S&SISA portfolio

noclaf

I am in the process of transferring my S&SISA to Fidelity, to take advantage of the capped platform fees if using ETF's. Currently all my investments are 100% Equities and I am 42 so have 15-18 years to go till retirement.

On a overall valuation of circa £50k (proportionally 22% of all my investment wrappers including pensions) would it be worthwhile including a Bond ETF for diversification? The last few years have been terrible for bonds and I have no idea if/when that will change but I am just wary that 100% Equities is at the far end of the risk scale......doesn't matter so much for pensions but for S&SISA there could be scenarios I need to dip into it ..hoping that's a last resort but you never know.

Below would be my proposed S&SISA portfolio:

Dev Equities -HMWO or SWDA 80%

EM Equities - EMIM 10%

Bonds - SAGG 10%

Any thoughts/opinions/suggestions for/against the bond component? Would a 10% weighting have much of a material impact during a market downturn or is it not worthwhile unless I have a higher allocation e.g: 15%

Midcap/Smallcap and Property are not well represented but on a 50k valuation I'm questioning whether the diversification offered is worth the extra complexity and trading fees...alternatively VWRL would give me a fairly well diversified single fund albeit at a slightly punchy 0.22% fund fee

InvesterJones

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

noclaf

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

I didn't make clear at outset but my intention for the S&SISA is that it act as a bridge to retirement.....57-60 would be the earliest I can access my pension/SIPP but employment and health considerations leading upto retirement age are an unknown at this point so the S&SISA will be used to plug that gap along with any cash savings etc

InvesterJones

noclaf said:

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

So perhaps split a portion that you think might represent that 'what if' moment and consider that a 5-10yr (eg medium) term investment (so perhaps suiting a mixed asset fund like a global 80/20 or 60/40 fund), and treat the rest as long term (eg. cheap global equities fund) that you don't touch. Yes, means some fund overlap but justified in this case. This should not be construed as advice of course, just an example.

Albermarle

InvesterJones said:

noclaf said:

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

So perhaps split a portion that you think might represent that 'what if' moment and consider that a 5-10yr (eg medium) term investment (so perhaps suiting a mixed asset fund like a global 80/20 or 60/40 fund), and treat the rest as long term (eg. cheap global equities fund) that you don't touch. Yes, means some fund overlap but justified in this case. This should not be construed as advice of course, just an example.

The OP wants to stay out of OEIC funds due to the charging structure of the platform they are moving to.
So would effectively have to construct their own from ETF's.

noclaf

Albermarle said:

InvesterJones said:

noclaf said:

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

So perhaps split a portion that you think might represent that 'what if' moment and consider that a 5-10yr (eg medium) term investment (so perhaps suiting a mixed asset fund like a global 80/20 or 60/40 fund), and treat the rest as long term (eg. cheap global equities fund) that you don't touch. Yes, means some fund overlap but justified in this case. This should not be construed as advice of course, just an example.

The OP wants to stay out of OEIC funds due to the charging structure of the platform they are moving to.
So would effectively have to construct their own from ETF's.

Exactly Albermarle, I think will end up landing on something like 75-80 Dev equities and the rest apportioned to EM and Bonds. I hold EM in my SIPP and am a bit concerned about the next few years with China and how that may impact investments but for now I will include. There are ex-China EM ETF's but predictably they are a lot pricier options and not sure if it's worth going into that level of specificity. My SIPP is 2 ETFs and I've reached a point where I avoid tinkering so will follow a similar approach for the ISA.

Albermarle

noclaf said:

Albermarle said:

InvesterJones said:

noclaf said:

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

So perhaps split a portion that you think might represent that 'what if' moment and consider that a 5-10yr (eg medium) term investment (so perhaps suiting a mixed asset fund like a global 80/20 or 60/40 fund), and treat the rest as long term (eg. cheap global equities fund) that you don't touch. Yes, means some fund overlap but justified in this case. This should not be construed as advice of course, just an example.

