AyG
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Post by AyG on Feb 1, 2018 11:38:21 GMT 7
In some ways, that's a curious pie chart. It splits bonds and gilts (even though gilts are bonds). In an ideal world it would be better to split conventional and index linked bonds, then within conventional to split government/corporate/high yield.
Also curious are the categories Japan, Asia, Far East, Emerging. Japan is in Asia. The Far East is also in Asia. And a lot of Asia is Emerging.
How much of Emerging is South America? South America is heavily dependent upon commodity prices. It's a volatile area of the world to be in. Not really consistent with your cautious approach.
Another analysis that you might like to perform is to look at currency exposure. You really only need to look at the big currencies: USD, GBP, EUR, JPY, plus THB. Lump everything else under "Other".
I'm still unclear as to in which currency (or currencies if you plan on dividing your time between two countries) the majority of your future expenditure is going to be in, but you should be tilting your investments towards it (or them).
Lots of investors ignore or underestimate FX risk. They may happily hold foreign bonds yielding a pittance, but gains of many years can be wiped out by a swing in FX rate. Swings of 30% are surprisingly frequent.
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chiangmai
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Post by chiangmai on Feb 1, 2018 14:07:24 GMT 7
In some ways, that's a curious pie chart. It splits bonds and gilts (even though gilts are bonds). In an ideal world it would be better to split conventional and index linked bonds, then within conventional to split government/corporate/high yield. Also curious are the categories Japan, Asia, Far East, Emerging. Japan is in Asia. The Far East is also in Asia. And a lot of Asia is Emerging. How much of Emerging is South America? South America is heavily dependent upon commodity prices. It's a volatile area of the world to be in. Not really consistent with your cautious approach. Another analysis that you might like to perform is to look at currency exposure. You really only need to look at the big currencies: USD, GBP, EUR, JPY, plus THB. Lump everything else under "Other". I'm still unclear as to in which currency (or currencies if you plan on dividing your time between two countries) the majority of your future expenditure is going to be in, but you should be tilting your investments towards it (or them). Lots of investors ignore or underestimate FX risk. They may happily hold foreign bonds yielding a pittance, but gains of many years can be wiped out by a swing in FX rate. Swings of 30% are surprisingly frequent. MY somewhat unorthodox code for this is: Far East includes China Taiwan and Hong Kong (many suggest HK and TW are a part of Developed Asia). My developed Asia includes Singapore! (and would include HK and TW had I not lumped them in the FE) Emerging Markets includes Thailand, India, Korea plus wwhatever else indivduals funds include inat category but do not always define. Japan is standalone, for no other reason than I want it to be so. The chart that I posted is the top level roll-up of countries hence the grouping of them is not too important since I have clear sight of the next level of detail - I think we already had the discussion on the definition of EM and how the answers vary. MY UK Gilts are Index Linked, My bonds are bond funds and not broken down further but they need to be, many if not most are fixed, very few are high yield but most are corporate! Your point on currency risk has been the centre of my attention for the past two weeks, especially after watching the very scary impact on my funds of the Davos statements regarding the strength of USD - as of writing I believe most of my funds are GBP hedged but this needs a closer look see. I am now solely based in Thailand, quite recently I was planning to split my year but I have abandoned that plan - my cash savings assets are some 68% in THB hence investment income to cover living expenses is not an issue.
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chiangmai
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Post by chiangmai on Feb 1, 2018 15:14:08 GMT 7
Here's the next level down: ![](https://s18.postimg.org/oes1kksg5/Untitled_II.png)
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AyG
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Post by AyG on Feb 7, 2018 8:51:40 GMT 7
as of writing I believe most of my funds are GBP hedged but this needs a closer look see. Did you check? I'd be surprised if this is correct. The norm is for bond funds to be hedged, and equity funds to be unhedged. For someone whose expenditure is in Thailand hedging into GBP is an unnecessary expense. Better simply to be exposed to be a basket of currencies and accept the average FX rate.
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Post by Fletchsmile on Feb 21, 2018 22:40:36 GMT 7
Yes like AyG says I'd be surprised if many of your UK funds are hedged into GBP. Hedging into GBP in the UK doesn't seem as popular as it is in other places. UK tends to service UK investors.
What I see more in other (international) places are where they look to build on a master fund and cater to different unit holder needs. Different share classes are common on the unit trusts I get thru Singapore. It's common for there to be no hedge, SGD hedged and USD hedged classes. EUR is another reasonably common currency though less so than the others.
In Singapore I currently hold 11 unit trusts. 5 are currency hedged. 10 are denominated in SGD and 1 in USD.
In SGD out of 10 funds, 4 are SGD hedged: 2 are equity funds, 1 is a multi asset fund and 1 a bond fund. 2 reasons I like the SGD hedged class are:
1) Stronger correlation of SGD to THB (compared to say USD or GBP), so next best thing to hedging into THB for me as someone living in Thailand. THB hedged funds are not common 2) I have a SGD denominated loan against my portfolio. So it's nice to match/hedge some of the unit trust assets and loan liability by currency as well as the cash flows. The divs received are in SGD and exceed the interest I pay on the loan
In USD I have 1 multi asset fund which is USD hedged. In that case, I didn't particularly look for a USD hedged version with any great conviction at the time. Just I had few USD assets aside from USD cash and small USD equity exposure at the time, so I bought with USD, and wanted to retain some USD exposure. Also in times of crisis people still tend to flee to USD. I also now have a small USD loan facility against it which makes the USD hedged class more suitable. Haven't drawn against the facility yet. More a case of keeping some powder dry when I see some opportunities or if I need funds for whatever purpose and it gives me a choice whether to borrow in SGD or USD.
