Maximum to hold in a single fund?

dunstonh

 Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund

Not really.    Some may do it at several million but it really depends on the fund and the underlying assets.  Not all funds are equal in that respect.  A fund with a high level of illiquid assets is very different from a fund that is totally liquid assets.

The reason I'm asking this now is that I'm having difficulty finding similar funds to the one I'm already invested in (Vanguard FTSE Developed World Ex-UK Equity Index Fund) 

That fund is designed to be held in conjunction with several other funds.   It exists to allow you to select how much UK and emerging markets you want when you are making your management decisions.

a) only holding this fund is not what it is designed for.
b) only holding a fund of 100% equities seems a strange choice for someone who is cautious.

However, back on to your question and relative to this fund, probably £5m.

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dunstonh said:

 Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund

Not really.    Some may do it at several million but it really depends on the fund and the underlying assets.  Not all funds are equal in that respect.  A fund with a high level of illiquid assets is very different from a fund that is totally liquid assets.

The reason I'm asking this now is that I'm having difficulty finding similar funds to the one I'm already invested in (Vanguard FTSE Developed World Ex-UK Equity Index Fund) 

That fund is designed to be held in conjunction with several other funds.   It exists to allow you to select how much UK and emerging markets you want when you are making your management decisions.

a) only holding this fund is not what it is designed for.
b) only holding a fund of 100% equities seems a strange choice for someone who is cautious.

However, back on to your question and relative to this fund, probably £5m.

Hi Dunston I do hold other funds alongside the one in question (including an actively managed UK equity fund). I am looking to increase my overall investment in equities and that is why I'm looking for an equivalent fund to the Vanguard one, which I have been very happy with. I don't want to include any emerging markets in my portfolio.

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eskbanker said:

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I tend to be a bit nervous about having 'too much' in one fund and would prefer to split an investment between similar funds to spread the (what I perceive to be) risk over different fund providers. Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund? Please be kind - I'm super cautious by nature and I've had some pretty condescending comments when I've mentioned this before, but I'd like to know the answer to this serious question please.

Perhaps worth clarifying what you do perceive the risk to be - obviously if you're looking for similar funds to track the same index that you're already invested in, then the underlying assets will be the same, or close to it, so your eggs would still ultimately be in the same baskets, and that would presumably imply that you see the risk in terms of fund manager viability rather than the funds themselves?

As above, there isn't a definitive answer to your question, but would you perhaps feel more secure if no more than x% of your portfolio is held by any individual fund manager?  Clearly some fund managers have substantially higher assets under management than others, so they're not all equal, and some will be more profitable than others, so you could refine a methodology to prioritise larger and more sustainable companies?

Or you could choose to hold no more than y% out of any given fund, so, for example, that Vanguard ex-UK one is about £18bn, so even if you held, say, £180K in it, you'd still only have a 0.001% share of it, whereas other funds will be significantly smaller (or larger)....

Example - if I had a sum of £1 million that I wanted to invest in say UK equities, I would want to spread it over similar funds with more than one fund provider, because to put it all in the one fund with the one provider would seem to me to be unwise. Don't ask me why, it just seems more sensible. It's what FAs would do too, isn't it (in my experience)?

Highly regarded investment companies and funds are definitely my preference.

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masonic said:

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wmb194 said:

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I tend to be a bit nervous about having 'too much' in one fund and would prefer to split an investment between similar funds to spread the (what I perceive to be) risk over different fund providers. Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund? Please be kind - I'm super cautious by nature and I've had some pretty condescending comments when I've mentioned this before, but I'd like to know the answer to this serious question please.

If it makes you feel anxious then split your investment between multiple funds/fund providers in amounts you're comfortable with and don't concern yourself with what other people do. In regards to managing risk, there's an old saying in investing about finding your, 'sleep level.'

Hi, thanks for responding. Not meaning to be rude, but I'm not asking what other people do, I'm asking for a definitive answer to this question. The reason I'm asking this now is that I'm having difficulty finding similar funds to the one I'm already invested in (Vanguard FTSE Developed World Ex-UK Equity Index Fund) and yes, my 'sleep level' is exactly the issue here!

There are several funds that are similar to Vanguard FTSE Developed World Ex-UK Equity Index Fund you could consider:

• L&G International Index Trust I Fund
• Aviva International Index Tracking SC2 Fund
• iShares Developed World Index Fund D (contains ~3.5% UK equities)
• UBS Core MSCI World ETF (contains ~3.5% UK equities)

Or you could just split it into one or more US, Europe, Developed Asia and Japan fund, where there are even more choices.

