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I'm not doubting what I'm doing just the effectiveness of it.
I do wonder though, a simple, boring, cheap, zero effort index tracker...
It doesn't help you John, but I know where you're coming from. Having initially convinced myself that passive investing via trackers was the way to go, I abandoned that approach (at least temporarily) and went gung-ho on income-paying investment trusts.
My main issue was/is that I can't convince myself to invest in markets I think are overvalued, like the US. The UK, I think, is fairly valued but that's just a gut feeling from what I've read, yet the majority of my purchases in the last 6 months have more an Asian flavour as that's where I think there's value.
My plan is still to add maybe 2 or 3 more Asia and emerging markets stocks to this investment trusts portfolio and then leave it be. I've bought 5 since November, so I'll go to 7 or 8 all up. Hopefully at that stage I'll be able to park the bus and that'll do for my "active" investments.
Next year I have a cash ISA maturing with a decent lump sum, so my plan is to use that to fund the cheap, boring, no-effort tracker. And add to that in the future via annual ISA allowances. Maybe Vanguard LifeStrategy or something like that. But I daresay a lot will depend on how the markets look at that point in time.
So I'm looking at a kind of two-pronged attack. I'm not sure how I've ended up here as I'm still convinced that passive investing and rebalancing is probably the best way to go. Maybe it's the gambler in me. I admit to kind of enjoying the process, but I think I'd also be quite happy to eventually leave it be to tick on by itself and get on with other stuff.
So I also question the effectiveness of what I'm doing and guess I'm covering the bases by using multiple approaches. And knowing myself as I do, I'd bet good money I'll probably change my mind by this time next year too. My only saving grace will be when I deplete my cash reserves to a level I don't want to breach, and then perhaps the meddling and messing and over-analysing will stop! Maybe.0 -
A great deal of that chimes, thanks for the input T.
The one thing I won't be doing is changing my mind though, I'm convinced the momentum of dividends and selective rebalancing based on value adjusted allocation and limited input of 12 trades annually will bear fruit (relatively) at some point down the line. I'm fully prepared to be proven wrong and totally on board the process, though, as mentioned it's just the effectiveness of what I think I'm doing that I question. Hindsight will have all the answers as always.
I have an IFA managed portfolio, an index tracking portfolio and this, so where they go in relative percentage terms will be interesting to see. I'm also trying to build a substantial cash buffer but that'll take a while. So it's not like this is a make or break deal.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
The one thing I won't be doing is changing my mind though, I'm convinced the momentum of dividends and selective rebalancing based on value adjusted allocation and limited input of 12 trades annually will bear fruit (relatively) at some point down the line.
So it's not like this is a make or break deal.
I phrased badly. I probably meant changing my mind as to the constituents comprising the income portfolio, given my current geographical approach. But I think I should be able to avoid tinkering when I get to where I think I want to be with it.
As you said, the fact that it's not an "all-in" approach for either of us, definitely helps. I find myself adopting a contrarian attitude with my current selections by picking unloved sectors, so I'm interested to see how that pans out. I bought BRWM the other week when it dipped below £4.500 -
Day 435 - for those interested.
Pulled £2K from cash balance last month.
Adjusted cash allocation to 0% since no requirement to hold anything in cash beyond the dividends for reinvestment.
Adjusted other allocations slightly to reflect a change in JETI which is now showing a reduced quoted yield on my CSD platform based on dividends paid, though I can't find that replicated anywhere else. Keeping an eye on it.
Tried to include a "ranking" formula that selects the three most appropriate quarterly trades based primarily on allocation adjustment, with a slight adjustment to the score for premium/discount and yield. Not entirely satisfied with the results but it will at least help to remove any emotion from the process.
I might delay the October rebalance if markets remain buoyant, dilemma is the loss of dividend income and subsequent compounding effect lost next quarter though if a suitable opportunity to pile in doesn't show.
'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
Interesting reading. Thanks for posting update.Win Dec 2009 - In the Night Garden DVD : Nov 2010 - Paultons Park Tickets :0
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Same here - Still following with interest.
just noticed Twentyfour income down at the bottom - not heard of it before, but looks like another (!) one for me to watch.0 -
DAY 456 for those interested
Plan is to rebalance on 1st October to comply with CSD rules on the zero platform fee when 6 regular trades made 6 monthly.
Top six ranked investments for rebalance this next half are currently
1. ABERDEEN LATIN AME ORD NPV
2. SCHRODER ORIENTAL ORD GBP0.01
3. JPMORGAN GBL EMERG ORD GBP0.01
4. MERCHANTS TRUST ORD GBP0.25
5. EURO ASSET TST NV EUR0.46(REGD)
6. MURRAY INTL TRUST ORD GBP0.25
I'm going to use the ex-dividend date as the cue for purchase timing, rather than any half-arsed attempt at valuation bargain hunting which is going to prove close to impossible anyway.
Theory being the efficient purchase of dividends will help to accelerate the compounding effect slightly and the valuations are largely an irrelevance at this stage beyond the allocation calcs.
1. ABERDEEN LATIN AME ORD NPV
4. MERCHANTS TRUST ORD GBP0.25
6. MURRAY INTL TRUST ORD GBP0.25
All 3 purchased in October to feed into the purchase of
2. SCHRODER ORIENTAL ORD GBP0.01 (in November)
3. JPMORGAN GBL EMERG ORD GBP0.01 (in December)
5. EURO ASSET TST NV EUR0.46(REGD) (in January)'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
DAY 477
Not been a great fortnight, some rebalancing was done right before the bigger sell off which was a kick in the guts, then BRWM rubbed salt in for good measure. Such is life.
That aside the long expected and hoped for prospect of averaging down on some of the inflated valuations over the next few months is a blessed relief unless the central banking politburo start their money printing interference again.
In light of the BRWM debacle last week I'm thinking of diversifying the allocation in specialist holdings. Something like this, to include PEW and BRCI.
I've been watching PEW.L for a few months, it's not long before the scheduled wind up though. Not sure what happens to the value of the ordinaries in a split trust on wind up date, presumably debts are settled, Zeros get paid out and whatever is left is assigned to the ordinaries?
Does the trust always vote to continue or just auto wind up, settle all accounts and close?'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
In light of the BRWM debacle last week I'm thinking of diversifying the allocation in specialist holdings. Something like this, to include PEW and BRCI.
BRCI was the other option I was looking at prior to buying BRWM. And I'm looking at it again now! Share price was as low as 97p today, maybe on the back of falling oil prices, with holdings Exxon and Chevron being on the slide for quite a while now. I'm still sore from the BRWM debacle so a bit wary at the moment. BRCI is also on quite a high premium, although I haven't checked the very latest NAVs.0 -
TCA, my only concern for BRWM going forward is how the dividend will be affected. I'm confident over the years it'll more than recover the valuation with a few rebalances.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0
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