My Portfolio

chiang_mai

"you realise that you are just a passenger on "what will be will be".

But of course. There again, it is said that death and taxes are certain yet I've done a pretty good job of avoiding both thus far!

Linton

Being of a similar age, I broadly agree with your general approach and reasons for taking it. Though perhaps it would be helpful if you linked it to your retirement financial strategy. In particular, what are the bond holdings for?

Cutting back so much on US could be open to question. Despite its relative decline in the world economy the US market still provides access to significant worthwhile investments.  Again looking at the major, and I believe fundamental, shifts in the world economy more in EM, mainly SE Asia, would seem justifiable.

Even in one’s mid 70s one should avoid reacting to short term events.  If you are in reasonable health now there is a fair chance you will still be benefitting from your investments in 20 years time.

chiang_mai

Linton said:

Being of a similar age, I broadly agree with your general approach and reasons for taking it. Though perhaps it would be helpful if you linked it to your retirement financial strategy. In particular, what are the bond holdings for?

Cutting back so much on US could be open to question. Despite its relative decline in the world economy the US market still provides access to significant worthwhile investments.  Again looking at the major, and I believe fundamental, shifts in the world economy more in EM, mainly SE Asia, would seem justifiable.

Even in one’s mid 70s one should avoid reacting to short term events.  If you are in reasonable health now there is a fair chance you will still be benefitting from your investments in 20 years time.

The bond holdings are for diversification, a lower risk alternative to my equities holdings. I have no illusions about counterbalancing and inverse relationships, not with short duration bond funds of the type I hold. I regard the bonds as a better source of income than money markets and cash, little more than that. 

I have no firm strategy for this portfolio other than to grow it in a manner that avoids obvious unnecessary and avoidable risk. The purpose of the funds is inheritance for my wife. That said, two of the bond funds are closing in on returns that would challenge some equities funds.

I agree with your comments regarding the US market. My concern is the unpredictability of government and it's lack of coherent policy and consistent direction. I remain open to investing further in the US, but only when I consider the environment to be more stable.

Hoenir

chiang_mai said:

InvesterJones said:

Sleeping at night is important, so I definitely agree with that.

I'd question why active management helps you sleep better than passive however - just as they can respond correctly to something quickly.. they can respond incorrectly too - and could take even longer to recover than passive. To get your desired ex-US tilt you could either use a global ex-us fund (eg. EXUS) which have done a lot better than 6.4% for the last quarter, or make up a portfolio from a few regional index trackers and just reduce the US proportion. 

I'm not in search of stellar profit or trying to shoot the lights out every day, just an above average return that is low(er) in risk. But sure, there are lots of ways to adopt the same theme, mine is only one of them.

Overweighting one particular market is heightening the risk level considerably not lowering it.  The inherent danger of increasing risk exposure is that overall returns fall well below the "average". Though the average is dependent on what your own personal benchmark is. 

kempiejon

chiang_mai said:
Historically, I've nearly always realised at  least 12% per year, which is better than the unadjusted 10% market average, perhaps I've just been lucky. I frequently read comments from people who talk in terms of much higher profit per year (true or not) but that's never been my goal.

Having established you are better than average (nearly always) most people here will have little to add being an average. Anyone who can beat the market with their own selections and not just luck should continue to do so thanks for sharing. I adjusted my investment when I realised I couldn't beat the average long term despite a few years averaging a 25% compounded annual return it only takes a few losses like 2008 and 2020 to drive the CAGR downward.
If you can get 12% crack on.

chiang_mai

Hoenir said:

chiang_mai said:

InvesterJones said:

Sleeping at night is important, so I definitely agree with that.

I'd question why active management helps you sleep better than passive however - just as they can respond correctly to something quickly.. they can respond incorrectly too - and could take even longer to recover than passive. To get your desired ex-US tilt you could either use a global ex-us fund (eg. EXUS) which have done a lot better than 6.4% for the last quarter, or make up a portfolio from a few regional index trackers and just reduce the US proportion. 

I'm not in search of stellar profit or trying to shoot the lights out every day, just an above average return that is low(er) in risk. But sure, there are lots of ways to adopt the same theme, mine is only one of them.

Overweighting one particular market is heightening the risk level considerably not lowering it.  The inherent danger of increasing risk exposure is that overall returns fall well below the "average". Though the average is dependent on what your own personal benchmark is. 

I don't buy into the idea that overweighting always increases risk necessarily. I live in Asia and know far more about Asian companies, markets and economies than I do the other countries I invest in. Call it "home country bias" if you like but I think a person should invest more in areas where they have knowledge. Just because the US is the worlds largest developed market, whilst Asian markets are much smaller and much less developed, doesn't mean I should invest proportionally in those markets. Equities markets are a forward looking view of a country's economy hence I invest according to what I know and can see, rather than what statistics tell me I should be doing.

aroominyork

chiang_mai said:

Hoenir said:

chiang_mai said:

InvesterJones said:

Sleeping at night is important, so I definitely agree with that.

I'd question why active management helps you sleep better than passive however - just as they can respond correctly to something quickly.. they can respond incorrectly too - and could take even longer to recover than passive. To get your desired ex-US tilt you could either use a global ex-us fund (eg. EXUS) which have done a lot better than 6.4% for the last quarter, or make up a portfolio from a few regional index trackers and just reduce the US proportion. 

I'm not in search of stellar profit or trying to shoot the lights out every day, just an above average return that is low(er) in risk. But sure, there are lots of ways to adopt the same theme, mine is only one of them.

Overweighting one particular market is heightening the risk level considerably not lowering it.  The inherent danger of increasing risk exposure is that overall returns fall well below the "average". Though the average is dependent on what your own personal benchmark is. 

