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  • FIRST POST
    • LULULU1
    • By LULULU1 12th May 18, 8:56 PM
    • 407Posts
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    LULULU1
    First Thoughts of Funds Portfolio please
    • #1
    • 12th May 18, 8:56 PM
    First Thoughts of Funds Portfolio please 12th May 18 at 8:56 PM
    Hi all,

    I am looking to buy some exchange traded funds and trackers, funds etc (mainly passive) and would appreciate any thoughts as to the following:

    Emerging Markets ETF 10%
    Emerging Funds small caps ETF 10%
    Asia Excluding Japan ETF 10%
    Asia small Caps Tracker 10%
    World large Caps Tracker 20%
    UK Small companies Tracker 20%
    India Tracker large cap 10%
    Woodford Capitol Trust 10%

    It is a very very early draft so I would be very happy to receive any thoughts at all.
Page 1
    • bostonerimus
    • By bostonerimus 12th May 18, 9:09 PM
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    bostonerimus
    • #2
    • 12th May 18, 9:09 PM
    • #2
    • 12th May 18, 9:09 PM
    What is the portfolio trying to achieve....long term capital growth?
    I like that you have kept your allocations at 10% and above. You might think about a bit more US exposure and there might be some overlap in the asia/emerging markets funds. Why no fixed income? Your portfolio could show a lot of volatility as it is currently structured with all the small cap and emerging markets/asia.
    Last edited by bostonerimus; 12-05-2018 at 9:11 PM.
    Misanthrope in search of similar for mutual loathing
    • LULULU1
    • By LULULU1 12th May 18, 9:17 PM
    • 407 Posts
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    LULULU1
    • #3
    • 12th May 18, 9:17 PM
    • #3
    • 12th May 18, 9:17 PM
    Thank you for your comments. Yes it is for capitol growth. I have deliberately stayed clear of America as I think its already pretty high.

    I can see now about the Asia/e,erging markets is to heavy.

    Can you explain a little about fixed income.

    Thank you
    • bostonerimus
    • By bostonerimus 12th May 18, 9:23 PM
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    bostonerimus
    • #4
    • 12th May 18, 9:23 PM
    • #4
    • 12th May 18, 9:23 PM
    Thank you for your comments. Yes it is for capitol growth. I have deliberately stayed clear of America as I think its already pretty high.

    I can see now about the Asia/e,erging markets is to heavy.

    Can you explain a little about fixed income.

    Thank you
    Originally posted by LULULU1
    Ignoring 50% of the world's market cap because it seems expensive today isn't a good long term strategy IMHO.

    A little fixed income will dampen volatility and provide some stable returns. You probably don't want to be long term duration as interest rates are probably going up. You can also rebalance between equities and bonds which some people think is useful....even if it might be more psychological than anything.
    Misanthrope in search of similar for mutual loathing
    • LULULU1
    • By LULULU1 12th May 18, 9:29 PM
    • 407 Posts
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    LULULU1
    • #5
    • 12th May 18, 9:29 PM
    • #5
    • 12th May 18, 9:29 PM
    When you say Fixed include are you suggesting Bonds, gilts or something else ?

    Have made a few adjustments to include USA.

    North America Large Caps ETF10%
    North America small caps ETF 10%
    Emerging Funds small caps ETF 10%
    Asia Excluding Japan ETF 10%
    Asia small Caps Tracker 10%
    World large Caps Tracker 20%
    UK Small companies Tracker 20%
    India Tracker large cap 10%
    Woodford Capitol Trust 10%
    • Alexland
    • By Alexland 12th May 18, 9:44 PM
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    Alexland
    • #6
    • 12th May 18, 9:44 PM
    • #6
    • 12th May 18, 9:44 PM
    If you want 100% equities it would be simpler, cheaper and probably smarter to just buy a FTSE All World tracker.

    US stock covers many internationally successful companies which have historically and continue to deliver excellent returns so not something to be completely avoided.

    Alex
    Last edited by Alexland; 12-05-2018 at 9:54 PM.
    • LULULU1
    • By LULULU1 12th May 18, 9:52 PM
    • 407 Posts
    • 35 Thanks
    LULULU1
    • #7
    • 12th May 18, 9:52 PM
    • #7
    • 12th May 18, 9:52 PM
    The FTSE All world tracker would not give me the balance I am after. I am looking for a fair bit of exposure towards India/ Asia emerging markets but I am possibly going "to many eggs in one basket".

