DFM/FA Arrangement to DIY

Audaxer

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Because_I_Can

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

Albermarle

Because_I_Can said:

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

Maybe worth a look at Blackrock MYmap series . Another low cost MA fund but constructed differently to both VLS and HSBC GS. 
Although some think it is not a good idea, I think having two or three different MA funds is sensible if you have a large sum to invest . They are all trying to achieve similar things but in different ways, and the results are not identical . So its a way to hedge your bets with probably no extra costs.

BritishInvestor

Because_I_Can said:

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

"LV= Smoothed Fund for a bit of downside protection"

I'd challenge your adviser to explain exactly what downside protection this type of fund offers. Does it remain broadly flat during prolonged market downturn (dot.com bust and GFC for example)?

BritishInvestor

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

I think I'm missing a large chunk of your process. You've undertaken your expenditure analysis but I can't see where you've worked out how much risk (equity exposure) you need to take/are happy taking, so not clear how you can start to think about fund selection.

"I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR"

I'm not convinced it will make much of a difference.

Because_I_Can

Albermarle said:

Because_I_Can said:

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

Maybe worth a look at Blackrock MYmap series . Another low cost MA fund but constructed differently to both VLS and HSBC GS. 
Although some think it is not a good idea, I think having two or three different MA funds is sensible if you have a large sum to invest . They are all trying to achieve similar things but in different ways, and the results are not identical . So its a way to hedge your bets with probably no extra costs.

Good suggestion, cheers for that 

BritishInvestor

bostonerimus said:

Thrugelmir said:

Because_I_Can said:

Thrugelmir said:

Because_I_Can said:

Option 1

Vanguard Lifestrategy 60% Equity - 35%

HSBC Global Strategy Balanced Portfolio C Acc - 25%

L&G Multi Index 5 Acc - 25%

Vanguard FTSE UK All Share Tracker - 5%

Vanguard UK Inflation Linked Bond ETF - 10%

Option 2

Vanguard Lifestrategy 60% Equity - 38%

Vanguard S&P Tracker - 13%

Vanguard FTSE UK All Share Tracker - 6%

Vanguard UK Inflation Linked Bond ETF - 9%

Vanguard Emerging Markets Index - 6%

Legal & General Pacific Index - 6%

Vanguard FTSE Japan ETF - 6%

WealthSelect Active Managed Portfolio 5 - 13%

Cash - 3%

Any feedback offered gratefully received.

Portfolios need to be constructed with thought not just cobbled together.  Care to share your research and the rational behind the choices and %'s allocated.  Also the geographical analysis,  the % invested in the top 20 holdings (as there's considerable duplication contained within) , the sector/industry split and lastly the equity/bond/cash split. 

Far too much ‘noise’ there to be honest which I guess is the reason why most potential DIY investors are put off.  Precisely why I’ll either stick it all into VLS60 as a default or get an IFA to start me off on a simple Ford Escort type portfolio.  I’m looking at a simple low cost tracker / hybrid type portfolio, nothing spectacular. 

That's why some people happily pay to use advisors. The noise does indeed becomes bewildering.  DIY is effortless in a raging bull market. As the incoming tide lifts all boats. Investors start to question what value advisors add. Once the tide starts to recede then investors have to make conscious decisions for themselves. There'll be a stampede for the exits when the panic sets in. Every investor for themselves.  Very predictable behaviour. Been seen time and time before. 

The OP has a DB pension so they might be in a better position than most to avoid the panicking herd. With a minimum guaranteed income level from a DB pension it gets a lot easier to implement something like a Guyton Klinger withdrawal strategy from a VLS100 portfolio maybe augmented with whatever flavor of the month you like ie Fundsmith, US equity, Asian Small Cap, Indonesian Pork Bellies (that's a small fund).
With the DB pension acting like your fixed income/bond allocation one very viable strategy with a global equity portfolio is to do nothing.

"it gets a lot easier to implement something like a Guyton Klinger withdrawal strategy from a VLS100 portfolio maybe augmented with whatever flavor of the month you like ie Fundsmith, US equity, Asian Small Cap, Indonesian Pork Bellies (that's a small fund)."

I can understand doing that with a multi-asset fund where you can broadly see how such an approach would've worked historically, but I've no idea how or why you would do that with a concentrated offering where decent historical data is patchy or non-existent. 

Because_I_Can

BritishInvestor said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

I think I'm missing a large chunk of your process. You've undertaken your expenditure analysis but I can't see where you've worked out how much risk (equity exposure) you need to take/are happy taking, so not clear how you can start to think about fund selection.

"I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR"

I'm not convinced it will make much of a difference.

I put my self firmly in the balanced / moderate camp (looking back at all the various risk assessments I’ve been through and how I’ve reacted to the various ups and downs over the last five years or so).  My starting point was always with the VLS series and 60% equity at this stage feels about right.  I accept an element of risk is needed but also recognise defence or protection is sensible as I move into drawdown. 

dunstonh

Because_I_Can said:

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

If CGT is an issue then multi-asset funds are not as good an option.    The ability to utilise CGT allowances annually is much easier with multiple funds investing in different areas as you can offset the losses on one against the gains on another and then switch around funds to ensure you dont fall foul of the 30 day rule.      

I am not a fan of smoothed funds.   That smoothing comes at a cost and if you understand the level of volatility you are taking with your investments and accept that then there is no need for a smoothed fund.

Audaxer

dunstonh said:

Because_I_Can said:

Audaxer said:

Because_I_Can said:

gm0 said:

It may be helpful to write an investment statement.  If only to help test the selections against why you thought to add them to the whole.

Lots of great feedback and suggestions on this thread - many thanks to all that have taken the time to comment.  Whilst I may have managed the ISA elements of our overall investment portfolio, I’m clearly still in the novice camp when it comes to DIY.  Multi assets and VLS have served me well for the ISAs and I feel they could for the large SIPP element as well.

I have a good idea of expenditure needs over the next few decades and have the comfort of knowing when the DB and SPs kick in. I also have a large (£200k) tax free lump sum coming from the OH’s DB/AVC pension in 5 years time.  I’m not seeking stellar returns, just enough to allow the journey to continue. I’ll have 18 months worth of spends easily accessible should we suffer a prolonged downturn to mitigate SORR and can dial things down if needed knowing I have the DB to essential cover BAU.

A couple of low cost MAs it is then……

Probably the best decision if you want simplicity with no hassle. Are you going a 50/50 split between VLS60 and HSBC Global Strategy Balanced?

Alternatively, if you don't need the returns from 60% equities, should you go for a couple of lower risk multi asset funds like VLS40 and HSBC Global Strategy Cautious? It could however be argued that with such are a large percentage of bonds, are they really lower risk in view of the current concerns about bonds? 

Those two certainly in pole position at the moment.  My current FA is quite keen on LV= Smoothed Fund for a bit of downside protection and he’s sending some stuff over on that. Open mind on that one until I’ve researched a bit more. I’d previously looked at CGT for that side of things. 

If CGT is an issue then multi-asset funds are not as good an option.    The ability to utilise CGT allowances annually is much easier with multiple funds investing in different areas as you can offset the losses on one against the gains on another and then switch around funds to ensure you dont fall foul of the 30 day rule.      

I think the CGT that the OP is referring to is the Capital Gearing Trust IT.