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Simplifying a portfolio
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fizio
Posts: 428 Forumite


Took early retirement and have a decent DB pension - below HRT threshold. My various investments across ISA/Drawdown/etc have been chopped and changed for ages and am now looking to simplify. The pot is circa £1m and I don't really need it for any day to day use so happy to take a bit of risk. Cash is already covered as well as a BTL portfolio so it's 100& investing.
I did some analysis today and the split is :
Global tracker - 56%
US S&P - 18%
UK tracker - 12%
Global Tech tracker - 4%
Global Infrastructure - 2%
Global REIT - 2%
cash 12% (2024 ISA so will invest shortly)
I have already switched out of a few areas like global smaller companies, corporate bonds and emerging markets where I had 2-5% holdings and moved to global trackers. US has done me very well over the last decade so happy to have a decent chunk there - though probably have too much possibly.
I am thinking of getting out of 3 areas where I am below 5%.
I don't have gold/mining etc so not sure how 'balanced' my portfolio is.
I am aware there is no right answer and a lot of 'it depends' etc but though I would get some feedback from some of the 'experts' here.
I did some analysis today and the split is :
Global tracker - 56%
US S&P - 18%
UK tracker - 12%
Global Tech tracker - 4%
Global Infrastructure - 2%
Global REIT - 2%
cash 12% (2024 ISA so will invest shortly)
I have already switched out of a few areas like global smaller companies, corporate bonds and emerging markets where I had 2-5% holdings and moved to global trackers. US has done me very well over the last decade so happy to have a decent chunk there - though probably have too much possibly.
I am thinking of getting out of 3 areas where I am below 5%.
I don't have gold/mining etc so not sure how 'balanced' my portfolio is.
I am aware there is no right answer and a lot of 'it depends' etc but though I would get some feedback from some of the 'experts' here.
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Comments
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What do you want your £1M pot for? It sounds like you dont really need it. If you are planning to die rich perhaps it may be worthwhile consulting an IFA to see how you can minimise IHT and other taxation.
Ignoring the fact that it's £1M you are talking about, some general comments on what you have said:
The global tracker will be about 60% US. Why do you need even more? The US has performed well recently but that says little about the future. It is perfectly capable of falling more than 50% in a crash given its high dependency on the Tech sector.
Your global tracker on its own is very well balanced. But it may be missing out on Emerging Markets and small companies depending on which tracker you have chosen.
Many people here like Vanguard FTSE Global All Cap because it includes everything.
REITs and Infrastructure can be good for income but not so good for capital growth or arguably much else. You have such small % holdings why include them at all? Some will be included in the tracker.
Are you sure you wont panic in a crash and do something foolish like selling the lot and so crystalising your losses? Many investors choose perhaps a 60% equity/40% bond portfolio to avoid some of the volatility. Minimising potential losses may be more important to you than maximising returns.
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Agree with Linton above, especially about moving nearer towards a 60/40 split. Only the most adventurous investor has your % in equities. And of course it has done very well the past few years, but that's no future indicator. So a good global tracker plus bond fund(s), or a multi-asset fund or 2 would be worth looking at.
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Linton - thanks for your comments and a few answers
1. I am not interested in inheritance and leaving a big pot for anyone
2. I have been heavy in the US for 20+ years (worked for big tech all my life) and my experience is that if there is a big issue in US then nowhere is safe (at least from stocks perspective). Plus there is always talk of US being a bubble but it never really taken a big hit that has lasted so I am prepared to take the risk of being US heavy. I would like to get down to 2-3 funds so global-exc-uk/uk/S&P possibly - though I could probably just get down to 1 and be done with it.
3. My global trackers are vanguard/hsbc
4. I do intend to exit the small holdings as agree its not worth holding very small percentages as the big players in those sectors will be covered to some degree in the global trackers
5. I have never sold anything in a panic in the last 20+ years regardless of what happens in the market - same applies to property - so I ok with riding out any big hits
6. I have looked into the 60/40 a few times over the last 2 decades and have had some bonds at various times but never really seen any benefit - especially the last decade. There are also quite a few interesting debates about how relevant the old 60/40 is nowadays. BTL and DB pension are enough for me to cope with any calamity in the stock market so not really convinced of the extra value of bonds in my situation - but will give it another look to see if it makes sense to have some at least.
7. Multi-asset funds are interesting and I have had a brief look into them but not done a deep dive - I do see some merits so thats one area I will investigate further.
Appreciate the feedback from you and Beddie1 -
With a DB pension, 12% cash (that's more than most people have) and BTL I don't think you need much in bonds, certainly not 40%. I would roll the US tracker into the the Global tracker and keep the UK tracker if you want to overweight domestically, otherwise roll that into the Global tracker as well. The small stuff is ok as a bit of spice, but you might also consider consolidating it into a Dividend/Income oriented fund just for a bit of variety and a convenient source of extra income if you need it.
I'm in a similar situation to you with a DB pension and rental income and investments that I don't touch and my portfolio is:
VTSAX (US Equity Index) 59%
VTIAX (International Equity Index) 24%
VWIAX (Wellesley Income Fund) 11%
Cash 3%
TIAA Traditional Annuity (Fixed Income) 3%
I'm in the US hence the large US equity holding. It really is a set and forget portfolio. If it's value goes down I don't care as I don't use it for retirement income so, like you, I'm ok riding that out and doing nothing through the last 10 years since I retired has been a good strategy.And so we beat on, boats against the current, borne back ceaselessly into the past.2 -
Bostonerimus1,
Thanks for that and its along the lines I am thinking so will add it to my considerations..0 -
Interesting.I’d take some first class holidays to ease it down a little….or are you interested in dying the richest in the graveyard?!
Or….have you considered helping some charity? I don’t mean after you’re gone - I mean getting involved in something and helping use your wealth to make a little difference somewhere?You also say you’re happy to take a risk.
For what reason? It’s money you don’t appear to need 🤷♂️
If you want to simplify, follow the https://kroijer.com/ approach & just buy the world as cheap as you can.
Pick a global tracker (heck, pick 3 if you aren’t sure), lock it and leave it 👍Surely that is simplification?
You also say you’re happy to take a risk.
Why? It’s money you don’t appear to need 🤷♂️Plan for tomorrow, enjoy today!2 -
With no requirements to use/need the pot now or in the future, then how does one determine what risk to take?0
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2. I have been heavy in the US for 20+ years (worked for big tech all my life) and my experience is that if there is a big issue in US then nowhere is safe (at least from stocks perspective). Plus there is always talk of US being a bubble but it never really taken a big hit that has lasted so I am prepared to take the risk of being US heavy. I would like to get down to 2-3 funds so global-exc-uk/uk/S&P possibly - though I could probably just get down to 1 and be done with it.The first 10 years of the millennium, US underperformed the rest of the world. The second decade they outperformed.
Whilst a large drop in markets will typically see all markets drop, the scale of the drop is what differs. US being tech heavy puts it at a higher risk of larger drops compared to the rest of the world.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
cfw1994 said:
You also say you’re happy to take a risk.
Why? It’s money you don’t appear to need 🤷♂️And so we beat on, boats against the current, borne back ceaselessly into the past.0 -
Cus said:With no requirements to use/need the pot now or in the future, then how does one determine what risk to take?And so we beat on, boats against the current, borne back ceaselessly into the past.1
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