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  • FIRST POST
    • doings
    • By doings 30th Jan 18, 2:22 PM
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    doings
    Portfolio Review
    • #1
    • 30th Jan 18, 2:22 PM
    Portfolio Review 30th Jan 18 at 2:22 PM
    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.
Page 1
    • Prism
    • By Prism 30th Jan 18, 3:31 PM
    • 336 Posts
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    Prism
    • #2
    • 30th Jan 18, 3:31 PM
    • #2
    • 30th Jan 18, 3:31 PM
    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
    • By Audaxer 30th Jan 18, 4:06 PM
    • 1,048 Posts
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    Audaxer
    • #3
    • 30th Jan 18, 4:06 PM
    • #3
    • 30th Jan 18, 4:06 PM
    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
    • By Linton 30th Jan 18, 4:10 PM
    • 9,386 Posts
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    Linton
    • #4
    • 30th Jan 18, 4:10 PM
    • #4
    • 30th Jan 18, 4:10 PM
    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
    • By Eco Miser 30th Jan 18, 4:22 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #5
    • 30th Jan 18, 4:22 PM
    • #5
    • 30th Jan 18, 4:22 PM
    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,
    Originally posted by doings
    Would that really matter? Less IHT to pay. Different if you're planning on supplementing your income by cashing in some of your investments.
    but hopefully got 20+ years left yet, but who knows?
    Originally posted by doings
    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.
    Eco Miser
    Saving money for well over half a century
    • doings
    • By doings 31st Jan 18, 12:03 PM
    • 5 Posts
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    doings
    • #6
    • 31st Jan 18, 12:03 PM
    • #6
    • 31st Jan 18, 12:03 PM
    [QUOTE=Prism;73803677]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.

    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.
    Originally posted by Linton

    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?

    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.
    Originally posted by Eco Miser

    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
    • By doings 31st Jan 18, 12:13 PM
    • 5 Posts
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    doings
    • #7
    • 31st Jan 18, 12:13 PM
    • #7
    • 31st Jan 18, 12:13 PM
    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.
    Originally posted by Audaxer

    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
    • By Audaxer 31st Jan 18, 12:51 PM
    • 1,048 Posts
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    Audaxer
    • #8
    • 31st Jan 18, 12:51 PM
    • #8
    • 31st Jan 18, 12:51 PM
    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?
    Originally posted by doings
    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
    • By Linton 31st Jan 18, 1:43 PM
    • 9,386 Posts
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    Linton
    • #9
    • 31st Jan 18, 1:43 PM
    • #9
    • 31st Jan 18, 1:43 PM
    [QUOTE=doings;73808202]
    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?
    Originally posted by Prism
    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
    • By Audaxer 1st Feb 18, 1:02 PM
    • 1,048 Posts
    • 604 Thanks
    Audaxer
    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.
    Originally posted by Linton
    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
    • By doings 1st Feb 18, 1:52 PM
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    doings

    ''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''.
    Originally posted by Linton
    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.
    • Linton
    • By Linton 1st Feb 18, 3:46 PM
    • 9,386 Posts
    • 9,519 Thanks
    Linton
    What is your view on my initial idea in my first post?
    Originally posted by doings
    I am not enthusiastic. You already have 2 global fund of funds and are now thinking of a third. I cannot see how you can come to a rational decision as to the relative %'s. Why those 3. Why not a fourth? What are the specific objectives driving your choices?

    What I advocate is a top down approach - decide what underlying assets with rough %s you want and then work out what funds will provide you with it. Every fund should have a clear identifiable unique purpose. Only then can you make a rational decision as to whether to keep/ditch/increase/decrease it.

    On the other hand if you want an easy life just buy one multi-asset fund that approximately meets your requirements. Possibly get a few minor holdings to provide a bit of interest.


    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.
    Originally posted by doings
    I think that could be because as far as Xray is concerned the holdings in a fund of funds are the second level funds, not the bottom level equity shares.
    • ColdIron
    • By ColdIron 1st Feb 18, 5:04 PM
    • 4,156 Posts
    • 5,242 Thanks
    ColdIron
    I have x-rayed my portfolio on the II site and it is telling me that there is no overlap at all
    Originally posted by doings
    On the equity front, the two global funds will have terrific overlap, how could they not? Just to compare the LifeStrategy fund with some of the others. The Woodford fund invests in primarily UK equities, the bulk of them will be in the FTSE All Share index that makes up 18 percent of the VLS. If you look at the top ten holdings in your Vanguard Emerging Markets fund and the EM tracker in VLS they both share Samsung, Tencent, Taiwan Semiconductor and Naspers. Your HSBC European Index tracks the FTSE Developed Europe ex-U.K index as does the Vanguard FTSE Developed Europe ex-U.K Equity Index in VLS so the overlap will be 100%. It also makes up 13% of the HSBC Global Strategy so you have three helpings of it. The only one with any real diversification or low overlap would be the Vanguard Global Small Cap as it contains companies not already covered by all the others. With these funds of funds that are designed to have very broad diversification the only effect of adding single sector funds is to skew the weightings. Was that your intention?

