Time to Allocate Capital - Please Help!

MrAcrux · 3 October 2017 at 3:34PM

Hello fellow investors,

I have finally managed to set up a SIPP for myself with iWeb and it’s time to allocate some capital and I thought I would pick your brains first before I commit any monies. I intend to contribute £40k to my SIPP before end of the tax year via my limited company. First contribution would be £10k followed by £20k and another £10k. Current total retirement portfolio looks like below and I manage the entire pot myself.

Current Retirement Portfolio:

My iWeb ISA:
Fundsmith Acc– 5.60%
iShare Global Property Securities Equity ‘D’ Acc – 5.87%
Vanguard Global Small Cap Acc – 11.32%
VLS 100% Acc- 31.34%

Mrs iWeb ISA:
Vanguard FTSE Global All Cap Acc – 37.96%

Mrs iWeb SIPP:
SMT – 7.91%

I have used my ISA allowance for this year and Mrs has got £10k left which I will put in Vanguard All Cap fund in a few weeks or as soon as the funds become available. I should also mention here that I have circa £25k in P2P market on top of the above. I will be taking out £10k for Mrs ISA from P2P leaving approx. £15k in P2P. And lastly I have just under £16k in fixed term cash ISA which matures in Feb 2018 and my plan is to transfer to my S & S ISA and put 10k in Fundsmith and £6k in Vanguard Small cap fund.
Now the real question is which fund, IT, ETF etc. I should put my SIPP money into? I am happy to consider active or passive funds. I am thinking of putting £20k into VLS100% or (HSBC) a similar global tracker and keen to put £10k in Biotech & healthcare and remaining £10k in something similar i.e. aggressive for long term growth. First does it sound like a plan and secondly, would appreciate some names of funds, ETF’s or IT’s, so that I can investigate them further.
Biotech - ?
Heathcare - ?
Emerging markets - ?
Any other sector - ?

PS: I am 34 years old and appreciate my current portfolio is 100% equities and I am comfortable with that or at least I think I am ;-). I have got my emergency funds etc. sorted and all of this portfolio is something I have no intention of touching for next few decades and I can live with its value falling 50-60% or even more as its only paper value. In fact I would be buying on the way down and on the way up. I own my house with mortgage and have no intention of moving/downsizing for at least 20 years.
So please share your thoughts about any funds or any comments regarding my current portfolio, as I am still learning and would appreciate any pearls of wisdom. If this was your portfolio what would you do?

Thanks for stopping by.

Linton · 3 October 2017 at 5:34PM

For the time being, and with the amount of money you have, I think that what you are doing so far is fine given you dont want the money (including the ISAs?) for decades and have a realiistic acceptance of risk.

On the details, in my view...
1) a bit extra in EM and/or SE Asia would add something
2) I would keep current funds and their overall % allocation much the same though you could usefully move from VLS100 to the Global all cap fund.
3) going for specific sectors isnt really justified other than out of interest.
4) The "property" seems rather out of place. I am not sure what it is there for - it's too small to make much difference and given your acceptance of risk I cant see you need it.
5) The Mrs's single SIPP investment in SMT seems over risky in itself, but if you are regarding the whole lot as one portfolio that happens to be spread across different environments then that's not a great issue as long as she doesnt get upset when her investments fall much more than yours.

grandst · 3 October 2017 at 6:51PM

Rebalancing between asset classes is a powerful tool which can boost returns and lower volatility. It might be worth having some bonds to take advantage of it instead of 100% equities.

MrAcrux · 4 October 2017 at 9:05AM

Linton, thank you for your reply. Yes the money is not needed for decades unless some life changing event takes place.

1. I agree - any recommendations for funds for EM or SE Asia that I can investigate further
2. I started my portfolio with VLS and to bring the UK bit down I started adding All cap in the portfolio.
3. Ok thanks
4. Property - again I added this with small cap when I bought the VLS as both sectors are not covered in VLS. I don't intend to buy any more at this stage.
5. That is fine - she doesn't even know she has a SIPP at this stage or don't know much about her ISA either. She stays home and looks after our daughter. She is not bothered much about money management (which is not ideal if anything was to happen to me) but I am trying to slowly get her interested. I have a single page financial map in place to help her in case I was hit by a bus.

Grandst - I intend to add bonds down the line, I think right now the bonds are not good value and rising interest rates (eventually) won't help either.

PS: Sorry I am unable to use the quote feature for some reason.

bigadaj · 6 October 2017 at 1:43AM

Seems like a slightly off mix of passive and active, is vls an intentional bias towards iver weighting the uk?

Fund smith and smt are also conviction and fairly high risk active funds, just looks a little odd with the majority in passives but maybe that's considered a balance overall, what does the allocation look like when you punch it into trustnet or Morningstar?

The property element is also obviously property company shares rather than physical, which arguably provides less diversification than you might desire if you're ant a property investment element.

Time to Allocate Capital - Please Help!

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