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Taking some risk out of my portfolio
revs
Posts: 40 Forumite
Hi,
My portfolio consists of the following:
50% Vanguard Lifestrategy 60% Equity
12% Vanguard Global Value VVAL
12% Vanguard Global Small Cap
8% Vanguard Emerging Markets
8% Lindsell Train UK Equity
6% Blackrock Global Property
4% Templeton EM Smaller Co.
In recent interviews, with some of the better investors, such as Ray Dalio, Paul Tudor Jones, Jim Rogers, it appears that now, maybe a good time to take some risk out of my portfolio.
I'd like to buy a small holding of gold (5-7%) and a small holding of commodities, poss Agriculture (5-7%). Hopefully they'll provide the non-correlated diversification benefits I'm after. I recognise that equities outperform them over the longer term.
The question is what to sell and what to buy? I going to sell Templeton EM Smaller Co as the costs are steep and it would seem the riskier part of my portfolio. Maybe sell some EM and Global Small Cap too?
I'd had a brief look at the available ETCs and I've found the following:
Agriculture:
ETFS Agriculture ETC GBP
ETFS GBP Daily Hedged Agriculture DJ-UBS PDSM ETC
Gold:
ETFS GBP Daily Hedged Physical Gold ETC
ETFS Physical Gold GBP
Invesco Physical Gold ETC GBP
iShares Physical Gold ETC GBP
Could anyone offer any advice on which investments would be most suitable? These are to be held in either SIPP or ISA.
Many Thanks
Revs
My portfolio consists of the following:
50% Vanguard Lifestrategy 60% Equity
12% Vanguard Global Value VVAL
12% Vanguard Global Small Cap
8% Vanguard Emerging Markets
8% Lindsell Train UK Equity
6% Blackrock Global Property
4% Templeton EM Smaller Co.
In recent interviews, with some of the better investors, such as Ray Dalio, Paul Tudor Jones, Jim Rogers, it appears that now, maybe a good time to take some risk out of my portfolio.
I'd like to buy a small holding of gold (5-7%) and a small holding of commodities, poss Agriculture (5-7%). Hopefully they'll provide the non-correlated diversification benefits I'm after. I recognise that equities outperform them over the longer term.
The question is what to sell and what to buy? I going to sell Templeton EM Smaller Co as the costs are steep and it would seem the riskier part of my portfolio. Maybe sell some EM and Global Small Cap too?
I'd had a brief look at the available ETCs and I've found the following:
Agriculture:
ETFS Agriculture ETC GBP
ETFS GBP Daily Hedged Agriculture DJ-UBS PDSM ETC
Gold:
ETFS GBP Daily Hedged Physical Gold ETC
ETFS Physical Gold GBP
Invesco Physical Gold ETC GBP
iShares Physical Gold ETC GBP
Could anyone offer any advice on which investments would be most suitable? These are to be held in either SIPP or ISA.
Many Thanks
Revs
0
Comments
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Why is now the time to reduce risk in your portfolio? Is it due to your personal circumstances, or due to market conditions? If it's the latter I don't necessarily agree.
Assuming you do want to go ahead and reduce risk, then the way I would do it with that portfolio is make your VLS 60 a higher percentage of your holdings.0 -
On the contrary, your EM funds might be the least riskiest at the moment, and your lifestyle fund could be the most.
EM has already had it hard this year with declines of 20%+ due to investor concerns with the rising dollar, trade wars and growth slowdowns in China. The likelihood is that the worst is mostly over, especially as the Chinese government look set to take action to prevent further falls.
Meanwhile, your lifestyle fund has a load of bonds in it with rates of 1-2%. It wouldn't take that much inflation and central banks acting to see those funds take a beating.
Not sure I'd change what you have unless there is a reason for it. If you're at retirement age for example and wanting to /protect/ what you have then you shouldn't look at moving into commodities you should be looking at having 2-3 years worth of cash that you can use to withdraw from if markets makes a move downward.0 -
What risk are you wanting to take out? ie what do you hope a revised portfolio will do that the current one doesnt (or vice versa)?0
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I want to reduce the impact of a market crash on my portfolio. My current portfolio is vulnerable to a market downturn.0
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Gold and agriculture are high risk, but low correlation with your existing holdings. Wouldn't you be better off aiming for low risk and low correlation?0
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I bought some gold (ETFS Physical Gold) at the end of September as a hedge against a market correction and/or depreciation of the pound with Brexit negotiations going nowhere. It has gone up, which beats going down, but not by that much. Obviously, I did not buy the GBP hedged gold!This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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I'm looking at de-risking also and I don't see too many options other than just reduce equity exposure.
What you replace it with is the challenge.
I'm looking at "all in one" options such as Capital Gearing, Ruffer, Troy, Personal Assets for some money.
Google "Harry Browne Permanent Portfolio" and you'll find some good reading, opinions as always will vary and a common view is just go with a good multi-asset.0 -
I want to reduce the impact of a market crash on my portfolio. My current portfolio is vulnerable to a market downturn.
Why now? What has changed? Hasnt it always been vulnerable to a market crash? Have your objectives changed - for example do you need the money in the near future?
The point being that one should design a portfolio for a level of risk/return that one is prepared to accept for the long term, or shorter if your objectives require. Randomly chopping and changing in the short term leads to loss of return and a higher risk of missing objectives in the long term.
If you want a lower risk/lower return portfolio I suggest you dont think in terms of tweaking your current portfolio, but rather start the design again from scratch. Top down, what % do you want in equity, bonds, property, infrastructure etc etc. For your equity, what % geographically, small vs large companies etc etc Then what funds will provide that allocation.
All this pre-supposes that you have at least £50K to manage, preferably more. For smaller amounts I suggest you sell all you have now and simply buy a multi-asset fund targetted at the risk/return level you want for the long term.0 -
Gold and agriculture are high risk, but low correlation with your existing holdings. Wouldn't you be better off aiming for low risk and low correlation?
As John Kay likes to say, risk is a function of the portfolio not of the individual holdings within it.
It's all just guesswork, of course, but I'd say that a little bit of gold and commodities might indeed reduce the risk for the portfolio. So might a bit of cash, particularly if he can use current accounts and regular savers that return more than inflation. Some people like infrastructure funds, though I'd have thought infrastructure companies would be sitting ducks for government confiscation in a depression.
As for what to sell: suppose he decided to keep the LifeStrategy. Could he then look to see how much overlap there is between its holdings and the holdings of the other funds? Then cut down the overlap.Free the dunston one next time too.0
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