My potential Portfolio. Bonkers or thumbs up?

mears1

Thank you @aroomin york
 Can you suggest a good low cost high performance Asia Pacific fund with low China exposure please.

mears1

dunstonh said:

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.

Then how does one choose? There are 1000s of products out there. The technical information is beyond my appreciation. And if the experts can't always get it right, how do you guys choose?

mears1

JohnWinder said:

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.

yup! Can see the foolishness now. Have to admit, I am guided by newspaper articles and the comparison graphs. But I am learning continuously from this forum. Incidentally, My portfolio hasn't totally excluded UK, as I have a managed fund which contains 13% UK equities, which might be too much now!

Audaxer

mears1 said:

dunstonh said:

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.

Then how does one choose? There are 1000s of products out there. The technical information is beyond my appreciation. And if the experts can't always get it right, how do you guys choose?

You are less likely to pick the wrong funds if you stick with index funds, or low cost multi asset funds that can be a well diversified one fund portfolio. It looks like the the funds you have chosen are all 100% equity - are you happy with such a high risk level?

ColdIron

mears1 said:

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?

Yes if you only wanted a tiny allocation to mid/small caps as that fund will be dominated by large cap companies

No if you wanted any meaningful exposure

They are very different funds. One is a large cap tracker with a dash of mid caps and the other is a dedicated fund. The Global All Cap might be a replacement for your Fidelity Index World but is no substitute for the Global Small-Cap

Don't get too hung up on charges, even if you put £40,000 into it you would only save £24 pa. What you invest in is far more important, get that right first

mears1

Audaxer said:

mears1 said:

dunstonh said:

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.

Then how does one choose? There are 1000s of products out there. The technical information is beyond my appreciation. And if the experts can't always get it right, how do you guys choose?

You are less likely to pick the wrong funds if you stick with index funds, or low cost multi asset funds that can be a well diversified one fund portfolio. It looks like the the funds you have chosen are all 100% equity - are you happy with such a high risk level?

May I ask what fund you use that is not 100% equity? Is it something like VG lifestyle 80:20? That is the only one I know.

NedS

mears1 said:

Thank you @aroomin york
 Can you suggest a good low cost high performance Asia Pacific fund with low China exposure please.

Are you sure you would want to do that? Your global equity trackers will already give you exposure to the Asia Pacific region. By considering additional regional funds you are betting on that region performing better (or worse) than the rest of the world. If you are confident that an Asia Pacific fund will out-perform, why not just go all in on that [rhetorical] rather than your well-diversified global equities tracker(s)?

NedS

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?

Sorry, I can't. I tend to use active funds for smaller companies as I believe it is one area where a good fund manager can outperform their index. They can be quite volatile though, so I tend to look to buy/add more after significant price drops rather than just constantly dripping in cash.

bostonerimus

mears1 said:

dunstonh said:

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.

Then how does one choose? There are 1000s of products out there. The technical information is beyond my appreciation. And if the experts can't always get it right, how do you guys choose?

There are 1000s of funds, and 1000s of them are basically the same. There is far too much choice for the investor and you have fallen into the "not seeing the wood for the trees" paralysis. You have some ok funds right now. There is an almost infinite selection of other ok funds and portfolios, none of them very special, just like yours. So stop trying to build the special portfolio, ok is just fine. OK has given me 10% average annual return over 30 years. DO NOT OVERTHINK things. "Asia Pacific Fund with low China exposure"? Don't think in that much granularity, let the global fund (passive or active) deal with that for you.

Thrugelmir

mears1 said:

dunstonh said:

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.

Then how does one choose? There are 1000s of products out there. The technical information is beyond my appreciation. And if the experts can't always get it right, how do you guys choose?

Gut instinct. 

If it's funds that are of interest to you. Read up on the indexes themselves that the funds benchmark against. There are significant differences in how they are compiled and weighted, both for risk and capitalisation.  Identify an index first. Then you'll have a smaller pool of funds to select from.