What's your portfolio?

aroominyork

I am more interested in the sectoral allocations.

Linton

aroominyork said:

I am more interested in the sectoral allocations.

You need to buy your own copy of morningstar


My Portfolio

Stock Sectors

Cyclical	34.20
Basic Materials	4.33
Consumer Cyclical	11.26
Financial Services	15.95
Real Estate	2.66

Sensitive	44.73
Communication Services	6.03
Energy	4.36
Industrials	14.41
Technology	19.94

Defensive	21.01
Consumer Defensive	6.70
Healthcare	11.64
Utilities	2.67

Top Holdings %

Microsoft Corp 1.44
Apple Inc 1.14
Novo Nordisk A/S Class B 1.09
NVIDIA Corp 1.09
ASML Holding NV 0.96
Nestle SA 0.93
SAP SE 0.78
Roche Holding AG 0.74
Lvmh Moet Hennessy Louis Vuitton SE 0.71
TotalEnergies SE 0.71



=============================================================================
VFGAC

Sectors	Investment %	Category %
Basic Materials	4.41	3.45
Consumer Cyclical	10.52	10.08
Financial Services	15.63	15.20
Real Estate	2.78	1.73
Communication Services	7.44	7.73
Energy	4.58	3.10
Industrials	11.25	11.16
Technology	23.85	25.35
Consumer Defensive	6.05	6.84
Healthcare	10.79	13.40
Utilities	2.70	1.97

Top holdings

Holdings	% Portfolio Weight
Microsoft Corp	3.71
Apple Inc	3.37
NVIDIA Corp	3.14
Amazon.com Inc	1.91
Meta Platforms Inc Class A	1.24
Alphabet Inc Class A	1.23
Alphabet Inc Class C	1.05
Eli Lilly and Co	0.84
Taiwan Semiconductor Manufacturing Co Ltd	0.74
JPMorgan Chase & Co	0.70

So my portfolio sectors are similar to VGFAC but with much lower allocation to giant US Tech.

noclaf

@Linton - quite a diversified growth portfolio.  Interested to know your thoughts on a couple of aspects:
-  would you follow a similar approach if 15-20 years from retirement or take on more risk such as higher growth e.g more US or Tech allocation?
 A couple of your funds are 5% for smallcaps, I have a few ETFs in my SIPP such as IITU and SMGB which are each just above 5% on a 150k overall SIPP value and EMSM in my ISA (88K overall value) but do ponder the ideal portfolio value threshold where the trading fees are worthwhile to diversify into multiple funds. 

Linton

noclaf said:

@Linton - quite a diversified growth portfolio.  Interested to know your thoughts on a couple of aspects:
-  would you follow a similar approach if 15-20 years from retirement or take on more risk such as higher growth e.g more US or Tech allocation?
 A couple of your funds are 5% for smallcaps, I have a few ETFs in my SIPP such as IITU and SMGB which are each just above 5% on a 150k overall SIPP value and EMSM in my ISA (88K overall value) but do ponder the ideal portfolio value threshold where the trading fees are worthwhile to diversify into multiple funds. 

1) Investment strategy should depend on objectives.  If you are purely investing for 15-20 years with no other objectives I see no reason not to use the most diversified tracker you can - VGFAC would be my choice, being the most diverisified (I believe).

 I agree with many others that you cannot significicantly beat the index in the long term with any degree of certainty. Within the equity asset class higher risk dies not necessarily lead to higher returns overall.  

Given sufficient diversification and time  I would contend that any portfolio will give the same long term returns.  WIth retirement investing the short/medium term behaviour becomes a factor to be considered.


2) My policy is not to drop below around 5% for any single fund.  The constraint is  that one needs to keep the number of funds manageable with minimal overlap.  I find 9 funds to be the sweet spot.  Below 9 and it becomes difficult to control major factors independently.

aroominyork

A few observations. First, if you contend that "any portfolio will give the same long term returns" why pay active management fees? Second, underweighting the US combined with a chunk of your US being low volatility is a strong tilt that has counted against you. Any regrets? Finally, I briefly dabbled in US smaller companies then decided they do not historically perform well against the S&P on a risk/return basis. Presumably you disagree?

noclaf

Thanks Linton, as always very helpful.
I am early 40's so growth is currently my key objective, am somewhat nervous about US markets given recent performance albeit much of it concentrated in Tech. 