    Can you explain your reasoning a bit more please re the simpler and cheaper thoughts. Most of the funds have an annual charge of approx 0.5%.

    Its great to hear peoples views and thoughts. I really appreciate all of the responses.
    • El Torro
    • By El Torro 12th May 18, 9:58 PM
    • 313 Posts
    • 284 Thanks
    El Torro
    • #8
    • 12th May 18, 9:58 PM
    • #8
    • 12th May 18, 9:58 PM
    When you say Fixed include are you suggesting Bonds, gilts or something else ?

    Have made a few adjustments to include USA.

    North America Large Caps ETF10%
    North America small caps ETF 10%
    Emerging Funds small caps ETF 10%
    Asia Excluding Japan ETF 10%
    Asia small Caps Tracker 10%
    World large Caps Tracker 20%
    UK Small companies Tracker 20%
    India Tracker large cap 10%
    Woodford Capitol Trust 10%
    Originally posted by LULULU1
    Better, though what jumps out at me is 10% in an Indian fund. Especially since you have exposure to India in other funds. I can see the logic of wanting to be overweight in India, though personally I would not put more than 5% there.
    • Alexland
    • By Alexland 12th May 18, 10:00 PM
    • 3,669 Posts
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    Alexland
    • #9
    • 12th May 18, 10:00 PM
    • #9
    • 12th May 18, 10:00 PM
    The FTSE All world tracker would not give me the balance I am after. I am looking for a fair bit of exposure towards India/ Asia emerging markets but I am possibly going "to many eggs in one basket".
    Originally posted by LULULU1
    If those markets grow then the FTSE All World index will increase the proportion of those regions.

    Can you explain your reasoning a bit more please re the simpler and cheaper thoughts. Most of the funds have an annual charge of approx 0.5%.
    Originally posted by LULULU1
    HSBC's attempt to track the FTSE All World index (tracking is never perfect) has an OCF of 0.16% and depending on your platform (and future contribution strategy) you would incur only one trade for setup and there would be no need to incur trades rebalancing the portfolio.

    Alex.
    Last edited by Alexland; 12-05-2018 at 10:06 PM.
    • bostonerimus
    • By bostonerimus 12th May 18, 10:05 PM
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    bostonerimus
    The FTSE All world tracker would not give me the balance I am after. I am looking for a fair bit of exposure towards India/ Asia emerging markets but I am possibly going "to many eggs in one basket".
    Originally posted by LULULU1
    You could use a cap weighted Global Equity tracker as a core fund and then add some Asia and Emerging Markets to give you the allocation you want.
    Misanthrope in search of similar for mutual loathing
    • LULULU1
    • By LULULU1 12th May 18, 10:07 PM
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    LULULU1
    Can you explain a bit about a "cap weighted Global Equity tracker" and who would do these.

    Sounds pretty good.
    • LULULU1
    • By LULULU1 12th May 18, 10:13 PM
    • 407 Posts
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    LULULU1
    Just found this on THIS IS MONEY site.

    "However, the good news is that ETFs can be used as low-cost building blocks to construct the portfolio you want.

    For example, the MSCI ACWI Index, which represents the total world equity markets, is made up of several smaller regional sub-indices.

    These can be bought together to recreate any geographic profile you wish.

    To give a practical example, if you split your investment over the iShares MSCI North America, iShares MSCI Europe, iShares MSCI Emerging Markets IMI, iShares MSCI Pacific ex-Japan and iShares Core MSCI Japan ETF funds you can re-construct the parent MSCI ACWI index exposure"

    Is this the kind of thing you meant ?

    Thank you.
    • Alexland
    • By Alexland 12th May 18, 10:25 PM
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    Alexland
    Hi,

    MSCI ACWI Index is similar to the FTSE All World that I mentioned earlier - the world's developed and emerging markets in roughly their 'correct' (as Jack Bogle would say) proportions.

    Boston is suggesting you use that type of low cost index fund for the majority of your money and then by a small number of geographic funds for your unbalanced punts to get some additional EM, etc exposure.

    Alex.
    Last edited by Alexland; 12-05-2018 at 10:32 PM.
    • LULULU1
    • By LULULU1 12th May 18, 10:32 PM
    • 407 Posts
    • 35 Thanks
    LULULU1
    So basically the suggestion is to put a significant amount in the MSCI ACWI Index and then add a small amount of the others to get the balance to where I want it. Isn't that basically what I started with ? Im a bit confused how that would save any money just potentially give me more USA and a better balance.

