Portfolio review ahead of investing an inheritance

aroominyork

ChilliBob said:

Thanks for the info regarding the ETF. I had no idea

Regarding infra, I have recently opepend a small position in the L&G infra index fund. Looks decent enough and its low cost

VT RM Alternative Income is on my list, but I keep sitting on the fence on it - it's not as steady as say CG Absolute, and a lower return the L&G tracker, but something keeps drawing me to it. Perhaps because it is that middle ground. 

Why do you see VT RM Alternate Income - where its "focus is real asset investments across three sectors; Secured Real Assets, Infrastructure and Specialist Real Estate" - as comparable to CG Absolute Return (the open ended version of Capital Gearing Trust)? Aside from the fact that CGAR holds some property they have little in common. VT with its aims of "preserving capital over the medium to long-term" is very different from CGT/CGAR's wealth preservation mandate which has seen it lose value in only one of 20 years; also, VT took a much heavier fall than CGAR when Covid struck. To me this looks like, as I said above, infrastructure being talked up as safer than it is.

JohnWinder

aroominyork said:

ChilliBob said:

Israel Technology, thats a new ETF to me, curious as to your reasons for something that niche? I have my fair share of thematic ETFS myself for all kinds of reasons. Also small holdings thankfully, as most have done pants! 

It's one of the most advanced countries in the world for new tech (some say second only to Silicon Valley) so it interested me. It went up strongly after I bought it but has lost a fair amount of those gains during the last year.

This 12 min video by Ben Felix on thematic funds being bad investments might shed some light. https://www.ifa.com/articles/thematic-etfs-felix/

ChilliBob

aroominyork said:

ChilliBob said:

Thanks for the info regarding the ETF. I had no idea

Regarding infra, I have recently opepend a small position in the L&G infra index fund. Looks decent enough and its low cost

VT RM Alternative Income is on my list, but I keep sitting on the fence on it - it's not as steady as say CG Absolute, and a lower return the L&G tracker, but something keeps drawing me to it. Perhaps because it is that middle ground. 

Why do you see VT RM Alternate Income - where its "focus is real asset investments across three sectors; Secured Real Assets, Infrastructure and Specialist Real Estate" - as comparable to CG Absolute Return (the open ended version of Capital Gearing Trust)? Aside from the fact that CGAR holds some property they have little in common. VT with its aims of "preserving capital over the medium to long-term" is very different from CGT/CGAR's wealth preservation mandate which has seen it lose value in only one of 20 years; also, VT took a much heavier fall than CGAR when Covid struck. To me this looks like, as I said above, infrastructure being talked up as safer than it is.

I see them as comparable as they're both low volatility and low returns options - it doesn't mean that I'm advocating choosing one over the other - indeed I'd suspect lots of people hold both. Yes, during Covid it didn't quite meet that low volatility mandate did it? - That's another concern which is one of the reasons I haven't pounced yet.

I think I am drawn to it as it seems a genuine portfolio diversifier away from equities, whilst also avoiding bonds. I'm aware it's a bad comparison, but basically I compare both this and CGAR to cash in the bank at the moment.

aroominyork

JohnWinder said:

aroominyork said:

ChilliBob said:

Israel Technology, thats a new ETF to me, curious as to your reasons for something that niche? I have my fair share of thematic ETFS myself for all kinds of reasons. Also small holdings thankfully, as most have done pants! 

It's one of the most advanced countries in the world for new tech (some say second only to Silicon Valley) so it interested me. It went up strongly after I bought it but has lost a fair amount of those gains during the last year.

This 12 min video by Ben Felix on thematic funds being bad investments might shed some light. https://www.ifa.com/articles/thematic-etfs-felix/

So he says that as a relatively inexperienced investment manager, he’s seen people get over-excited by themes such as crypto and marijuana, and that drives up prices until they fall. I gave up after three minutes but I don’t think he was going anywhere else.

aroominyork

ChilliBob said:

aroominyork said:

ChilliBob said:

Thanks for the info regarding the ETF. I had no idea

Regarding infra, I have recently opepend a small position in the L&G infra index fund. Looks decent enough and its low cost

VT RM Alternative Income is on my list, but I keep sitting on the fence on it - it's not as steady as say CG Absolute, and a lower return the L&G tracker, but something keeps drawing me to it. Perhaps because it is that middle ground. 

