My Portfolio

masonic

Probably best not to read too much into what he is doing, but he's not selling US stocks to buy stocks elsewhere in the world. His recent sales have been focused on reducing exposure to the banking sector. Seems to be hoarding cash. So that might not bode well for financials elsewhere in the world either. They've had a good run recently, so maybe the party is coming to an end.

Then again, perhaps it means nothing.

Linton

thunderroad88 said:

chiang_mai said:

So the key take away for me is that I am probably light on US holdings. It was always in my mind that I could use the cash or short term bonds to increase that, but just not right now.

I have also taken onboard the extent to which the UK fund is higher risk as a result of its over reliance on Financial Services. It may be sensible at some point to swap that out for a FTSE All Share managed tracker such as HSBC. 

 Many thanks for everyone's comments, it's always helpful to understand other people's perspectives.

I have done that…combined Artemis SG with HSBC Ftse tracker for both UK and Europe. I think the marginally increased risk scores of the Smartgarp funds over the index is justified for now by the significant extra return they generate. I also agree with you that managed funds delivering consistently more than low cost index funds do justify that extra 1% in fees…for as long as they deliver. I am still 50% in US though..

I see little justification for holding Artemis European SmartGARP at all in a retirement portfolio.

Looking at the Morningstar portfolio data for the fund I see financial services is 39%. Financial services must surely be the most globally correlated sector of all, one major country’s  banks are unlikely to fail (or strongly out-perform) unless the same thing is happening everywhere. Hence it represents a serious single point of failure risk.

Risk scores are not helpful in these circumstances when they are based on short term volatility rather than susceptibility to “black swan” events. 

chiang_mai

Linton said:

I see little justification for holding Artemis European SmartGARP at all in a retirement portfolio.

Looking at the Morningstar portfolio data for the fund I see financial services is 39%. Financial services must surely be the most globally correlated sector of all, one major country’s  banks are unlikely to fail (or strongly out-perform) unless the same thing is happening everywhere. Hence it represents a serious single point of failure risk.

Risk scores are not helpful in these circumstances when they are based on short term volatility rather than susceptibility to “black swan” events. 

My apologies if I have unintentionally misled you but mine is not a retirement portfolio. I am indeed over 75 and retired but this portfolio does not have any connection with my retirement income. This portfolio and its future growth is a source of learning and fun, it will eventually be left to my wife, along with the rest of my estate, of which this forms a small part. SC EU represents 11% of my equities (7% of my portfolio), I don't  think that's a significant allocation.

chiang_mai

masonic said:

Probably best not to read too much into what he is doing, but he's not selling US stocks to buy stocks elsewhere in the world. His recent sales have been focused on reducing exposure to the banking sector. Seems to be hoarding cash. So that might not bode well for financials elsewhere in the world either. They've had a good run recently, so maybe the party is coming to an end.

Then again, perhaps it means nothing.

There are a number of valid reasons why he is selling, including tax avoidance, regulatory and the fact that some of his investments have reached fair value. Bond market risks are however in the center of my radar, along with the impact they might have on the banking system, in Asia, in particular. Bond defaults in my region are highly probable this year and neither government nor the banks will have the degree of liquidity needed to support the issuers. Junk bonds issued by regional property companies are prolific, their potential to upend the banking system, locally and beyond, should not be underestimated, not by anyone who remembers 1997.

Hoenir

chiang_mai said:

masonic said:

Probably best not to read too much into what he is doing, but he's not selling US stocks to buy stocks elsewhere in the world. His recent sales have been focused on reducing exposure to the banking sector. Seems to be hoarding cash. So that might not bode well for financials elsewhere in the world either. They've had a good run recently, so maybe the party is coming to an end.

Then again, perhaps it means nothing.

There are a number of valid reasons why he is selling, including tax avoidance, regulatory and the fact that some of his investments have reached fair value. 

Berkshire Hathaway at it's core is an insurance company. Not a personal plaything.

masonic

chiang_mai said:

masonic said:

Probably best not to read too much into what he is doing, but he's not selling US stocks to buy stocks elsewhere in the world. His recent sales have been focused on reducing exposure to the banking sector. Seems to be hoarding cash. So that might not bode well for financials elsewhere in the world either. They've had a good run recently, so maybe the party is coming to an end.

Then again, perhaps it means nothing.

There are a number of valid reasons why he is selling, including tax avoidance, regulatory and the fact that some of his investments have reached fair value. Bond market risks are however in the center of my radar, along with the impact they might have on the banking system, in Asia, in particular. Bond defaults in my region are highly probable this year and neither government nor the banks will have the degree of liquidity needed to support the issuers. Junk bonds issued by regional property companies are prolific, their potential to upend the banking system, locally and beyond, should not be underestimated, not by anyone who remembers 1997.

People will speculate about his reasons, and others can form opinions about the validity of those reasons, but the last time I checked in on the story, the man himself had not provided any reasoning for it. So there is probably more than a little confirmation bias from those opining on the topic.

chiang_mai

Hoenir said:

There are a number of valid reasons why he is selling, including tax avoidance, regulatory and the fact that some of his investments have reached fair value. 

Berkshire Hathaway at it's core is an insurance company. Not a personal plaything.

I'm not sure what that has to do with anything, only 25% of BH profits were derived from its insurance business.

https://finmasters.com/berkshire-hathaway-subsidiaries/

aroominyork

masonic said: Underperformance is to be expected with SCV during bull markets, and we've been in a bull market, except for some brief spells, for most of the last 20 years. It has tended to generate more consistent returns under varying market conditions, but will not compete with growth/momentum during the good times. But it is still a high risk proposition with a fair loss potential, so more a diversifier within equities than a defensive holding. It's one of the holdings in the Weird Portfolio, which advocates 20% of each of its 5 constituents (40% small caps overall) - a little too rich for me.

I expect you are aware of Monevaor's recent articles on small cap value (including https://monevator.com/small-value/ for members). He shows that small cap value has beaten the market over the recent bull period. 

Cus

What's the difference between small cap and small value above in definition? Where is the small cap value numbers please?

Bostonerimus1

chiang_mai said:

Linton said:

I see little justification for holding Artemis European SmartGARP at all in a retirement portfolio.

Looking at the Morningstar portfolio data for the fund I see financial services is 39%. Financial services must surely be the most globally correlated sector of all, one major country’s  banks are unlikely to fail (or strongly out-perform) unless the same thing is happening everywhere. Hence it represents a serious single point of failure risk.

Risk scores are not helpful in these circumstances when they are based on short term volatility rather than susceptibility to “black swan” events. 

My apologies if I have unintentionally misled you but mine is not a retirement portfolio. I am indeed over 75 and retired but this portfolio does not have any connection with my retirement income. This portfolio and its future growth is a source of learning and fun, it will eventually be left to my wife, along with the rest of my estate, of which this forms a small part. SC EU represents 11% of my equities (7% of my portfolio), I don't  think that's a significant allocation.

We are in similar situations having retired early with substantial assets and retirement income from various pensions and social security sources. With such a financial profile a portfolio can either be growth oriented with a lot of risk or built to preserve capital and throw off regular income and it will only really matter to your heirs. The vast majority of people are not in such a fortunate situation and their decisions might materially change their income and circumstances. They have to worry about asset allocation, fees and growing their portfolio in the accumulation phase and then comes sequence or returns risk and spending down their capital while you and I don't have to consider those factors anymore. So this discussion must include the goals of the portfolio and personal circumstances.