Do you see any anomalies?

ColdIron

Just a cursory assessment

• 30:70 Currency Hedged Global Equity - 11%
  30:70 UK:Overseas. Currency hedging is useful for bonds to control volatility but will likely be a drag on performance for equities. It seems to be competing with the other equities below
  
• Corporate Bond - 2%
  2%. Any point?
• Emerging Markets - 22%
  This is the standout anomaly for a risk averse person looking at 10-12 years. There is a lot of misunderstanding with EM, particularly EM economies vs markets
• UK Equity - 5%
  Fine
• World Ex-UK - 38%
  Fine as well, probably the best of the bunch with the above UK equity
  
• Islamic Global Equity - 14%
  These tend to be heavy in US equities, fine as far as it goes
• Sustainable Global Equity - 8%
  ESG funds tend to underperform but at 8% it's barely a nod towards sustainability, I'm not sure what part this plays with the above
  

There is a huge degree of overlap and tbh looks like a bit of a dog's dinner. It lacks any obvious focus

At nearly 100% equities it's a long way away from what a "risk averse person looking at 10-12 years" would look at. For that a 60:40 equity: bonds ratio would be more typical. Corporate bonds, even at more than 2%, are no replacement for investment grade/government bonds

If you can find a global equity fund and couple it with a suitable proportion of investment grade bonds I think you would be in a better place

Brutal but fair?

Ivkoto

ColdIron said:

Just a cursory assessment

• 30:70 Currency Hedged Global Equity - 11%
  30:70 UK:Overseas. Currency hedging is useful for bonds to control volatility but will likely be a drag on performance for equities. It seems to be competing with the other equities below
  
• Corporate Bond - 2%
  2%. Any point?
• Emerging Markets - 22%
  This is the standout anomaly for a risk averse person looking at 10-12 years. There is a lot of misunderstanding with EM, particularly EM economies vs markets
• UK Equity - 5%
  Fine
• World Ex-UK - 38%
  Fine as well, probably the best of the bunch with the above UK equity
  
• Islamic Global Equity - 14%
  These tend to be heavy in US equities, fine as far as it goes
• Sustainable Global Equity - 8%
  ESG funds tend to underperform but at 8% it's barely a nod towards sustainability, I'm not sure what part this plays with the above
  

There is a huge degree of overlap and tbh looks like a bit of a dog's dinner. It lacks any obvious focus

At nearly 100% equities it's a long way away from what a "risk averse person looking at 10-12 years" would look at. For that a 60:40 equity: bonds ratio would be more typical. Corporate bonds, even at more than 2%, are no replacement for investment grade/government bonds

If you can find a global equity fund and couple it with a suitable proportion of investment grade bonds I think you would be in a better place

Brutal but fair?

Thank you for the opinion! I have corrected the "risk averse" part. I am exactly opposite than that (close to a gambler if I can describe it like this). 

The point of the 2% Corporate bonds was to keep some amount of money safe from big drops and I was thinking of increasing it with 1% each year left ( not sure it will be the right thing, but this is why I am asking for anomalies, because I am not expert in investment).

I am aware of some overlapping, but as I asked is there any sector or company, which is more than normal?

Thank you.

ColdIron

Ivkoto said:

ColdIron said:

Just a cursory assessment

• 30:70 Currency Hedged Global Equity - 11%
  30:70 UK:Overseas. Currency hedging is useful for bonds to control volatility but will likely be a drag on performance for equities. It seems to be competing with the other equities below
  
• Corporate Bond - 2%
  2%. Any point?
• Emerging Markets - 22%
  This is the standout anomaly for a risk averse person looking at 10-12 years. There is a lot of misunderstanding with EM, particularly EM economies vs markets
• UK Equity - 5%
  Fine
• World Ex-UK - 38%
  Fine as well, probably the best of the bunch with the above UK equity
  
• Islamic Global Equity - 14%
  These tend to be heavy in US equities, fine as far as it goes
• Sustainable Global Equity - 8%
  ESG funds tend to underperform but at 8% it's barely a nod towards sustainability, I'm not sure what part this plays with the above
  

There is a huge degree of overlap and tbh looks like a bit of a dog's dinner. It lacks any obvious focus

At nearly 100% equities it's a long way away from what a "risk averse person looking at 10-12 years" would look at. For that a 60:40 equity: bonds ratio would be more typical. Corporate bonds, even at more than 2%, are no replacement for investment grade/government bonds

If you can find a global equity fund and couple it with a suitable proportion of investment grade bonds I think you would be in a better place

Brutal but fair?

Thank you for the opinion! I have corrected the "risk averse" part. I am exactly opposite than that (close to a gambler if I can describe it like this).

Well I think you've achieved what you set out to do. However that doesn't sit well with currency hedging of equities

The point of the 2% Corporate bonds was to keep some amount of money safe from big drops and I was thinking of increasing it with 1% each year left ( not sure it will be the right thing, but this is why I am asking for anomalies, because I am not expert in investment).

In a 40% equity drop you could expect your fund's value to be about 60% of what it was. With 2% of corporate bonds it could be 60.8% but probably less than that as corporate bonds tend to move in the same direction as equities. A few percent more will make little difference. About as much protection as a layer of cling film would provide for your phone

I am aware of some overlapping, but as I asked is there any sector or company, which is more than normal?

I would say the overlap is almost complete bar the corporate bonds. Really what you are doing is just messing with the allocations and objectives of each fund. That's what I meant by lack of focus

The obvious anomaly is the high allocation to EM, 5% to 10% would be more usual, many would have less than that especially over only 10-12 years. While the economies of, say, India and China are growing it could be a long time before their markets catch up and it is those that you are investing in. Higher risk does not necessarily translate into higher return

I intend no disrespect by the above, it's just my honest assessment

gravel_2

Ivkoto said:

gravel_2 said:

Seems over complicated. Likely some crossover. Why not just a single global fund or a strategy fund?

