global funds

dannybbb

some growth would be nice but largely would be happy if it held its value as i would still have the tax benefits in addition to keeping pace with inflation.

Ive been looking at how to invest the lump sum and the 1000 im adding per month - considering phasing in 130k lump sum over the next year and the same percentages from the monthly contribution. Given my age (51) ive picked these to try and hedge against tech and us and high valuations and to keep some cash to take advantage of a bigger fall

HSBC ALL WORLD FTSE - 25%
HSBC BALANCED - 25%
VANGUARD HIGH YIELD DIVIDEND FUND - 10%

XUSE - 20%

vanguard short term money market 20%

would be interested to hear what others think of the split?

InvesterJones

Lots of overlap, which makes it hard to actually get and balance any particular weightings you're looking for. Maybe pick a strategy first and then find the minimum of funds you need to address it?

dannybbb

This is my strategy unfortunately - try to address concerns of overvaluation and tech dominance with a global fund but also with one with less US and not all equities. strategy is to to to preserve and if possible grow what i have

InvesterJones

If that's your strategy then how about

70% Vanguard high yield dividend

30% STMMF

dannybbb

thanks - ill look at the high yield fund in a bit more detail - do you think it makes sense in terms of my objectives and where we are in terms of the stock market, the workd and my age?

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81942184#Comment_81942184

Pass. We aren't allowed to give tailored advice. But if you're looking for a global fund with less US, less tech, and lower valuations, it fits the bill. Adding 30% STMMF fits roughly your previous non-equity diversification. But the exact split is up to you, your risk tolerance, and your timeframe.

masonic

Going for just the high dividend yield fund for your equities is a rather extreme move. It means your portfolio will be devoid of the companies that are responsible for most of the growth in recent years, and your biggest tech holding will be Samsung. Is that what you want? Tech making up about 5% of your portfolio instead of 30%? I'd have thought the happy medium would be somewhere in between. I think a split between the HSBC FTSE All-world and the high dividend yield fund, perhaps with some XUSE if you feel like the US is still too heavy, would give a more diversified and balanced portfolio. It would be for you to choose the weightings to fit your preferences.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81942295#Comment_81942295

I agree. I definitely wouldn't have all my equity allocation in the high yield fund.

Firms with low yield are often reinvesting and growing, so are not concentrating on paying dividends. As well as that, in the US dividends are taxed more heavily that capital gains from growth, so dividends are less popular there than they are in Europe and especially in the UK.

For the equity allocation I'd suggest mixing a global tracker, an ex-US; and maybe a UK fund too for a bit of home bias. You could also consider a global small cap tracker like Vanguard Global Small-Cap Index Fund which would help to dial down the mega-cap tech bias too; or consider using Vanguard FTSE Global All Cap Index Fund as your global fund, that includes emerging markets and small caps, which dilutes the dominance of tech mega-caps a little.

As above, you can mix and match to your preferences.

aroominyork

Those are sensible warnings about going all-in equity income, but VHYL has not done badly with <40% US and "devoid of the companies that are responsible for most of the growth in recent years". Look at the 5 year figures - barely a ciggy paper between it and a vanilla global fund.

masonic

It's done really well over the past 6 months. It was only managing about two thirds of the returns of the vanilla index prior to Trump's antics stepping up. It will also have benefitted from the recent value rotation. That all may continue or it may not. Longer term the sector has underperformed for extended periods.

It's interesting to see the Covid crash wasn't any kinder to it than the wider market, though with a lot of financials, the subsequent inflation wave and higher interest rate policy would be good for it.