Why do you see VT RM Alternate Income - where its "focus is real asset investments across three sectors; Secured Real Assets, Infrastructure and Specialist Real Estate" - as comparable to CG Absolute Return (the open ended version of Capital Gearing Trust)? Aside from the fact that CGAR holds some property they have little in common. VT with its aims of "preserving capital over the medium to long-term" is very different from CGT/CGAR's wealth preservation mandate which has seen it lose value in only one of 20 years; also, VT took a much heavier fall than CGAR when Covid struck. To me this looks like, as I said above, infrastructure being talked up as safer than it is.

I see them as comparable as they're both low volatility and low returns options - it doesn't mean that I'm advocating choosing one over the other - indeed I'd suspect lots of people hold both. Yes, during Covid it didn't quite meet that low volatility mandate did it? - That's another concern which is one of the reasons I haven't pounced yet.

I think I am drawn to it as it seems a genuine portfolio diversifier away from equities, whilst also avoiding bonds. I'm aware it's a bad comparison, but basically I compare both this and CGAR to cash in the bank at the moment.

Low volatility and comparable to cash? Did cash fall 25% when Covid struck?

Low returns? CGAR has returned 30% in five years, VT 25% in its four years. Not too shabby, and not suggesting a cash-like level of risk.

I agree VT provides diversification but, again, I would caution that being different to equities and bonds doesn't mean it won't act similarly.

ChilliBob

aroominyork said:

ChilliBob said:

aroominyork said:

ChilliBob said:

Thanks for the info regarding the ETF. I had no idea

Regarding infra, I have recently opepend a small position in the L&G infra index fund. Looks decent enough and its low cost

VT RM Alternative Income is on my list, but I keep sitting on the fence on it - it's not as steady as say CG Absolute, and a lower return the L&G tracker, but something keeps drawing me to it. Perhaps because it is that middle ground. 

Why do you see VT RM Alternate Income - where its "focus is real asset investments across three sectors; Secured Real Assets, Infrastructure and Specialist Real Estate" - as comparable to CG Absolute Return (the open ended version of Capital Gearing Trust)? Aside from the fact that CGAR holds some property they have little in common. VT with its aims of "preserving capital over the medium to long-term" is very different from CGT/CGAR's wealth preservation mandate which has seen it lose value in only one of 20 years; also, VT took a much heavier fall than CGAR when Covid struck. To me this looks like, as I said above, infrastructure being talked up as safer than it is.

I see them as comparable as they're both low volatility and low returns options - it doesn't mean that I'm advocating choosing one over the other - indeed I'd suspect lots of people hold both. Yes, during Covid it didn't quite meet that low volatility mandate did it? - That's another concern which is one of the reasons I haven't pounced yet.

I think I am drawn to it as it seems a genuine portfolio diversifier away from equities, whilst also avoiding bonds. I'm aware it's a bad comparison, but basically I compare both this and CGAR to cash in the bank at the moment.

Low volatility and comparable to cash? Did cash fall 25% when Covid struck?

Low returns? CGAR has returned 30% in five years, VT 25% in its four years. Not too shabby, and not suggesting a cash-like level of risk.

I agree VT provides diversification but, again, I would caution that being different to equities and bonds doesn't mean it won't act similarly.

Indeed it did not! Perhaps part of the reason for my hesitation. 

Low returns compared to other options - such as Global trackers - was where I was going with that - e.g. Fidelity World 52% over 5yrs. 

The level of risk between cash and say Global Trackers seems quite a challenge to find the right investments for me, which is really why I haven't done too much in that regard!

ChilliBob

aroominyork said:

JohnWinder said:

aroominyork said:

ChilliBob said:

Israel Technology, thats a new ETF to me, curious as to your reasons for something that niche? I have my fair share of thematic ETFS myself for all kinds of reasons. Also small holdings thankfully, as most have done pants! 

It's one of the most advanced countries in the world for new tech (some say second only to Silicon Valley) so it interested me. It went up strongly after I bought it but has lost a fair amount of those gains during the last year.

This 12 min video by Ben Felix on thematic funds being bad investments might shed some light. https://www.ifa.com/articles/thematic-etfs-felix/

So he says that as a relatively inexperienced investment manager, he’s seen people get over-excited by themes such as crypto and marijuana, and that drives up prices until they fall. I gave up after three minutes but I don’t think he was going anywhere else.

I think the Ben Felix videos are pretty decent to be honest, I did enjoy the Thematic ETFs one. He's very well regarded in this space. I own a few (thematic ETFs) and their performance hasn't been amazing, but this video, along with other sources did stop me from going a bit rogue with them! But hey, horses for courses if Ben's not your bag and you're keen on thematic ETFs then crack on!