All Star Manager Portfolio

meester

FATHEROFTWO wrote: »

Yes Re the comparison to the comparison to the "asset allocation model" it has a question mark ( ? )so I presume I have deviated too far away from it to compare.

Re Blackrock will the difference in P class and A make a difference to the comparison made on the BESTINVEST SITE ?

No, it's just for different types of investor. Same thing.

Has anyone any comments re the portfolio ?

Does the initial portfolio (without blackrock) look like a medium risk/low risk portfolio ? or someone PLEASE tell me what it is ?

Does the volatility of 13.9 percent seem a bit high ?

The volatility represents the daily variance, up and down, averaged out over a year. The percentage quoted is the standard deviation of this daily variance, annualized over a year. Let's say the expected annual average growth (call it r) of your portfolio is 8%. According to the central limit theorem for a normally distributed population (which markets might or might not be), 68% of samples lie within one standard deviation (σ) of the mean, 95% within two standard deviations of the mean, and 99.7% within three standard deviations. Given the 95%, that means that 2.5% of samples are WORSE than r - 2σ, and 2.5% are BETTER than r + 2σ.

Therefore, once in forty years (2.5%), you would expect to have a loss of 8% - 2 * 13.9 = -19.8%. Which to me seems quite low for what is such an unlikely event. Of course this is all theoretical, but I would say, no, you do not have a risky portfolio.

A once in five years loss would theoretically be given in Excel by =NORMINV(1/5,8,13.9) = 3.7% loss.

What would be a low.....medium.....high risk volitility factor be...anyone got any ideas ?

thanks

I think you have a lower-medium risk selection. I would be slightly cautious of the Blackrock fund. It is incredibly popular right now due to its short record of success, and hundreds of millions of pounds are flooding in. Few of these investors really know how it works. As I understand it they are acting as a hedge fund in effect. And of course their strategies can go wrong and cause big losses. Correct me if I am wrong, but there is no risk-free 10%+ return possible.

Bond funds are better understood, even if on current data the volatility would appear to be higher..

Have you thought about how you are going to structure your investments in terms of inside/outside ISA? This is quite important, especially with the end of the tax year looming.

FATHEROFTWO_2

meester wrote: »

No, it's just for different types of investor. Same thing.



The volatility represents the daily variance, up and down, averaged out over a year. The percentage quoted is the standard deviation of this daily variance, annualized over a year. Let's say the expected annual average growth (call it r) of your portfolio is 8%. According to the central limit theorem for a normally distributed population (which markets might or might not be), 68% of samples lie within one standard deviation (σ) of the mean, 95% within two standard deviations of the mean, and 99.7% within three standard deviations. Given the 95%, that means that 2.5% of samples are WORSE than r - 2σ, and 2.5% are BETTER than r + 2σ.

Therefore, once in forty years (2.5%), you would expect to have a loss of 8% - 2 * 13.9 = -19.8%. Which to me seems quite low for what is such an unlikely event. Of course this is all theoretical, but I would say, no, you do not have a risky portfolio.

A once in five years loss would theoretically be given in Excel by =NORMINV(1/5,8,13.9) = 3.7% loss.



I think you have a lower-medium risk selection. I would be slightly cautious of the Blackrock fund. It is incredibly popular right now due to its short record of success, and hundreds of millions of pounds are flooding in. Few of these investors really know how it works. As I understand it they are acting as a hedge fund in effect. And of course their strategies can go wrong and cause big losses. Correct me if I am wrong, but there is no risk-free 10%+ return possible.

Bond funds are better understood, even if on current data the volatility would appear to be higher..

Have you thought about how you are going to structure your investments in terms of inside/outside ISA? This is quite important, especially with the end of the tax year looming.

Thanks your analysis is appreciated.

I was looking for a low to medium risk with a wide spread of investments.

I have used only about 1K of this years shares isa (maxi) which is a legal and general all share isa.
I thought of toping up by about 4K in a lump sum to average down on my 15 percent losson the share isa.
Do you think this is a wise Idea ?

I will use my next cash is 2008/2009 in april to top up with Barclays 6.5 percent rate which I believe is the best one on the market at present with 3.6k.

I will then revert to my hypothetical portfolio as mentioned above.

