US Markets Risk

masonic

https://forums.moneysavingexpert.com/discussion/comment/81884213#Comment_81884213

Obviously you can do whatever you wish as it's your money. But when you buy into an active fund, you are effectively delegating that responsibility to the fund manager. If you dislike what they are doing then a change probably is justified. If you find you keep having to change, then it may be that there isn't a suitable fund to cater to your needs. With the amount of time you are spending, it may be that you should be your own fund manager and do your own stockpicking. With the rise in free trading platforms, this is much more feasible, and potentially a lot less frustrating than fighting a rotating crop of middlemen for what you want.

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81884246#Comment_81884246

I'm very comfortable with my current selection and have been so, in the majority, for most of the past ten months.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81884285#Comment_81884285

Well here's hoping they serve your needs for years to come.

Bobziz

And on the subject of needs, and apologies if already covered, how did you settle on 12-15% ?

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81884383#Comment_81884383

I calculate that I can achieve a total return of 8% via strategic bond funds and that equities risk is around 50% greater. The average volatilty of my equities fund holdings is 8.6% whislt the average volatility of my bond funds is 4%, so around 50%. It's not a particularly scientific metric that is certainly open to challenge, but the answer agreed with my finger after I wet it and held it in the air. :)

Another aspect of the calculation was a member who keeps reminding us of his circa 9% return with no effort whatsoever. I felt that my time was worth something and that I can do better than 9%, if I put in the time and effort.

Bobziz

https://forums.moneysavingexpert.com/discussion/comment/81884493#Comment_81884493

So not a need, more a what you think you can achieve with a tolerable level of risk. What is your criteria for determining that a fund is no longer meeting its objective ?

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81884590#Comment_81884590

It depends on the fund, but typically a couple of consecutive months of poor performance will see the fund start to get watched more closely, in order to try and understand what's going on. Funds that contain more small caps tend to be more volatile, so it may depend on what's happening globally. One of the best measures I find is to compare the fund against the benchmark and its peers, typically, I will already have an alternate in mind for many of my funds so it helps to compare against that also. Historically, it takes several months before I decide to make any change. Alternatively, I may decide that a fund or region had become too risky, as I did last year with the US and made a pre-emptive move to dilute that risk.

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/81884127#Comment_81884127

On the point of different benchmarks, the natural starting point is a global all cap index, but I think it's equally fine to overweight your home country. I have seen an IFA publish data on how he beat the benchmark by >1% pa over 2012-22 (before his fees - haha!) but when you look at his benchmark it was 50% UK for most of that period… not a high bar to set! I use 90% global + 10% UK, and if I want my outperformance to increase I just change the Excel cells to 80/20 and bingo! It's as much smoke and mirrors as you choose it to be.

For bonds, where I think active management is more justified, I use a benchmark of 50% global aggregate bond fund and 50% gilt fund.

chiang_mai

Anyone wanting to reduce their US markets allocation and dip a toe into the Far East, Asia and Japan, could do far worse than to consider Invesco Pac (UK) which combines Japan, China, Dev Asia and EM, into a single fund with an excellent track record. It has an MS risk score of 79 (KiiD level 5), which puts it just over the line into Very Adventurous….. the SD is 9.5. The biggest downside risk I can see is the funds TWSMC holding at 9%, which may not suit if you already hold that company elsewhere.

https://global.morningstar.com/en-gb/investments/funds/F0GBR04RX2/risk

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81889268#Comment_81889268

It's very expensive though. If the intention is to reduce US markets then a simple ex-us passive index tracker like XMWX covers developed markets,and something like HMEF adds emerging at whatever overweight you desire.