What do you think of my asset allocation ...?

Linton

NannaH said:

So the truth of the matter is that nobody knows what a future well balanced portfolio should look like and those of us recently retired/about to retire in the next few years are the guinea pigs.
Marvellous 🙄

All I really know at the moment is that bonds aren’t doing what they are supposed to do -  but that there is currently no alternative.  Property/REITS?  

If Pension companies are moving out of Bonds, as I read in the FT ( I think) then I shall be watching very closely for the next few years. 

But it is easy to spot a poorly balanced portfolio simply from the % allocations to asset type/countries/industries/growth vs value and any other measures you can find. 

I dont see that people retiring in the next few years are in a different position to previous generations of investors. The future is always unknown.  It would probably have turned out well for those who retired on investments in 2010 but disastrously for those who did this 10 years earlier.  What is different though is that those who retired in 2000 did not have the benefits and drawbacks of "pension freedom".

Pension companies in the sense of those selling annuities or running DB schemes, like many other people who need to meet future guaranteed UK liabilities, have no choice but to invest in UK Gilts.  Managers of pension and other funds whose remit gives them that option do appear to be moving into other investments than medium/long dated UK Gilts. 

Thrugelmir said:

Frequentlyhere said:

@Thrugelmir I entirely agree with your outlook, but where does that leave us with portfolio allocation (apart from stuffed), in your opinion?

Likely to be an era when more targeted stock/fund selection will be key. Value is an often misused term as covers a broad range of scenarios. Not least that "value" companies themselves do grow. 

Before the event paying attention to stock/fund selection is always the key.  You do not know what type of era you will meet.  If by "targeted" you mean focussing on those areas you believe will do well then that is high risk as if you are wrong you could come seriously unstuck.  Though you may be prepared to accept that risk for longer term higher returns.

So I would advocate negative targetting to reduce excessive exposures and so broaden diversification in other areas rather than looking for things to invest in.

NannaH

If bonds are performing their correct ‘purpose’, why are pension companies looking for other sources of safer investment?  

The 2 Royal london funds I have with 40% bonds and 50% bonds have dropped almost as much as Fundsmith since new year and twice as much as VLS 80.  

Prism

NannaH said:

If bonds are performing their correct ‘purpose’, why are pension companies looking for other sources of safer investment?  

The 2 Royal london funds I have with 40% bonds and 50% bonds have dropped almost as much as Fundsmith since new year and twice as much as VLS 80.  

Global bonds are down around 2.5% since the start of the year whereas global equities are down around 5%. So they still seem to be doing what most people want them to do which is reduce the downside and volatility of the whole pot. 

Frequentlyhere

@Thrugelmir I tend to agree, I've certainly leant towards value in the last year or so within my equities.

@JohnWinder contributing my half-understanding too, I think you are right. Providing you hold them for the long term, the improved yield from the price falling will see them deliver what they're supposed to.

@Albermarle I do agree, and intend to diversify into bonds too.

All the above said, VGOV down another 1% today, down 10.5% since December.

If bonds are meant to be the dampener for equities falling, then wouldn't it be rather nicer of them to fall less than equities? If they're meant to be less volatile than equities, then could they not fall 10% in a month, please?

They're not doing a tremendous job of convincing me of their worth at the moment, though surely now a better time than last month?

Thrugelmir

Linton said:

NannaH said:

So the truth of the matter is that nobody knows what a future well balanced portfolio should look like and those of us recently retired/about to retire in the next few years are the guinea pigs.
Marvellous 🙄

All I really know at the moment is that bonds aren’t doing what they are supposed to do -  but that there is currently no alternative.  Property/REITS?  

If Pension companies are moving out of Bonds, as I read in the FT ( I think) then I shall be watching very closely for the next few years. 

But it is easy to spot a poorly balanced portfolio simply from the % allocations to asset type/countries/industries/growth vs value and any other measures you can find. 

I dont see that people retiring in the next few years are in a different position to previous generations of investors. The future is always unknown.  It would probably have turned out well for those who retired on investments in 2010 but disastrously for those who did this 10 years earlier.  What is different though is that those who retired in 2000 did not have the benefits and drawbacks of "pension freedom".

