Staying balanced

BlobCore

I can't get my head around the best way to handle this one so any advice appreciated.

My portfolio consists of 11 separate funds / ETFs one weighted;
1 @ 20%
2 @15%
2 @ 10%
6 @ 5%

I want to contribute £400 per month and split this between investments so teh overall balance remains the same.

Problem is 5% of £400 = £20, below the minimum regular contribution and in some cases below what a single unit in the fund is priced at.

Any suggestions on best way to handle this?

Thanks.

Eyeful

(a) Increase the amount of your monthly contributions
(b) Decrease the number of funds you are using
(c) See if you like one of these portfolios as an alternative
https://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/

MX5huggy

Do you have trading costs? No point spending £100 try to balance £400 into the right ETF.

Here’s a video on why this is hard it’s not about investing but the principals apply. https://youtu.be/GVhFBujPlVo

With no trading costs I would list out the value of each EFT and it’s percentage the ETF furthest under target I would buy 1 more unit (not actually buy yet we might need more in a minute). Then look again and buy a unit for the EFT most under target (it might be the same one), keep doing this until you’ve spent your £400. 

But what is “under target” is a 5% holding at 4% (20% off target)  worse than 20% at 19% (5% off target)?

What to do if one takes off, a 5% ends up at 10% do you sell to rebalance? (again costs?). 

Sell the whole lot buy a global index tracker and forget the whole exercise. 

Notepad_Phil

BlobCore said:

...
I want to contribute £400 per month and split this between investments so teh overall balance remains the same.
...

That's going to require a lot of work if you really want to keep each fund/etf to those percentages on a monthly basis - presumably the 11 funds are in quite different areas so one month one fund/etf might go up by 5% whereas another might fall by 10% so each month the contribution spread will need to change to keep the funds/etfs at your desired percentages. You also have the issue that you might need to spend 15% of your £400 to buy just one unit of an etf that is only weighted at 5%.

Could you not get to a much smaller subset of funds (not etfs as you can't buy a fraction of an etf) that you would regularly contribute into, and then once per year rebalance them into your funds/etfs at your desired percentages? 

Though unless you've got very good reasons for your fund choices and percentages then as per MX5huggy, why not just put it all into a global index tracker.

masonic

You could instead save up £4,800 over the course of a year and then use the regular investing service for 1 month to buy your various funds, if your provider allows this. Or just invest in the 5% funds every now and then. However, it seems rather overcomplicated to have six funds at 5% weighting when you're only contributing a few thousand a year, and presumably not a large amount already invested if keeping the weightings balanced is presenting such a challenge.

bostonerimus

Either increase your contributions or reduce the number of funds...better still do both. You don't need to own lots of funds to be  diversified.