Well we are very fund restricted with the provider.

Even if you are not offered a Global/All World option some manual allocation between the Global (ex-UK) and the UK fund would give you an approximation.

Ivkoto

ColdIron said:

Ivkoto said:

ColdIron said:

Just a cursory assessment

• 30:70 Currency Hedged Global Equity - 11%
  30:70 UK:Overseas. Currency hedging is useful for bonds to control volatility but will likely be a drag on performance for equities. It seems to be competing with the other equities below
  
• Corporate Bond - 2%
  2%. Any point?
• Emerging Markets - 22%
  This is the standout anomaly for a risk averse person looking at 10-12 years. There is a lot of misunderstanding with EM, particularly EM economies vs markets
• UK Equity - 5%
  Fine
• World Ex-UK - 38%
  Fine as well, probably the best of the bunch with the above UK equity
  
• Islamic Global Equity - 14%
  These tend to be heavy in US equities, fine as far as it goes
• Sustainable Global Equity - 8%
  ESG funds tend to underperform but at 8% it's barely a nod towards sustainability, I'm not sure what part this plays with the above
  

There is a huge degree of overlap and tbh looks like a bit of a dog's dinner. It lacks any obvious focus

At nearly 100% equities it's a long way away from what a "risk averse person looking at 10-12 years" would look at. For that a 60:40 equity: bonds ratio would be more typical. Corporate bonds, even at more than 2%, are no replacement for investment grade/government bonds

If you can find a global equity fund and couple it with a suitable proportion of investment grade bonds I think you would be in a better place

Brutal but fair?

Thank you for the opinion! I have corrected the "risk averse" part. I am exactly opposite than that (close to a gambler if I can describe it like this).

Well I think you've achieved what you set out to do. However that doesn't sit well with currency hedging of equities

The point of the 2% Corporate bonds was to keep some amount of money safe from big drops and I was thinking of increasing it with 1% each year left ( not sure it will be the right thing, but this is why I am asking for anomalies, because I am not expert in investment).

In a 40% equity drop you could expect your fund's value to be about 60% of what it was. With 2% of corporate bonds it could be 60.8% but probably less than that as corporate bonds tend to move in the same direction as equities. A few percent more will make little difference. About as much protection as a layer of cling film would provide for your phone

I am aware of some overlapping, but as I asked is there any sector or company, which is more than normal?

I would say the overlap is almost complete bar the corporate bonds. Really what you are doing is just messing with the allocations and objectives of each fund. That's what I meant by lack of focus

The obvious anomaly is the high allocation to EM, 5% to 10% would be more usual, many would have less than that especially over only 10-12 years. While the economies of, say, India and China are growing it could be a long time before their markets catch up and it is those that you are investing in. Higher risk does not necessarily translate into higher return

I intend no disrespect by the above, it's just my honest assessment

Thank you again for your honest opinion!

This is why I asked these questions, because there are many knowledgeable people on the forum. I still  have the time to correct some of the mistakes mentioned.

ColdIron

I'm with gravel_2, even then it would be beyond most people's risk tolerance for a short timeframe

Or if you want to roll the dice on US and tech the Islamic fund alone could suffice. Too high octane for many, certainly me. It has performed well recently but that won't always be the case. Anything that can go up fast can come down equally fast but that's the nature of the beast. Funds 1, 2 and 7 don't seem to be bringing anything to your particular party

This is not a recommendation

Ivkoto

ColdIron said:

I'm with gravel_2, even then it would be beyond most people's risk tolerance for a short timeframe

Or if you want to roll the dice on US and tech the Islamic fund alone could suffice. Too high octane for many, certainly me. It has performed well recently but that won't always be the case. Anything that can go up fast can come down equally fast but that's the nature of the beast. Funds 1, 2 and 7 don't seem to be bringing anything to your particular party

This is not a recommendation

Ok I very much appreciate what you saying! But the 10-12 year period is only while I am still contributing money in the pension ( hopefully it will be in the region of £400k ), so if I live another 30 years after I stop, do you think it is still too risky?

ColdIron

For me certainly, many people de-risk their portfolio to some degree around or after retirement

But 42 years is a long time and much will change. 42 years ago we were fighting the Falklands War and Thatcher hadn't implemented the Big Bang when the LSE was deregulated

I'd keep my options open. Slow and steady wins the race

Linton

2% bonds is a waste of time and effort. Anything less than perhaps 5% will make so little difference that it’s not worth holding..

InvesterJones

Ivkoto said:

ColdIron said:

I'm with gravel_2, even then it would be beyond most people's risk tolerance for a short timeframe

Or if you want to roll the dice on US and tech the Islamic fund alone could suffice. Too high octane for many, certainly me. It has performed well recently but that won't always be the case. Anything that can go up fast can come down equally fast but that's the nature of the beast. Funds 1, 2 and 7 don't seem to be bringing anything to your particular party

This is not a recommendation

Ok I very much appreciate what you saying! But the 10-12 year period is only while I am still contributing money in the pension ( hopefully it will be in the region of £400k ), so if I live another 30 years after I stop, do you think it is still too risky?

There's risk from volatility, which time alleviates to some extent, but there's also risk from sector concentration, or lack of diversity, which time does not alleviate, and in fact, if you build a portfolio based on the sectors that are currently doing well then time is almost the enemy - over very long timeframes you don't want to make a bet on today's favourite sectors but instead be diverse so that if sector performance changes, you're still fine. Any other equity funds besides your world fund + a bit of UK + a bit of EM is basically saying you want to decrease diversity.