Pension companies in the sense of those selling annuities or running DB schemes, like many other people who need to meet future guaranteed UK liabilities, have no choice but to invest in UK Gilts.  Managers of pension and other funds whose remit gives them that option do appear to be moving into other investments than medium/long dated UK Gilts. 

Thrugelmir said:

Frequentlyhere said:

@Thrugelmir I entirely agree with your outlook, but where does that leave us with portfolio allocation (apart from stuffed), in your opinion?

Likely to be an era when more targeted stock/fund selection will be key. Value is an often misused term as covers a broad range of scenarios. Not least that "value" companies themselves do grow. 

Before the event paying attention to stock/fund selection is always the key.  You do not know what type of era you will meet.  If by "targeted" you mean focussing on those areas you believe will do well then that is high risk as if you are wrong you could come seriously unstuck.  Though you may be prepared to accept that risk for longer term higher returns.

So I would advocate negative targetting to reduce excessive exposures and so broaden diversification in other areas rather than looking for things to invest in.

My comment was generic. In that active investment management is likely to outperform passive in the short to medium term. Nothing to do with taking a higher level of risk. Sometimes it's more a question of avoiding the pot holes that lie ahead. There's enough already baked in to suggest that returns are likely to be lower than average for the next decade. Global equity funds are likely to disappoint. Having been the fad of the past few years. 

ChilliBob

Thrugelmir said:

Frequentlyhere said:

@Thrugelmir I entirely agree with your outlook, but where does that leave us with portfolio allocation (apart from stuffed), in your opinion?

Likely to be an era when more targeted stock/fund selection will be key. Value is an often misused term as covers a broad range of scenarios. Not least that "value" companies themselves do grow. 

The Temple Bar manager was on AJ Bell Money And Markets last week. He said the past value 'rallies' averaged just over 5 years, and right now the divergence in growth and value was at its widest than in any of those rallies, hence, he expects this recent value resurgence to continue for a while. Of course, he's an active manager, running a value fund, so he may be a tad biased :0   but the data argument was interesting. 

MaxiRobriguez

NannaH said:

So the truth of the matter is that nobody knows what a future well balanced portfolio should look like and those of us recently retired/about to retire in the next few years are the guinea pigs.
Marvellous 🙄 

On the other side of this coin, those who've recently retired should have spent the last 10 years getting incredible gains on their portfolios at a point when the actual £ value of those portfolios would be as high as they're ever going to be, considering early on in career you're building the pot and after retirement you're whittling it down.

Undoubtedly the next few years are going to be hard to navigate for everyone, but any recent retiree who planned sensibly should be navigating it with a huge margin of safety, because the gains in the last decade have outpaced any reasonable long term plans by a large degree.

valiant24

Frequentlyhere said:

...
I'll probably look back at this in 5 years and think, "Yup, should have just been in Vanguard lifestrategy 80" no doubt!

Yes, I am wondering if I should abandon the current Gilts/Index Gilts/Gold/Global tracker strategy and just throw in my lot with Lifestrategy 60 (or maybe 75/25 LS60 and LS80 to give a Lifestrategy 65 effect).

valiant24

NannaH said:

All I really know at the moment is that bonds aren’t doing what they are supposed to do -  but that there is currently no alternative.  Property/REITS?  

I already own three houses in England outright, so am reluctant to expose myself more, so to speak.

Albermarle

Undoubtedly the next few years are going to be hard to navigate for everyone, but any recent retiree who planned sensibly should be navigating it with a huge margin of safety, because the gains in the last decade have outpaced any reasonable long term plans by a large degree.

I was thinking the same , you took the words right out of my mouth !

Yes, I am wondering if I should abandon the current Gilts/Index Gilts/Gold/Global tracker strategy and just throw in my lot with Lifestrategy 60 (or maybe 75/25 LS60 and LS80 to give a Lifestrategy 65 effect).

I would consider also alternatives to Life Strategy funds , like HSBC global strategy or Blackrock mymap , which have been performing better recently .