    However I do realise that if I did buy the Balanced fund I would have a slight overlap.
    Given the large existing overlap I doubt it will have much significant effect as far as the equity component is concerned. It will still be large
    • doings
    • By doings 2nd Feb 18, 9:04 AM
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    doings

    I think that could be because as far as Xray is concerned the holdings in a fund of funds are the second level funds, not the bottom level equity shares.
    Originally posted by Linton

    I think you are right about this. I have been blindly using this x-ray tool on Morningstar, when there used to be a free version, and more recently II, in the belief that I have no overlapping funds. I dare say I wont be alone in this. It do's seem at bit misleading when it tells you 'no overlaps exist'.
    Are you aware of any better x-ray facility to find the said overlaps? If such a tool exists I will need to do some serious changes to the portfolio.
    Feel like I'm banging my head against a wall here, going around in circles, but at the same time I feel fortunate that the portfolio has actually made money instead of losing it.
    All I was looking for was to de-risk the higher risk funds and make safer, and hopefully, gain by just above inflation to pass on to the family. Now it seems a major revamp is needed to diversify what I thought was a quite well diversified portfolio. Problems, problems!
    Really grateful for every-ones help on here.
    • Linton
    • By Linton 2nd Feb 18, 9:15 AM
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    Linton
    I think you are right about this. I have been blindly using this x-ray tool on Morningstar, when there used to be a free version, and more recently II, in the belief that I have no overlapping funds. I dare say I wont be alone in this. It do's seem at bit misleading when it tells you 'no overlaps exist'.
    Are you aware of any better x-ray facility to find the said overlaps? If such a tool exists I will need to do some serious changes to the portfolio.
    Feel like I'm banging my head against a wall here, going around in circles, but at the same time I feel fortunate that the portfolio has actually made money instead of losing it.
    All I was looking for was to de-risk the higher risk funds and make safer, and hopefully, gain by just above inflation to pass on to the family. Now it seems a major revamp is needed to diversify what I thought was a quite well diversified portfolio. Problems, problems!
    Really grateful for every-ones help on here.
    Originally posted by doings
    Dont worry about it - you would be highly diversified if you just held 1 multi-asset fund. It's just that by holding 2 or 3 you arent improving things much.

    I dont know of any tool that will dig deeper into holdings of holdings. The fund management companies themselves dont issue data to that level.
    • JSMill
    • By JSMill 10th Feb 18, 8:35 PM
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    JSMill
    I have ISAs and a SIPP with Alliance Trust. The reporting is pretty much non-existent. I just enrolled for Morningstar Premium, and thought/hoped I could copy in my ATS data using the "transaction" rather than the "watchlist" portfolio when the markets are down - thereafter monitoring things in detail through Morningstar, and seeing their opinions on the different components. Yet I find it difficult to locate investments within MS, which seems quite clunky, and wonder whether it will actually do what I imagine/hope for. If not, what is the point of it?? Or do I just stick with my spreadsheets? Any thoughts appreciated. I think there must be something I'm just not getting here.
    • Linton
    • By Linton 10th Feb 18, 10:45 PM
    • 9,386 Posts
    • 9,519 Thanks
    Linton
    I have ISAs and a SIPP with Alliance Trust. The reporting is pretty much non-existent. I just enrolled for Morningstar Premium, and thought/hoped I could copy in my ATS data using the "transaction" rather than the "watchlist" portfolio when the markets are down - thereafter monitoring things in detail through Morningstar, and seeing their opinions on the different components. Yet I find it difficult to locate investments within MS, which seems quite clunky, and wonder whether it will actually do what I imagine/hope for. If not, what is the point of it?? Or do I just stick with my spreadsheets? Any thoughts appreciated. I think there must be something I'm just not getting here.
    Originally posted by JSMill
    It is clunky but it can be done. You type exactly the right name into the holdings field and then set up the date and the number of units and then click ADD. Morningstar will work out the total value from the price at that date. ISIN numbers seem to work up to a point - GBnnnn.

    You can find investments using the fund screener. Or once you have set up a fund in your portfolio you can click on the fund name.

    Personally I dont try and track every buy and sell but just edit the holding.

    Trustnet is easier to use for a dummy portfolio but its analysis isnt nearly as good.
    • bostonerimus
    • By bostonerimus 11th Feb 18, 4:34 PM
    • 1,826 Posts
    • 1,171 Thanks
    bostonerimus
    Are you aware of any better x-ray facility to find the said overlaps? If such a tool exists I will need to do some serious changes to the portfolio.
    Feel like I'm banging my head against a wall here, going around in circles, but at the same time I feel fortunate that the portfolio has actually made money instead of losing it.
    Originally posted by doings
    There are an almost infinite group of good portfolios and often people worry far too much about perfection and this leads to frustration. Get yourself a good cash emergency fund and then decide on the equity to bond ratio that you need.......you can go with more equities if you have something like a DB pension to rely on. 60/40 has historically been a reasonable split for many people, but realize that with interest rates on the way up bond funds will take some time to give much return.

    Now just decide how you are going to construct the portfolio keeping overlap to a minimum; single multi-asset fund, a few broadly diversified funds, one global equity. maybe one UK equity, a corporate bond and a bond index; or those broad funds plus overweighting things like value, EM and small cap. I would avoid high cost ITs and active funds with a small number of stocks.
    Last edited by bostonerimus; 11-02-2018 at 4:41 PM.
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