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    • Pork&Beans
    • By Pork&Beans 2nd Dec 17, 2:49 AM
    • 11Posts
    • 1Thanks
    1st Portfolio
    • #1
    • 2nd Dec 17, 2:49 AM
    1st Portfolio 2nd Dec 17 at 2:49 AM
    Hey Guys

    First post so forgive me if this may be naive.Decided to make up a portfolio in an ISA. Constructed using low fee index funds as follows:

    Domestic UK Market - FTSE 100/250 - 24%
    Gold Bullion - 20%
    US Market - Large/Small cap - 14%
    Emerging Markets - 9%
    Property - 7%
    Developed Europe 7%
    Japan 7%
    Inflation linked Gilt 7%
    Cash 5%

    Pretty much gives me a balance of 70/30 towards Equities.

    Anyone have any thoughts how this might perform using pound cost averaging ?
Page 1
    • bowlhead99
    • By bowlhead99 2nd Dec 17, 10:20 AM
    • 7,836 Posts
    • 14,311 Thanks
    • #2
    • 2nd Dec 17, 10:20 AM
    • #2
    • 2nd Dec 17, 10:20 AM
    - no Asia-ex Japan? So you want Apple but not Samsung, Ford but not Kia, Sony but not LG, Twitter but not Tencent?

    - no corporate bonds of any type but you are buying IL gilts with guaranteed real-terms loss to maturity?

    - gold as over half your non-equities component is high, given it doesn't produce an income and costs money to store/ insure over time ; essentially a speculative component which may potentially function as an inflation hedge.

    - cash in a S&S ISA produces zero return ; cash in a cash ISA more like 1%.

    Pretty much gives me a balance of 70/30 towards Equities
    - I count 61% equities to 39% non-equities

    Anyone have any thoughts how this might perform using pound cost averaging?
    - how it performs "using pound cost averaging" (eg monthly or quarterly or annual drip -feeding) is probably similar to how other portfolios with the same asset mix would perform with the same timing of purchases. Statistically, worse than investing with a large lump-sum up front, but if you don't have a lump sum and are funding from your ongoing salary etc, it's your only choice.

    - although you have ten holdings so if you are contributing (say) 200pm you will be paying ten dealing costs each month rather than one or two if you used a couple of multi asset funds - could be expensive and limits your choice to providers that don't have transaction fees. Also if some of the holdings are only 7% that's only 14 on 200 and below the minimums with many products, so you'd have to rotate the purchases from month to month. Or just invest more - 500-1000 or so each batch of purchases, with a fund platform that doesn't have transaction fees, would give you a minimum purchase of 35-70 for the smaller holdings, which would be OK.
    • IanSt
    • By IanSt 2nd Dec 17, 11:39 AM
    • 260 Posts
    • 194 Thanks
    • #3
    • 2nd Dec 17, 11:39 AM
    • #3
    • 2nd Dec 17, 11:39 AM
    There are some gaps in there that some people might not have, but it all depends on your reasons for choosing these areas.

    I personally would not have the gold/cash holdings within my funds as I go 100% equities for my investments - but with a large cash sum saved for emergencies outside in higher interest current accounts etc.

    Is there is a reason for not holding Asia? It might be easier for you to hold UK, emerging markets and global funds - but then you might be unwilling to hold the large US ratio that a global fund would bring compared to the Japan and Europe percentages you're considering.
    • chrisgg
    • By chrisgg 2nd Dec 17, 11:42 AM
    • 61 Posts
    • 52 Thanks
    • #4
    • 2nd Dec 17, 11:42 AM
    • #4
    • 2nd Dec 17, 11:42 AM
    I see you're planning on using low cost tracker funds - fair enough, but its worth double checking the property fund you buy. Many property index funds actually invest in the shares of property companies rather than directly in commercial property. This results in a false illusion of diversification as what appears to be one of your non equity allocations is actually invested in equity.
    • dunstonh
    • By dunstonh 2nd Dec 17, 2:20 PM
    • 92,652 Posts
    • 59,974 Thanks
    • #5
    • 2nd Dec 17, 2:20 PM
    • #5
    • 2nd Dec 17, 2:20 PM
    Domestic UK Market - FTSE 100/250 - 24%
    is it 100 or 250?

    100 is an awful index. 250 is more representative of the domestic economy.
    Anyone have any thoughts how this might perform using pound cost averaging ?
    If this is monthly contributions only and starting from now (i.e. nil balance at the start) then its a complete waste of time and energy. There is no point building a bespoke portfolio until you get into the 10s of thousands of pounds.

    You are missing a range of sectors (asia, gilts (index linked being different), corp bonds, HYB etc). Why have you chosen to leave out those sectors?

    Why so high in gold? (seems strange for a monthly premium setup).

    Is your property coverage property share or bricks and mortar?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Pork&Beans
    • By Pork&Beans 2nd Dec 17, 4:17 PM
    • 11 Posts
    • 1 Thanks
    • #6
    • 2nd Dec 17, 4:17 PM
    • #6
    • 2nd Dec 17, 4:17 PM
    Thank you guys, some good advice.

    There is no cost to the transactions of the index funds

    As for the emerging markets, the top countries inside that fund include China, Taiwan, Hong Kong,South Korea and India.

    It won't be a lump sum as I dont think this bull market is going to continue forever.

    The domestic market is weighted equally between FTSE 100 fund and FTSE 250 fund and the property fund consists of REITS underlying.

    I've used the Gold not as a ETF but rather as a physical holding in the event that for some reason the whole financial system goes belly up. I do have my concerns about the current levels of global debt.
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