If you are just trying to avoid eggs in one basket, then you'd hold these with different investment platforms. So for example if you held the Vanguard fund on Vanguard's own platform, then you could hold the L&G fund at AJ Bell and the Aviva fund at Hargreaves Lansdown etc, remembering that as you increase the number of counterparties involved in managing your assets, you increase the likelihood that if an asset manager fails at some point you'll be exposed. This is especially true if you are forced to compromise on quality when spreading your assets around.

There isn't any sort of definitive answer to this question, except that there is no need to do any of this at all if you select one of the big asset managers with trillions under management. In this case holding a seven figure sum in one place would not be unreasonable. Whereas if you opt for one of the start-up trading platforms like Lightyear or Robinhood, the risk of failure is considerably greater and in that case I wouldn't hold more than the FSCS compensation limit in one of their accounts.

Thanks for the fund pointers, I will check those out. Splitting things by region in the way you suggest would seem to me unnecessary, when I'm happy with the Vanguard index fund just as it is. Same for splitting over investment platforms, I'd prefer to stick with just the one (which I'm happy with). I want to keep things as simple as possible. I agree with your point about sticking with the big asset managers and would intend to do that always. 

eskbanker

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eskbanker said:

Aged said:

I tend to be a bit nervous about having 'too much' in one fund and would prefer to split an investment between similar funds to spread the (what I perceive to be) risk over different fund providers. Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund? Please be kind - I'm super cautious by nature and I've had some pretty condescending comments when I've mentioned this before, but I'd like to know the answer to this serious question please.

Perhaps worth clarifying what you do perceive the risk to be - obviously if you're looking for similar funds to track the same index that you're already invested in, then the underlying assets will be the same, or close to it, so your eggs would still ultimately be in the same baskets, and that would presumably imply that you see the risk in terms of fund manager viability rather than the funds themselves?

As above, there isn't a definitive answer to your question, but would you perhaps feel more secure if no more than x% of your portfolio is held by any individual fund manager?  Clearly some fund managers have substantially higher assets under management than others, so they're not all equal, and some will be more profitable than others, so you could refine a methodology to prioritise larger and more sustainable companies?

Or you could choose to hold no more than y% out of any given fund, so, for example, that Vanguard ex-UK one is about £18bn, so even if you held, say, £180K in it, you'd still only have a 0.001% share of it, whereas other funds will be significantly smaller (or larger)....

Example - if I had a sum of £1 million that I wanted to invest in say UK equities, I would want to spread it over similar funds with more than one fund provider, because to put it all in the one fund with the one provider would seem to me to be unwise. Don't ask me why, it just seems more sensible. It's what FAs would do too, isn't it (in my experience)?

Not based on the reply from one further up the page, no, but if they were going to do that they'd have a solid reason for doing so and be able to explain it!

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eskbanker said:

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Example - if I had a sum of £1 million that I wanted to invest in say UK equities, I would want to spread it over similar funds with more than one fund provider, because to put it all in the one fund with the one provider would seem to me to be unwise. Don't ask me why, it just seems more sensible. It's what FAs would do too, isn't it (in my experience)?

Not based on the reply from one further up the page, no, but if they were going to do that they'd have a solid reason for doing so and be able to explain it!

Well as I said, in my experience (and on more than one occasion) an FA/IFA has done exactly that! No doubt they did have a solid reason for doing so and would be able to explain it, but they are financial professionals and I am not! All I can go by is my cautious nature!

masonic

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masonic said:

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wmb194 said:

Aged said:

I tend to be a bit nervous about having 'too much' in one fund and would prefer to split an investment between similar funds to spread the (what I perceive to be) risk over different fund providers. Is there a rule of thumb for this ie a maximum that it's recommended to hold in one fund? Please be kind - I'm super cautious by nature and I've had some pretty condescending comments when I've mentioned this before, but I'd like to know the answer to this serious question please.

If it makes you feel anxious then split your investment between multiple funds/fund providers in amounts you're comfortable with and don't concern yourself with what other people do. In regards to managing risk, there's an old saying in investing about finding your, 'sleep level.'

