Portfolio Review

doings · 30 January 2018 at 3:22PM

Hello everyone, long term forum lurker here.
I would be interested on your views on my ideas for changing my ISA portfolio held with II.
A little about myself. I'm 64, retired 3 years on a comfortable pension with State Pension being added in 18 months.
Emergency cash accounts totaling approx 30K.
I have been contemplating de-risking my portfolio for a while now due to my age and life expectancy. I have been beating myself up with the thoughts that if there was a big downturn in the markets I may well die before it ever recovers, but hopefully got 20+ years left yet, but who knows?
All proceeds to be left to my family.
My portfolio is as follows:-

Vanguard LS 80 Acc 44.85%
HSBC Global Strat Dynamic Acc 18.21%
Woodford Eq Income Acc 17.98%
Vanguard Small Cap Index Acc 9.51%
Vanguard Emerging Markets Acc 5.75%
HSBC European Index Acc 3.70%

My idea is to sell the riskier Emerging Markets and the European Index Funds and also possibly about 25% of the Vanguard LS 80 to amalgamate them all into a new holding in the HSBC Global Strategy Balanced fund. Hopefully the lower risk rating and higher bond holdings will make the portfolio less volatile.
Has anyone any thoughts on this idea or any suggestions for me to mull over.
Portfolio value at the moment is a little over 300K. I may well add further funds in April but I am not sure how much.
Thanks everyone,
Doings.

Prism · 30 January 2018 at 4:31PM

One thing you could do is the separate out the bond fund from the equities. Then at any given time you can sell either to fund your requirements. For example, if there was an equity crash you could sell bonds as required while keeping invested in stocks for the recovery. In better times you could sell a blend of both. If you can survive on existing pensions without being forced to sell you can generally take more risk.

Audaxer · 30 January 2018 at 5:06PM

I agree it sounds like a good idea to de-risk a bit, and sell now to cash in the gains of the riskier funds. Maybe to simplify things you could just have the whole portfolio split between VLS60 and HSBC Global Strategy Balanced, although it is a lot in each fund house, so maybe include another balanced mixed asset fund?

If you don't mind me asking, is the whole portfolio on the one platform, and if so which one? I'd just have concerns with that much in the one platform in case the unlikely event of a major fraud happened, as I'd only be covered up to the FSCS limit of £50k.

Linton · 30 January 2018 at 5:10PM

What is your ISA for? From what you say you seem to have more than enough to live on without it. Without knowing an objective it is difficult to make appropriate comments.

However 2 points....
I dont see much point in holding a European tracker and the Woodford Income fund when VLS80 and the HSBC Global fund would presumably hold much the same investments. If are to have a core of multi asset funds it would make more sense to surround then with niche funds in sectors you feel are inadequately covered by the main holdings.

I am not confident that safe government bonds are a sensible investment at the moment and suggest you look at a range of other options to diversify away from pure equity.

Eco_Miser · 30 January 2018 at 5:22PM

doings wrote: »

I have been beating myself up with the thoughts that if there was a big downturn in the markets I may well die before it ever recovers,

Would that really matter? Less IHT to pay. Different if you're planning on supplementing your income by cashing in some of your investments.

doings wrote: »

but hopefully got 20+ years left yet, but who knows?

Who knows indeed, but I'm planning on living to 100+. It may not happen, but planning on a shorter life could be embarrassing if you outlive your plans.:o

doings · 31 January 2018 at 1:03PM

Prism wrote: »

One thing you could do is the separate out the bond fund from the equities. Then at any given time you can sell either to fund your requirements.

Hopefully I wont need to sell anything, even in a downturn, as I can still survive on my pensions and my 30k emergency fund.
The Corporate bond fund within the Balanced fund would cost me 0.19%. To buy this separately would cost me 0.43%. Not a lot, but better in my pocket.

Linton wrote: »

What is your ISA for? From what you say you seem to have more than enough to live on without it. Without knowing an objective it is difficult to make appropriate comments.
However 2 points....
I dont see much point in holding a European tracker and the Woodford Income fund when VLS80 and the HSBC Global fund would presumably hold much the same investments. If are to have a core of multi asset funds it would make more sense to surround then with niche funds in sectors you feel are inadequately covered by the main holdings.

I am not confident that safe government bonds are a sensible investment at the moment and suggest you look at a range of other options to diversify away from pure equity.

The ISA fund is there to give me, firstly, the feel good/safe factor, and give me assurance that on my demise, it will ensure a bit of comfort and easier living for my family.
The portfolio as it stands has very little or no overlap.
The balanced fund is 28.5% Corporate bonds.
What are the other options other than bonds to diversify from pure equity?