I tend to transition between simple 1/2/3 fund portfolios and more complex when adding satellites. I may revert to the simple portfolio at some point as find I am less tempted to 'tinker' the more simple the setup.

Linton

aroominyork said:

A few observations. First, if you contend that "any portfolio will give the same long term returns" why pay active management fees? Second, underweighting the US combined with a chunk of your US being low volatility is a strong tilt that has counted against you. Any regrets? Finally, I briefly dabbled in US smaller companies then decided they do not historically perform well against the S&P on a risk/return basis. Presumably you disagree?

I pay active management fees because it is not possible to get the underlying allocations I want with trackers.  The right allocation is more  important than the cheap allocation..   In the very long term the allocations should make no difference make no difference to returns.  However I am concerned about one-off events in the short/medium terms  I will not be around to take advantage of the very long term.    Increasing the diversification and reducing the size of the largest constituents is intended, amongst other things, to reduce the effect of localised one-off events, in particular tech booms and busts.

If you believe that the market knows best and that prices are "correct" as far as anyone knows surely it follows that this implies that all investments in the market are expected to make the same returns.  If the market believed otherwise the poorer investments would be sold and their price would decrease.  So why should the tilts make any long term difference? 

Dabbling is the wrong way to develop a portfolio.  The very short term will lead you astray ignoring those areas of the market temporarily out of favour and investing in other areas which are already highly priced.

A graph for you.  I find it difficult to see  that anything has counted against me...



I cannot go any further back since some of the funds were not available but it does seem that the 2 graphs are remarkably close with my portfolio slightly ahead.

aroominyork

I was astonished by your performance given the US underweight, MINV having risen only 27% in five years, and EMs not having a good five years so I did a quick spreadsheet (figures from HL charts and estimating Kraneshares as Vanguard All Cap's rise) and got 58.48%. I assume you made some profitable changes during the five years?

	Holding	5 years
Fidelity European W Acc	15%	59.97%		9.00%
Fidelity UK Smaller Companies W Acc	5%	58.36%		2.92%
iShares MSCI World Minimum Volatility ETF(MINV)	20%	27.64%		5.53%
Janus Henderson European Small Companies I Acc	6%	48.20%		2.89%
**Kraneshares MSCI China Clean Tech ETF	1%	64.17%		0.64%
M&G Global Emerging Marketa I Acc	12%	25.52%		3.06%
M&G Japan Smaller Companies Sterling I Acc	5%	71.58%		3.58%
Matthews Asia Small Coms I Acc	7%	84.10%		5.89%
T Rowe Price US Smaller Companies C Acc	11%	62.25%		6.85%
Vanguard S&P 500 UCITS ETF Inc	18%	100.69%		18.12%
	100%			58.48%
Vanguard FTSE Global All Cap				64.17%

MK62

Is it US underweight though?

This.... https://advisor.visualcapitalist.com/the-109-trillion-global-stock-market-in-one-chart/ ....suggests the US (in 2023 at least) represents 42.5% of the global stock market cap (valued in USD).....quite a difference to the 65-70% weighting the US takes in many funds.......looks like differing data or differing interpretations of data are being used, but which is actually representative?

Linton

MK62 said:

Is it US underweight though?

This.... https://advisor.visualcapitalist.com/the-109-trillion-global-stock-market-in-one-chart/ ....suggests the US (in 2023 at least) represents 42.5% of the global stock market cap (valued in USD).....quite a difference to the 65-70% weighting the US takes in many funds.......looks like differing data or differing interpretations of data are being used, but which is actually representative?

I agree the standard indexes do not appear to represent the full global market. In particular China is woefully underweight. If I remember correctly China was added to the global indexes in the late 2010’s at what may have been an arbitrary 3%.Let’s suggest a conspiracy theory - the market data is rigged to benefit the US in its global trade war with China.