I don't buy into the idea that overweighting always increases risk necessarily. I live in Asia and know far more about Asian companies, markets and economies than I do the other countries I invest in. Call it "home country bias" if you like but I think a person should invest more in areas where they have knowledge. Just because the US is the worlds largest developed market, whilst Asian markets are much smaller and much less developed, doesn't mean I should invest proportionally in those markets. Equities markets are a forward looking view of a country's economy hence I invest according to what I know and can see, rather than what statistics tell me I should be doing.

I don't understand "a person should invest more in areas where they have knowledge." That could make sense if you were stock picking, but you are not. If I lived in Australia and knew more about Aussie companies, that would not in itself justify a large overweight to an Australian index fund.

I just charted your Artemis SmartGARP funds against their equivalent index funds. They have done very well over the last five years, although the previous five were nothing to write home about. 

Linton

chiang_mai said:

Hoenir said:

chiang_mai said:

InvesterJones said:

Sleeping at night is important, so I definitely agree with that.

I'd question why active management helps you sleep better than passive however - just as they can respond correctly to something quickly.. they can respond incorrectly too - and could take even longer to recover than passive. To get your desired ex-US tilt you could either use a global ex-us fund (eg. EXUS) which have done a lot better than 6.4% for the last quarter, or make up a portfolio from a few regional index trackers and just reduce the US proportion. 

I'm not in search of stellar profit or trying to shoot the lights out every day, just an above average return that is low(er) in risk. But sure, there are lots of ways to adopt the same theme, mine is only one of them.

Overweighting one particular market is heightening the risk level considerably not lowering it.  The inherent danger of increasing risk exposure is that overall returns fall well below the "average". Though the average is dependent on what your own personal benchmark is. 

I don't buy into the idea that overweighting always increases risk necessarily. I live in Asia and know far more about Asian companies, markets and economies than I do the other countries I invest in. Call it "home country bias" if you like but I think a person should invest more in areas where they have knowledge. Just because the US is the world’s largest developed market, whilst Asian markets are much smaller and much less developed, doesn't mean I should invest proportionally in those markets. Equities markets are a forward looking view of a country's economy hence I invest according to what I know and can see, rather than what statistics tell me I should be doing.

Depending on how you measure such things China’s economy is larger than that of the US. How investors should best react is unclear.

I agree that investing more or less in a particular area than a global index would suggest does not always increase risk and may well decrease it.

You have two different risks to be considered. One is the normal Gaussian noise of the markets for which one may be able to show that moving away from a market cap weighted index increases standard deviation. One could take the view that normal volatility is not something to worry much about.

However there are the quite different concepts of single points of failure and “fat tails” distribution which leads to extreme events affecting the markets being much more common than the simple theory of Gaussian noise would suggest. A reasonable response to such risks would be to distribute one’s investments across as many different countries, sectors, styles etc as possible to minimise correlation

Hoenir

chiang_mai said:

Hoenir said:

chiang_mai said:

InvesterJones said:

Sleeping at night is important, so I definitely agree with that.

I'd question why active management helps you sleep better than passive however - just as they can respond correctly to something quickly.. they can respond incorrectly too - and could take even longer to recover than passive. To get your desired ex-US tilt you could either use a global ex-us fund (eg. EXUS) which have done a lot better than 6.4% for the last quarter, or make up a portfolio from a few regional index trackers and just reduce the US proportion. 

I'm not in search of stellar profit or trying to shoot the lights out every day, just an above average return that is low(er) in risk. But sure, there are lots of ways to adopt the same theme, mine is only one of them.

Overweighting one particular market is heightening the risk level considerably not lowering it.  The inherent danger of increasing risk exposure is that overall returns fall well below the "average". Though the average is dependent on what your own personal benchmark is. 

I don't buy into the idea that overweighting always increases risk necessarily. I live in Asia and know far more about Asian companies, markets and economies than I do the other countries I invest in. Call it "home country bias" if you like but I think a person should invest more in areas where they have knowledge. Just because the US is the worlds largest developed market, whilst Asian markets are much smaller and much less developed, doesn't mean I should invest proportionally in those markets. Equities markets are a forward looking view of a country's economy hence I invest according to what I know and can see, rather than what statistics tell me I should be doing.

It's your judgement call.  Understanding the downside risks is where the majority of investors spend too little time. Identifying the potential negatives of any particular strategy or investment. Overly focussed on the upside particularly in buoyant market conditions.  Metrics are a usefull guide to the future. Any basic understanding of financial history confirms that . As ultimately markets boil down to basic maths. Every rollercoaster eventually has a sizable dip.

chiang_mai

aroominyork said:

I don't understand "a person should invest more in areas where they have knowledge." That could make sense if you were stock picking, but you are not. If I lived in Australia and knew more about Aussie companies, that would not in itself justify a large overweight to an Australian index fund.

I just charted your Artemis SmartGARP funds against their equivalent index funds. They have done very well over the last five years, although the previous five were nothing to write home about. 

Many people have home country bias and it shows up in the extent to which they favour funds in their home country, this varies based on nationality and the source of the advice. I recall reading that it's not unusual for British people to invest 20% of their portfolio in the UK. If we're going to determine investment size based on market size or capitalisation, that represents a high risk bet. Ditto many Americans in the US consider that global investing is an unnecessary higher risk and don't invest beyond their shores at all. The point is that investing in another country or region, doesn't mandate that a person invest using pre-ordained ratios. I believe a person should invest in areas where they have knowledge insight or confidence rather than just because they can. In my case, I have knowledge and confidence in Asia and EM, hence my investment here is higher.