Eco_Miser wrote: »

Would that really matter? Less IHT to pay. Different if you're planning on supplementing your income by cashing in some of your investments.
Who knows indeed, but I'm planning on living to 100+. It may not happen, but planning on a shorter life could be embarrassing if you outlive your plans.:o

I don't think IHT is a problem at the moment, but I'll need to keep my eye on the ball for any future rule changes. Don't think I will need to supplement my income in the near future as I can manage perfectly well on my pension at the moment, and state pension to add in 18 months.

doings · 31 January 2018 at 1:13PM

Audaxer wrote: »

I agree it sounds like a good idea to de-risk a bit, and sell now to cash in the gains of the riskier funds. Maybe to simplify things you could just have the whole portfolio split between VLS60 and HSBC Global Strategy Balanced, although it is a lot in each fund house, so maybe include another balanced mixed asset fund?

I'm quite happy to hold the other funds, at least for the time being. It was just the riskier funds I was concerned about and perhaps top slicing the VLS80.

If you don't mind me asking, is the whole portfolio on the one platform, and if so which one? I'd just have concerns with that much in the one platform in case the unlikely event of a major fraud happened, as I'd only be covered up to the FSCS limit of £50k.

The whole 300+k is with II, or should I say, through II. To cover me for the FSCS limit of 50k I would need 6 different platforms?

Audaxer · 31 January 2018 at 1:51PM

doings wrote: »

The whole 300+k is with II, or should I say, through II. To cover me for the FSCS limit of 50k I would need 6 different platforms?

I agree it's not practical to split between 6 platforms. Maybe I am overly cautious, but I wouldn't have it all with the one platform.

Linton · 31 January 2018 at 2:43PM

doings wrote: »

Prism wrote: »

The ISA fund is there to give me, firstly, the feel good/safe factor..., and give me assurance that on my demise, it will ensure a bit of comfort and easier living for my family.
The portfolio as it stands has very little or no overlap.
The balanced fund is 28.5% Corporate bonds.
What are the other options other than bonds to diversify from pure equity?

So there is no intention to withdraw any of the money - we are talking about an unlimited time frame.

What I would do is to split the £300K. Put say £150K into cautious wealth preservation investments - eg the various Wealth Preservation ITs and funds, Strategic Bond funds, possibly some directly held property. Avoid safe government bonds - the Strategic Bond Fund will move in that direction when it makes sense to do so. So you know that whatever happens at least that amount of money is pretty safe with a reasonable chance of at least matching inflation to give you the warm fuzzy feeling. The rest can then be invested in 100% equity with at least a nod towards higher risk. Focus on as broad a geographic spread as possible with extra Far East/EM and Small Companies.

The point of the split is so that you can focus on particular very different objectives rather than making the whole portfolio middle of the road, somewhat cautious, neither one thing nor the other. It also makes it very obvious as to how much is safe and how much isnt. And you can change the relative %s over time without much difficulty. Both advantages missing from the multi-asset fund approach.

On overlap I think you will find your European Tracker is close to identical to the European part of VLS80. 25% of Woodford is Giant/Large UK companies. All of which will be included in VLS80.

Audaxer · 1 February 2018 at 2:02PM

Linton wrote: »

The rest can then be invested in 100% equity with at least a nod towards higher risk. Focus on as broad a geographic spread as possible with extra Far East/EM and Small Companies.

Linton, I'm sure it would probably produce the best returns, but unless you have a really good knowledge and understanding like you have, I think the difficulty is establishing the right percentages to invest in the Far East/EM and Small Companies, as well as how much to put into the likes of Technology, Industrials, Financial Services etc. Interested to learn how you would work out what percentages you should have in each of these areas, so that an inexperienced investor didn't get it badly wrong and end up with worse returns than a multi asset fund?

doings · 1 February 2018 at 2:52PM

Linton wrote: »

''So there is no intention to withdraw any of the money - we are talking about an unlimited time frame''.
''What I would do is to split the £300K. Put say £150K into cautious wealth preservation investments - eg the various Wealth Preservation ITs and funds, Strategic Bond funds, possibly some directly held property. Avoid safe government bonds - the Strategic Bond Fund will move in that direction when it makes sense to do so. So you know that whatever happens at least that amount of money is pretty safe with a reasonable chance of at least matching inflation to give you the warm fuzzy feeling. The rest can then be invested in 100% equity with at least a nod towards higher risk. Focus on as broad a geographic spread as possible with extra Far East/EM and Small Companies''.
''On overlap I think you will find your European Tracker is close to identical to the European part of VLS80. 25% of Woodford is Giant/Large UK companies. All of which will be included in VLS80''.

I wouldn't say 'unlimited' at 64 years old.
The bond fund within the Balanced Fund is the Corporate Bond Fund, so I presumes this fits in better than any safe government bonds.
I have had a look at some of the Wealth Preservation ITs and funds, but feel that their on-going charges are eye wateringly high, on what is mainly a passive portfolio. It would really go against the grain paying out this kind of charge.
What is your view on my initial idea in my first post?
I have x-rayed my portfolio on the II site and it is telling me that there is no overlap at all. However I do realise that if I did buy the Balanced fund I would have a slight overlap.

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