The OP wants to stay out of OEIC funds due to the charging structure of the platform they are moving to.
So would effectively have to construct their own from ETF's.

Exactly Albermarle, I think will end up landing on something like 75-80 Dev equities and the rest apportioned to EM and Bonds. I hold EM in my SIPP and am a bit concerned about the next few years with China and how that may impact investments but for now I will include. There are ex-China EM ETF's but predictably they are a lot pricier options and not sure if it's worth going into that level of specificity. My SIPP is 2 ETFs and I've reached a point where I avoid tinkering so will follow a similar approach for the ISA.

Only issue is that 10% bonds is not going to make much difference either way. I guess you need at least 20% to have any stabilising effect if equities go into a market downturn. Or you could have 10% bonds and 10% gold maybe ( there are gold ETF's) . Not advice of course, just a thought.

noclaf

Albermarle said:

noclaf said:

Albermarle said:

InvesterJones said:

noclaf said:

InvesterJones said:

I think the key consideration is that 'could be scenarios I need to dip into it' - it might be worth working out what amount you'd possibly need to make available and treat that separately to the rest of your long term investment.

As of now/near term ..highly unlikely to touch the S&SISA. I am thinking a 5-10 years down the line but it's a big 'what if' at the moment.

So perhaps split a portion that you think might represent that 'what if' moment and consider that a 5-10yr (eg medium) term investment (so perhaps suiting a mixed asset fund like a global 80/20 or 60/40 fund), and treat the rest as long term (eg. cheap global equities fund) that you don't touch. Yes, means some fund overlap but justified in this case. This should not be construed as advice of course, just an example.

The OP wants to stay out of OEIC funds due to the charging structure of the platform they are moving to.
So would effectively have to construct their own from ETF's.

Exactly Albermarle, I think will end up landing on something like 75-80 Dev equities and the rest apportioned to EM and Bonds. I hold EM in my SIPP and am a bit concerned about the next few years with China and how that may impact investments but for now I will include. There are ex-China EM ETF's but predictably they are a lot pricier options and not sure if it's worth going into that level of specificity. My SIPP is 2 ETFs and I've reached a point where I avoid tinkering so will follow a similar approach for the ISA.

Only issue is that 10% bonds is not going to make much difference either way. I guess you need at least 20% to have any stabilising effect if equities go into a market downturn. Or you could have 10% bonds and 10% gold maybe ( there are gold ETF's) . Not advice of course, just a thought.

I was thinking the same regarding Bonds, 10% is too low to make a meaningful difference and 70-80% Equities is more than enough to 'feel' the pain in a downturn.

Interesting on the Gold suggestion, I have held Gold ETF's before...they aren't as good VFM generally but also aware cheapest isn't always the optimum choice as can be seen with some of the super cheap Equities ETF's that are utter dross. I will look into the Gold option and Property is another potentially. Whatever I end up with, what it to be a portfolio I will stick with so hopefully some fairly decent sized liquid ETF's ideally.
On your final point, I've been on this forum long enough to know DYOR but appreciate your suggestions...good food for thought!

masonic

Monevator recently published a few articles on using a broad commodities ETF as a diversifier. You can certainly pick up some REITs at good discounts at the moment, although there is a reason for that.

noclaf

This is probably a fairly basic question if anyone can opine : would there be a significant overlap between the companies that fall within FTSE 100 and 250 trackers and the developed markets component of a global equities tracker? I assume the answer is yes but assumptions are dangerous!

masonic

noclaf said:

This is probably a fairly basic question if anyone can opine : would there be a significant overlap between the companies that fall within FTSE 100 and 250 trackers and the developed markets component of a global equities tracker? I assume the answer is yes but assumptions are dangerous!

The UK market makes up less than 5% of the global index, so there will be very little overlap on a percentage basis, but a very large overlap on the basis of holdings.