers that are low cost?

aroominyork

Having minimal emerging markets exposure because you want to avoid China feels a little like throwing the baby out with the bathwater. There are ways to have you cake and eat it (these metaphors are not combining well...) such as an Asia Pacific fund with low China exposure.

ColdIron

mears1 said:

NedS said:

Fidelity Index World and L&G International Index have near identical performance and both are good choices for global equity trackers and are good choices to form the core of a global equity portfolio. I'd also consider some smaller companies funds as satellite holdings which will add further diversification away from the predominantly large cap holdings in the global trackers.

Useful advice, thank you. Have you any suggestions of Small and Medium cap global trackers that are low cost?

This might tick your box, tracks the MSCI World Small Cap Index and an OCF of 0.29%

Vanguard Global Small-Cap Index Fund

https://www.vanguardinvestor.co.uk/investments/vanguard-global-small-cap-index-fund-gbp-acc

bostonerimus

I have no idea how your portfolio will do in the future, but you haven't done anything really stupid and are using well regarded mainstream funds so it looks fine to me. You also haven't used a lot of funds which I think keeps things simple which I like. I gave up worrying about any fine detail in asset allocation a while ago and mostly use cap weighted indexes so I wouldn't over think things.

mears1

ColdIron said:

mears1 said:

NedS said:

Fidelity Index World and L&G International Index have near identical performance and both are good choices for global equity trackers and are good choices to form the core of a global equity portfolio. I'd also consider some smaller companies funds as satellite holdings which will add further diversification away from the predominantly large cap holdings in the global trackers.

Useful advice, thank you. Have you any suggestions of Small and Medium cap global trackers that are low cost?

This might tick your box, tracks the MSCI World Small Cap Index and an OCF of 0.29%

Vanguard Global Small-Cap Index Fund

https://www.vanguardinvestor.co.uk/investments/vanguard-global-small-cap-index-fund-gbp-acc

Thank you for your suggestion.  VG's Global Small Cap Index has an OCF (0.29%) higher than the 0.23% of VG ftse Global all cap index fund. Would it be more cost effective just to have the VG ftse Global all cap index fund? 

I know previous performance is not an indicator etc, but VG ftse Global all cap index fund's performance on Trustnets graph was disturbingly lower than the Fidelity's and L&G funds mentioned.