DFM/FA Arrangement to DIY

Because_I_Can

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 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.

Thanks dunstonh.  Not sure if we’re talking about the same thing. I was looking at Capital Gearing Trust as bringing a bit more of a defensive element to the portfolio rather than any CGT (tax) position. That said, your statement re understanding the level of volatility with the rest of the investments rings true. 

BritishInvestor

Because_I_Can said:

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. 

I'd be wary of using a risk questionnaire in isolation and also using just the last five years to determine whether you are comfortable with a given asset allocation. 
For example, the 1970s (from a UK POV) was a painful period (which you may well encounter during your retirement) - it's worth starting with a glass half-empty approach. 
 
But this doesn't answer the other part of my question - how much equity exposure do you need to take? Would a 50% equity allocation mean your retirement plan wasn't viable (for example)?

bostonerimus

BritishInvestor said:

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. 

I put the other focused funds on there because people always want some secret sauce on their index trackers.

Because_I_Can

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. 

Just a brief update on where things are heading.  The DFM is now on notice so that’s a saving in terms of charges although I’m going to retain the services of my FA (plus) for now - that charge isn’t too bad at 0.35%.

Ultimately, we’re moving from the DFM complex set up and it’s likely that the monies will be split across the following 3 funds (I’m still reviewing them).  As you recall, I want something simple and multi asset - fire and forget

Vanguard Lifestrategy 60

> difficult to see beyond Vanguard, the 60/40 has been in my core ISA for years

> cheap (0.22%), decent track record. Volatility between 6-9%

> decent equity allocation, good quality bonds

> slight UK bias but perhaps not a bad thing currently

> this could be the 10+ year pot in terms of capital growth 

Quilter Cirilium Balanced Passive 

> Equity exposure between 20-55%, currently 46.5%. Volatility between 6-10%

> Slightly more expensive than VLS60 (0.38%)

> Reasonable performance, below VLS60 in 2021 but above VLS40

> Slight US bias
> Again, more the growth element of the portfolio

LV= Flexible Guarantee Managed Growth Pn, maybe the Balanced Pn

> Lean towards capital protection as more a cautious type of investment - handled the covid hit of March 2020 very well for example
> Will be the primary source of income drawdown although will top up from the two above if returns particularly good

> More expensive at 1.2% although had a very good 2021 and upper quartile (1) for last 5 years which is decent.

I could also supplement the above with say a short term annuity (5 years), e.g. the LV= Protected Retirement Plan, something like £30k a year. I also have other monies in ISAs plus my OH’s DB pension and tax free lump sum in 5 years time.

As ever, happy to receive any thoughts or answer any questions, although I’m still quite the novice and take guidance from my FA as that what’s I’m paying him for. I’ve looked at so many funds over the last couple of months I’m in danger of overthinking it all.

OldMusicGuy

I am in a similar situation to you, a large DC pot providing the bulk of our retirement savings, augmented by a small OH db pension and two SPs (in a couple of years). I have a portfolio of three multi-asset funds (Vanguard, HSBC and Blackrock) plus some cash. I like to keep it simple and low cost. The portfolio is designed to reduce the impact of downturns at the expense of growth (I don't need significant capital growth, we are decumulating). So far it has achieved its goals through the COVID crisis and the war in Ukraine.

I used Morningstar's X-Ray tool to analyse the portfolio in terms of global coverage, growth/value stocks and large cap/small cap to give a kind of sense check (nothing too complex though). I also found this video and the tools in it very helpful: https://www.youtube.com/watch?v=w_cPHn9U-Ik .

Bottom line - keeping it simple and low cost has worked very well for me.  

Albermarle

LV= Flexible Guarantee Managed Growth Pn, maybe the Balanced Pn

> Lean towards capital protection as more a cautious type of investment - handled the covid hit of March 2020 very well for example
> Will be the primary source of income drawdown although will top up from the two above if returns particularly good

> More expensive at 1.2% although had a very good 2021 and upper quartile (1) for last 5 years which is decent.

You do not see LV plans mentioned on this forum . Normally for capital protection , the IT;s Capital Gearing and Personal Assets are often mentioned along with their related OEIC funds . The performance is similar to the LV plan but the fees are cheaper.

Because_I_Can

Albermarle said:

LV= Flexible Guarantee Managed Growth Pn, maybe the Balanced Pn

> Lean towards capital protection as more a cautious type of investment - handled the covid hit of March 2020 very well for example
> Will be the primary source of income drawdown although will top up from the two above if returns particularly good

> More expensive at 1.2% although had a very good 2021 and upper quartile (1) for last 5 years which is decent.

You do not see LV plans mentioned on this forum . Normally for capital protection , the IT;s Capital Gearing and Personal Assets are often mentioned along with their related OEIC funds . The performance is similar to the LV plan but the fees are cheaper.

Thanks Albermarle, I certainly looked at Capital Gearing and Personal Assets alongside the LV= offering (which was the one the FA+ suggested). I’ll take a closer look again before making a final decision. 

Because_I_Can

OldMusicGuy said:

I am in a similar situation to you, a large DC pot providing the bulk of our retirement savings, augmented by a small OH db pension and two SPs (in a couple of years). I have a portfolio of three multi-asset funds (Vanguard, HSBC and Blackrock) plus some cash. I like to keep it simple and low cost. The portfolio is designed to reduce the impact of downturns at the expense of growth (I don't need significant capital growth, we are decumulating). So far it has achieved its goals through the COVID crisis and the war in Ukraine.

I used Morningstar's X-Ray tool to analyse the portfolio in terms of global coverage, growth/value stocks and large cap/small cap to give a kind of sense check (nothing too complex though). I also found this video and the tools in it very helpful: https://www.youtube.com/watch?v=w_cPHn9U-Ik .

Bottom line - keeping it simple and low cost has worked very well for me.  

Thanks OldMusicGuy, simple and low cost was certainly my intention. I’ve analysed the portfolio via Trustnet but it wasn’t as good as I imagined it would be (in terms of detail). I’ll definitely run them through Morningstar’s X-ray tool as well.