Hi, thanks for responding. Not meaning to be rude, but I'm not asking what other people do, I'm asking for a definitive answer to this question. The reason I'm asking this now is that I'm having difficulty finding similar funds to the one I'm already invested in (Vanguard FTSE Developed World Ex-UK Equity Index Fund) and yes, my 'sleep level' is exactly the issue here!

There are several funds that are similar to Vanguard FTSE Developed World Ex-UK Equity Index Fund you could consider:

• L&G International Index Trust I Fund
• Aviva International Index Tracking SC2 Fund
• iShares Developed World Index Fund D (contains ~3.5% UK equities)
• UBS Core MSCI World ETF (contains ~3.5% UK equities)

Or you could just split it into one or more US, Europe, Developed Asia and Japan fund, where there are even more choices.

If you are just trying to avoid eggs in one basket, then you'd hold these with different investment platforms. So for example if you held the Vanguard fund on Vanguard's own platform, then you could hold the L&G fund at AJ Bell and the Aviva fund at Hargreaves Lansdown etc, remembering that as you increase the number of counterparties involved in managing your assets, you increase the likelihood that if an asset manager fails at some point you'll be exposed. This is especially true if you are forced to compromise on quality when spreading your assets around.

There isn't any sort of definitive answer to this question, except that there is no need to do any of this at all if you select one of the big asset managers with trillions under management. In this case holding a seven figure sum in one place would not be unreasonable. Whereas if you opt for one of the start-up trading platforms like Lightyear or Robinhood, the risk of failure is considerably greater and in that case I wouldn't hold more than the FSCS compensation limit in one of their accounts.

Thanks for the fund pointers, I will check those out. Splitting things by region in the way you suggest would seem to me unnecessary, when I'm happy with the Vanguard index fund just as it is. Same for splitting over investment platforms, I'd prefer to stick with just the one (which I'm happy with). I want to keep things as simple as possible. I agree with your point about sticking with the big asset managers and would intend to do that always. 

Failing to split over investment platforms is comparatively a lot more risky. If you want to keep things as simple as possible, holding the same Vanguard index fund, but spreading between investment platforms would be the optimal solution.

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masonic said:

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Thanks for the fund pointers, I will check those out. Splitting things by region in the way you suggest would seem to me unnecessary, when I'm happy with the Vanguard index fund just as it is. Same for splitting over investment platforms, I'd prefer to stick with just the one (which I'm happy with). I want to keep things as simple as possible. I agree with your point about sticking with the big asset managers and would intend to do that always. 

Failing to split over investment platforms is comparatively a lot more risky. If you want to keep things as simple as possible, holding the same Vanguard index fund, but spreading between investment platforms would be the optimal solution.

I take your point - food for thought, thanks. The platform I use is Quilter, which I understood to be one of the best.

PS when I inherited the pension(s), it was recommended by the FA that it would be 'better' for everything to be consolidated on one platform.

eskbanker

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The platform I use is Quilter, which I understood to be one of the best.

PS when I inherited the pension(s), it was recommended by the FA that it would be 'better' for everything to be consolidated on one platform.

But terms like 'better' and 'best' are objectively meaningless in a vacuum, i.e. they need to be measured by some sort of criteria?

Lowest cost, most responsive service, scale of product range, financial stability, technology offerings, etc, for platform comparison, and for comparing one versus multiple platforms there'd need to be a proper assessment of pros and cons, in the context of one's own financial circumstances - what did you understand these to be at the time?

masonic

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masonic said:

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Thanks for the fund pointers, I will check those out. Splitting things by region in the way you suggest would seem to me unnecessary, when I'm happy with the Vanguard index fund just as it is. Same for splitting over investment platforms, I'd prefer to stick with just the one (which I'm happy with). I want to keep things as simple as possible. I agree with your point about sticking with the big asset managers and would intend to do that always. 

Failing to split over investment platforms is comparatively a lot more risky. If you want to keep things as simple as possible, holding the same Vanguard index fund, but spreading between investment platforms would be the optimal solution.

I take your point - food for thought, thanks. The platform I use is Quilter, which I understood to be one of the best.

Oh. That's the old Old Mutual Wealth Management. It is a large provider, so it has that in its favour. I believe it runs on the FNZ software platform, like several other major providers. Loss making after tax in its most recent set of accounts (small after tax profit the previous year), which is a surprise given I understand it is quite expensive. I don't know much else about it other than observing that when the name pops up in these parts it is often around people complaining about and trying to reclaim fees for advice they don't feel they received.