    Also not trying to confuse myself even more but am considering a small % in a REIT perhaps British Land. Anyone ever held REITS ?

    I guess you could discuss this subject for ever more but wow its interesting and the board is so educational.

    Thanks
    • Alexland
    • By Alexland 12th May 18, 10:58 PM
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    Alexland
    Boston's suggestion is different as you might be putting somewhere like 70% of your money into a single core global developed/emerging market fund which would run at a really low percentage fee. You would then only need to buy EM, Asia and India funds to get the additional exposure you seek.

    British Land is in the FTSE100 and you would get exposure to these types of companies within a good all world index fund. You would also get exposure to Europe, Japan, South America, etc in roughly their fair market proportions.

    Also we haven't mentioned Woodford whose investment style seems very haphazard. If you want some active it might be worth considering it for your eastern geographic funds where in less developed markets an active strategy and local knowledge might be beneficial.

    Alex.
    • bostonerimus
    • By bostonerimus 12th May 18, 11:05 PM
    • 2,426 Posts
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    bostonerimus
    So basically the suggestion is to put a significant amount in the MSCI ACWI Index and then add a small amount of the others to get the balance to where I want it. Isn't that basically what I started with ? Im a bit confused how that would save any money just potentially give me more USA and a better balance.

    Also not trying to confuse myself even more but am considering a small % in a REIT perhaps British Land. Anyone ever held REITS ?

    I guess you could discuss this subject for ever more but wow its interesting and the board is so educational.

    Thanks
    Originally posted by LULULU1
    There's a million ways to skin a cat. Using an All World Tracker core and a few small cap/Asia funds could get you to that same place as your 2nd portfolio, but with fewer funds which will make it easier for you to rebalance and manage.

    Don't fall into the trap of wanting to own a bit of everything. Get started with a simple portfolio and contribute to it every month, once you've mastered that you might add commercial property or commodities funds or any number of other assets etc......however, you don't need to own everything, 90% of my portfolio is in just 3 funds, a US total market equity tracker, an All World ex US equity tracker and a US Bond tracker.
    Misanthrope in search of similar for mutual loathing
    • Thrugelmir
    • By Thrugelmir 13th May 18, 12:26 AM
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    Thrugelmir
    British Land is in the FTSE100 and you would get exposure to these types of companies within a good all world index fund.
    Originally posted by Alexland
    With a market capitalisation of less than 7 billion. Exposure is going to very small. ( For example BP - 112 Bn, HSBC 147 Bn).
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • LULULU1
    • By LULULU1 13th May 18, 7:48 AM
    • 407 Posts
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    LULULU1
    I think its beginning to take a better shape now with much more balance. Here we go........

    MSCI ACWI Index 70%
    Emerging Funds small caps ETF 10%
    Asia Excluding Japan ETF 10%
    UK Small companies Tracker 10%
    • Linton
    • By Linton 13th May 18, 8:26 AM
    • 9,970 Posts
    • 10,255 Thanks
    Linton
    I think its beginning to take a better shape now with much more balance. Here we go........

    MSCI ACWI Index 70%
    Emerging Funds small caps ETF 10%
    Asia Excluding Japan ETF 10%
    UK Small companies Tracker 10%
    Originally posted by LULULU1

    You have moved from 40% small companies in your first portfolio to 50% in your second to 20% now. Looking at geography portfolio 1 is about 10% US, Portfolio 2 say 30% US, Portfolio 3 35% US. You seem to be jumping about all over the place.


    Perhaps it would be better if you thought through your high level allocations before listening to the tracker siren calls. You could then choose the most appropriate funds to meet the allocations which in some cases, particularly Small Companies, may not be trackers. Note that small cap trackers can include quite large companies in their remit.



    How much do you have to invest? If it is less than say 25K and have little experience I suggest you just keep to a single global all cap tracker or a high equity multi-asset fund. If its more than 100K perhaps you should seek professional advice.
    • LULULU1
    • By LULULU1 13th May 18, 8:45 AM
    • 407 Posts
    • 35 Thanks
    LULULU1
    Thanks you for your help.

    Its more than 100k. Its in a SIPP at the moment. Many people have said they don't feel a professional is necessary but Im happy to be helped that way if its the right thing t0 do.

    The reason I came on way to see whats others views were to asset allocation and then continue to study before making a final decision.

    Hargreaves Landsdown do two things called "leave it to the experts" and "Master Portfolio". They also look helpful.
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