For someone living in Thailand, I don't see much point in having funds which are GBP hedged though. Most of your outgoings are THB. Plus you would also have GBP exposure just by holding UK equities or sterling bonds
So in summary on hedges for me: - SGD hedge makes sense as 1) a "substitute" hedge for THB and to 2) hedge SGD loan - USD hedge makes sense 1) in times where there is a flight to quality and 2) to hedge USD loan - GBP hedge makes little sense living in Thailand. I just keep the natural GBP equity and GBP bond exposures and that's enough as a Brit who who is mindful he still has some ties to the UK, but life really is in Thailand
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chiangmai
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Post by chiangmai on Jun 30, 2018 17:02:14 GMT 7
Anyone have any thoughts on F&C Commercial Property Trust, I'm looking to diversify my pension, improve income and replace HDIV and GAM?
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AyG
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Post by AyG on Jul 1, 2018 9:17:32 GMT 7
Anyone have any thoughts on F&C Commercial Property Trust, I'm looking to diversify my pension, improve income and replace HDIV and GAM? You want to replace HDIV which yields 5.1% with FCPT which yields less than 4%? That won't "improve income". Don't know what GAM is. Incidentally, FCPT's weighted average lease length is 7.0 years. That would concern me.
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chiangmai
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Post by chiangmai on Jul 1, 2018 9:35:49 GMT 7
Anyone have any thoughts on F&C Commercial Property Trust, I'm looking to diversify my pension, improve income and replace HDIV and GAM? You want to replace HDIV which yields 5.1% with FCPT which yields less than 4%? That won't "improve income". Don't know what GAM is. Incidentally, FCPT's weighted average lease length is 7.0 years. That would concern me. Diversify, improve income and replace HDIV and GAM are three separate objectives, each for different reasons. FCPT interests me because it provides diversification, HDIV has fallen out of (my) favour because their NAV has fallen and the FM is making negative noises rather positive ones, complaining how hard it is to make a decent return etc. My other candidates include Liontrust Special Situations (because of lowered risk and solid diversification), Caledonian Investments (which appeals because of it's low risk cautious approach) and Invesco Perpetual Income (for income). GAM Star Credit (IE00B54L8Q54) seems a poor historic choice that I'm no longer comfortable with, it has neither growth nor dividend appeal.
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AyG
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Post by AyG on Jul 1, 2018 10:33:41 GMT 7
chiangmai, just a friendly word of advice: you are changing your investments too often. A short period of underperformance is not a reason to sell, and switching incurs costs. The reasons for your original purchase are most probably still there. I'd suggest you set yourself a rule (which I apply myself): never sell an investment in the first three years unless (a) the fund manager changes, or (b) the fund's objective changes, or (c) the charges go up unreasonably.
Giving a very concrete example, I bought the Independent Investment Trust in the 70's. It promptly went on to lose 70% of its value. I continued to hold it, and have since been very amply rewarded, making it my top performing holding with a 10 year annualised performance of 19%.
And just returning to FCPT for a moment, I've just noticed it's trading at a premium to NAV of 6.5%. Pretty much all income providing assets have had their price driving up thanks to moronic imprudent fiscal management by central banks. When things start to return to normal (as I believe they are doing now), the prices of these assets will return to more rational levels. Previously FCPT traded at an almost 40% discount to NAV. You could potentially face a significant capital loss.
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chiangmai
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Post by chiangmai on Jul 1, 2018 11:24:37 GMT 7
Up until this week I actually haven't changed anything in my pension portfolio for two years, I chased in my GIA account and that I did change so your point is taken.
Also, my circumstances are now changing, I've just bought a UK flat and will spend half of each year there, I, therefore, want to increase my UK holdings somewhat and to increase my UK income within the pension fund.
The final point to make is that I now understand more about investing than I did a year ago when I started out, I've also formed a view on the stability of markets and the things that might happen in the short to medium term and as a result, I'm looking for lower risk products and have shed my one high risk holding, Fidelity Asia.
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Post by rgs2001uk on Jul 3, 2018 22:16:55 GMT 7
You want to replace HDIV which yields 5.1% with FCPT which yields less than 4%? That won't "improve income". Don't know what GAM is. Incidentally, FCPT's weighted average lease length is 7.0 years. That would concern me. Diversify, improve income and replace HDIV and GAM are three separate objectives, each for different reasons. FCPT interests me because it provides diversification, HDIV has fallen out of (my) favour because their NAV has fallen and the FM is making negative noises rather positive ones, complaining how hard it is to make a decent return etc. My other candidates include Liontrust Special Situations (because of lowered risk and solid diversification), Caledonian Investments (which appeals because of it's low risk cautious approach) and Invesco Perpetual Income (for income). GAM Star Credit (IE00B54L8Q54) seems a poor historic choice that I'm no longer comfortable with, it has neither growth nor dividend appeal. I assume you are talking about Caledonia IT, www.hl.co.uk/shares/shares-search-results/c/caledonia-investments-plc-ordinary-5pOthers to consider may be www.trustnet.com/factsheets/t/he03/the-bankers-investment-trust-ordwww.hl.co.uk/shares/shares-search-results/b/bankers-investment-trust-ord-25p-sharewww.hl.co.uk/shares/shares-search-results/b/brunner-investment-trust-ord-25p-shareI hold both the above, and offloaded Caledonian, my circumstances are different to yours, horses for courses.
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