UK asset allocation

safe_hands2

Just wondering what people's thoughts are on the proportion of UK equities to hold in an investment portfolio. Not with a view to trying to guess the future, but from a general long term investing perspective.

ColdIron

What are you trying to achieve?

My income portfolio has a very different proportion to my growth one and both are right for their respective objectives. I hope both will be long(ish) term

Linton

The main problem I see with UK investing is that its allocation to industries is quite different to what you would expect if you invested globally. In particular there are no large tech companies in the FTSE100 but an unusually high % of oil and mining companies  which. In general, carry out the business outside the UK.

There are some investment objectives for which the UK is unusually good, in particular equity income. However if you are investing for growth in the long term I suggest that you don’t have so much UK that it seriously compromises your overall portfolio allocation. Whether it ‘s 0%, 5%, or 10% won’t make much difference. I would avoid 20% or higher.

dunstonh

safe_hands2 said:

Just wondering what people's thoughts are on the proportion of UK equities to hold in an investment portfolio. Not with a view to trying to guess the future, but from a general long term investing perspective.

Its a choice.  Some like home bias.  Some like market cap. Some like GDP and there are dozens, if not hundreds, of official benchmarks that will have UK equities are different ratios to market cap.

UK is a dinosaur index.  If you think dinosaurs are the future, then UK is the place to be.   In reality, they are not the future, but the dinosaurs are not dead yet.

safe_hands2

I'm drip feeding monthly for long term growth, using global tracker as equity portion. Starting to feel a bit uncomfortable with the 60% US allocation in that. Nothing to do with current volatility, but the overexposure to one region and massive companies in that doesn't feel very diversified. Was thinking of bringing that down a little by upping UK allocation to 5%. Maybe that's overthinking things.

aroominyork

Upping UK allocation to 5%? Or do you mean by 5%.

One model I read a few years ago on this forum, and which I'm now quite close to, is: 40% North America; 30% UK & Europe; 30% Japan, Asia Pacific and emerging markets. If nothing else it's very neat and symmetrical!

GeoffTF

I have got 18% UK. It was less, but the UK has been outperforming.

Hoenir

When you say UK companies. Are you referring to domestically oreintated companies or internationally focussed ones. The larger UK companies generally generate more of their revenue overseas than their US counterparts. 

Eyeful

You sound just like a new comer to investing.

1 . Anything to do with money has some form of risk attached. It's just the size & type of risk that changes.
Example: Even money in a low risk savings account protected up to £85k by the FSCS has risk. Inflation risk.
RPI from 1948-2025:  https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23

2. Yes I think you are over thinking things.
You choose a low cost passive global index tracker fund or ETF to diversify and not try to guess where to invest.
The % historic chance of winning with Global Index Tracker Fund or ETF over 10 years is above 90%.
If you are drip feeding the money in, then the volatility is your friend.
https://monevator.com/best-global-tracker-funds/

3. The important thing is to be able to sleep at night & not worry about your investments.
If you are worried then maybe you should be using a
low cost Global Multi Asset Fund with a share/bond split or share/risk you are comfortable with.
https://monevator.com/passive-fund-of-funds-the-rivals/

Albermarle

safe_hands2 said:

I'm drip feeding monthly for long term growth, using global tracker as equity portion. Starting to feel a bit uncomfortable with the 60% US allocation in that. Nothing to do with current volatility, but the overexposure to one region and massive companies in that doesn't feel very diversified. Was thinking of bringing that down a little by upping UK allocation to 5%. Maybe that's overthinking things.

I think you will not be the only one recently reducing ( or already reduced) US exposure to some extent, but whether it turns out to be a good decision or not only time will tell. 
Maybe worth noting that the % of US does vary a bit within different global trackers, maybe something like 63% +/- 3%.
On the other hand 4 to 5% for UK in these trackers is normal, so not sure 'upping it to 5%' would do anything.

El_Torro

My investments are currently about 11% UK. Not a particularly conscious decision, this has mainly happened because I hold some VLS multi asset funds. My global smaller companies fund is also a bit overweight in the UK. 

As others have articulated well already just because you are investing in companies that are listed in the UK that doesn't necessarily mean that their main activity is in the UK.