However reading over the posts it may be wise to drop cash into the hypothetiocal portfolio in 4 EQUAL segments spaced out over a 12 month period to smooth out the peaks and troughs or troughs and troughs if it turns out to be the start of a bear market.

The balance of the money prior to being dropped into the portfolio would be held in a high interest instant access account.

Does this sound like a wise idea or can you suggest a better one ?

Thanks look forward to your input and any other comments anyone has !

purch

I would be slightly cautious of the Blackrock fund

I agree there...

I hold some of this fund since launch, (mainly as an experiment to see how it went) and whilst I am happy with the performance so far I will continue to reserve judgement on it until it has been through a period where market conditions differ. The market conditions since it's launch have been broadly favourable to the way this fund is set up to function.

cloud_dog

FATHEROFTWO wrote: »

I have used only about 1K of this years shares isa (maxi) which is a legal and general all share isa.
I thought of toping up by about 4K in a lump sum to average down on my 15 percent losson the share isa.
Do you think this is a wise Idea ?

Transfer it to a decent ISA provider and deposit your remaining £3k, even if you dont know where to put it yet (you can decide that later).

cloud_dog

jamesd

cloud-dog is correct and you should transfer and deposit the full limit this year. If the Legal and General ISA has a cash option you can deposit there to ensure that you get the money in during this tax year in case the transfer does take longer than desirable.

FATHEROFTWO_2

I dont think I can add cash to it as it is a stocks and share ISA maxi unless the regs changed recently so my thoughts were stick in a few thousand to the limit then once in I could transfer the new TOTAL amount from legal and general (all share tracker) to Hargreaves lansdown and self select my own funds as mentioned in my hypoyhetical portfolio in the 2008/2009 tax year

Does this sound reasonable enough or does it make a difference that my whole Managed funds will be within a tax wrapper ?

jamesd

There is no government prohibition on holding cash in a stocks and shares ISA provided it is intended for eventual investment. If that particular provider doesn't offer cash, look for a money market fund or simply start the transfer process immediately and hope that it is completed this tax year.

wombat42_2

purch wrote: »

I agree there...

I hold some of this fund since launch, (mainly as an experiment to see how it went) and whilst I am happy with the performance so far I will continue to reserve judgement on it until it has been through a period where market conditions differ. The market conditions since it's launch have been broadly favourable to the way this fund is set up to function.

Well it has kept rising OK inspite of the downturn in 2008 so it looks good to me.

FATHEROFTWO_2

Thanks jamesd

I just checked Legal and Generals site and they have a cash trust element with the Stocks and shares MAXI ISA.

I checked it with morningstar and it has a 2 star rating in the
"STERLING MONEY MARKET " section.

Question is If I had to put I think the Max Is 3K into the cash trust would this be in an ISA wrapper ?

Secondly could I transfer that £3K in cash trust element from Legal and General to a Mini Cash Isa from my 2007 allowance on 7th april 2008 ?

I was intending to put 3.6K in Barclays 6.5 percent MINI ISA ON 7TH April 2008 anyway so this would mean if I could transfer the £3K Cash from it it would be £6600 invested in Barclays Cash Mini Isa come April.Would this be allowed ??

cloud_dog

FATHEROFTWO wrote: »

Question is If I had to put I think the Max Is 3K into the cash trust would this be in an ISA wrapper ?

I think the L&G web site pretty much answers your question......

http://www.legalandgeneral.com/investments/isas/cash-isa/

But, to answer it, Yes it is invested in your S&S ISA wrappet, in a money market based fund equivillent to cash (for all intents and purposes but not the same as a deposit account)

Secondly could I transfer that £3K in cash trust element from Legal and General to a Mini Cash Isa from my 2007 allowance on 7th april 2008 ?

No, it is in your S&S ISA, in a money fund.

I was intending to put 3.6K in Barclays 6.5 percent MINI ISA ON 7TH April 2008 anyway so this would mean if I could transfer the £3K Cash from it it would be £6600 invested in Barclays Cash Mini Isa come April.Would this be allowed ??

No, even from the start of the new FY when the ISA rules change you will NOT be able to transfer S&S ISA monies in to a Cash ISA. The new rules do allow transfers the other ways (Cash ISA in to S&S ISA).

cloud_dog