Looking for views on performance of ISA portfolio

TcpnT

Thanks for all the replies and comments. To answer a few of them:

The charges are 0.75%+vat for the manager with all dealing and commission charges and fund charges on top of that. Depending on the amount of dealing during the year they probably average about 1.5% in total each year. I don't think that's unreasonable. Has crossed my mind though that he is favouring individual shares because that avoids fund charges that would have to be included in the annual totals that have to be included in statements.

I also think that 40 holdings is too much for a portfolio of this size but I don't see too much evidence of churn. There are only a few changes each year.

I agree with the suggestion of comparing with a balanced mixed asset fund or benchmark and in fact I had done this before posting. VLS60 was an obvious choice and I have modelled the return from VLS60 with the same initial investments and the same annual withdrawals and charges taken. This resulted in an equivalent annualised return of 3.7% after charges were taken into account. Interestingly the VLS60 returns very closely matched the MSCI Pimfa Private Investors Balanced index which is used as a benchmark in the annual reports. If the benchmark or VLS60 had been matched (with same charges deducted) the total return at the end of the period would have been around £470k instead of £379k.

As for Poseidon's question about why she is using this service although she has no interest in investments. The answer is that she is of the generation that believed that leaving things to an expert professional was the way things were done. She and her husband had a couple of legacies over the years and I imagine that at the time they were recommended by someone, probably a friend or solicitor, to hand the money over to a stockbroker who would deal with everything, pay them an income, and grow the capital too. In their case I think that was the right choice. As long as they received some income every quarter and were taken out to lunch once a year they were happy and I doubt they ever considered whether the performance was good or not.

Mind you all this misses the real point of my post which was to see if anyone could offer any real life performance comparables from investment managers, stockbrokers or IFAs. The medium risk balanced portfolio must be a fairly common beast. I do realise that those who frequent this forum are not the most likely to use these services but I'm not sure where else to go for comparables.

Finally I've just looked at the last annual report gain and the investment mix at the moment is more like 70% equities, 20% gilts and corp bonds and 10% property and alts

AltaNate

poseidon1 said:

I don't see that this is a like for like comparison with a stockbroker managed portfoiio of individual shares, corporate bonds and perhaps gilts, paying actual dividends and interest annually.

This particularly fund is accumulation only ( no income unit variant), so to be able to make annual 'income' distributions of £6k to  £10k  mentioned by the OP in favour of his MIL, surely units would need to be sold each year?

Seems  to me need to find a distributing fund with the 60:40 mix, with a gross distributable income yield of say 2.5% to 3% and see what its capital value would be over the same period for a proper comparison with the conventional stockbroker managed portfolio.

All that being said for £272k originally invested,  in my experience 40 separate holdings  was far too many, and would make me wonder if there was an element of 'churn' going on.

 However, this begs the question if OP's MIL has zero interest in investing, how on earth did she end up with a stockbroker managed portfolio in the first place?

Not sure if I misunderstood your post but there are INCome variants of the two funds but I couldn’t see them on Trustnet and the charts were likely ACCumulation variant. Both have historic yield circa 2% which is short of the performance of the managed portfolio. 

LifeStrategy 60% Equity Fund - GBP Inc : GB00B4R2F348 
HSBC Global Strategy Balanced Portfolio Income : GB00B7PHDP01

MK62

TcpnT said:

Mind you all this misses the real point of my post which was to see if anyone could offer any real life performance comparables from investment managers, stockbrokers or IFAs. The medium risk balanced portfolio must be a fairly common beast. I do realise that those who frequent this forum are not the most likely to use these services but I'm not sure where else to go for comparables.

TBH, such "comparables" would be meaningless unless the underlying portfolio composition was the same, or at the least, broadly similar, and the withdrawal timing/level was the same/similar.

Fees aside, what drives portfolio returns are the specific investments within that portfolio......so comparing different portfolios is meaningless unless the investments within them are the same or similar.......and on top of that, the level and timing of withdrawals can give rise to significant differences in outcome as well, even if the total withdrawn was similar.

Linton

MK62 said:

TcpnT said:

Mind you all this misses the real point of my post which was to see if anyone could offer any real life performance comparables from investment managers, stockbrokers or IFAs. The medium risk balanced portfolio must be a fairly common beast. I do realise that those who frequent this forum are not the most likely to use these services but I'm not sure where else to go for comparables.

TBH, such "comparables" would be meaningless unless the underlying portfolio composition was the same, or at the least, broadly similar, and the withdrawal timing/level was the same/similar.

Fees aside, what drives portfolio returns are the specific investments within that portfolio......so comparing different portfolios is meaningless unless the investments within them are the same or similar.......and on top of that, the level and timing of withdrawals can give rise to significant differences in outcome as well, even if the total withdrawn was similar.

Exactly, plus if you do have a comparison over the past 7 years you may well find it is different over the next 7 years.

The important factors are that the investments are meeting MIL's needs and are likely to do so for the rest of her life without her having sleepless nights. Presumably she is currently being advised by regulated professionals who could be sued if they do something foolish.
   
To the OP: I strongly suggest that you avoid worrying her or persuading her to do something different.  In my view the most you can safely do is to suggest that if she is concerned she could pay for for a review by an Independent  Financial Advisor.  Dont take it upon yourself to provide investment advice.

If she does change her investments on your advice and some future crash  significantly changes her circumstances she could see it as your fault. Families and money often do not mix well.