AyG
Crazy Mango Extraordinaire
Posts: 5,871
Likes: 4,555
|
Post by AyG on Jul 26, 2017 18:33:39 GMT 7
This may seem obvious, but it's only just occurred to me, when it comes to rebalancing you can save transaction costs by only rebalancing in one portfolio. (E.g. if in portfolio 1 you need to sell 5 of fund x, and in portfolio 2 you need to sell 3 of the same fund, just sell 8 in portfolio 1 or 2 - whichever has the lowest transaction costs.) You mentioned some time back, in a PM I think, that you moved from Transact to HL, I think you said because of costs. Presumably you moved unwrapped funds? My drawdown at Transact is wrapped and I think I saw that HL only accepts unwrapped funds. That's not a big a deal for me because I actually like Transact and the people there have been extremely helpful shortly after I lost my first IFA, they were happy to chat through options and provided useful pointers. And since I'm going to build a second portfolio I should be able to avoid the extra fees that Transact typically charge execution only clients, plus of course I have no IFA commission charge. Not I, maybe Fletch. I'm pretty sure he's an HL fan. I personally think HL is far too expensive (though the service is reportedly very good). My QROPS is with Transact since it's the only platform I know of that allows me to manage my own investments directly. (Formerly with Cofunds, but they kicked me off.) My general investments are (a) with TrustNetDirect (very cheap, mediocre service, and you have to check every transaction carefully - they make a lot of mistakes), and I keep the value of the investments below the IHT threshold, and (b) Internaxx, based in Luxembourg.
|
|
|
Post by Fletchsmile on Jul 26, 2017 21:17:18 GMT 7
You mentioned some time back, in a PM I think, that you moved from Transact to HL, I think you said because of costs. Presumably you moved unwrapped funds? My drawdown at Transact is wrapped and I think I saw that HL only accepts unwrapped funds. That's not a big a deal for me because I actually like Transact and the people there have been extremely helpful shortly after I lost my first IFA, they were happy to chat through options and provided useful pointers. And since I'm going to build a second portfolio I should be able to avoid the extra fees that Transact typically charge execution only clients, plus of course I have no IFA commission charge. Not I, maybe Fletch. I'm pretty sure he's an HL fan. I personally think HL is far too expensive (though the service is reportedly very good). My QROPS is with Transact since it's the only platform I know of that allows me to manage my own investments directly. (Formerly with Cofunds, but they kicked me off.) My general investments are (a) with TrustNetDirect (very cheap, mediocre service, and you have to check every transaction carefully - they make a lot of mistakes), and I keep the value of the investments below the IHT threshold, and (b) Internaxx, based in Luxembourg. Yes I've been a HL fan for somewhere close to 30 years now. The overall service I've had in that time has been excellent. These days the platform and various info are also very good compared to peers. I also have relatives portfolios on there which makes it easy. Should anything happen to me I've every confidence those relatives wouldn't have much hassle managing things, and could even ask/ pay for advice should they go that route. Platforms outside the UK would be less easy for them. (That's another reason why in the UK I often prefer unit trusts to investment trusts. Investment trusts require something of a more experienced investor to manage properly compared to unit trusts, when you consider things like corporate actions, liquidity/daily volumes, premium/discount to NAV vs simpler pricing which is always based on NAV instead, leverage etc etc) HL are not the cheapest around. That said when considering costs though, someone also needs to look at the various discounts/ rebates you can get. People who write articles in various press and compare sites frequently overlook these and really don't give a full picture. eg if you look on Trustnet at Woodford Income and Royal London Sterling Extra Yield you'll see the annual charges at 0.75% and 0.5% p.a. respectively www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=KEFAZwww.trustnetoffshore.com/Factsheets/Factsheet.aspx?univ=DC&fundCode=RPF65&pagetype=overviewbut thru HL with their ongoing savings they become 0.6% and 0.4% respectively because of the arrangements HL has in place. So that's a saving of 0.15% on Woodford and 0.1% on Royal London. www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/c/cf-woodford-equity-income-income www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/r/royal-london-sterling-extra-yield-bond-class-y-income Comparison tables rarely pick this up, which in my view is misleading. Also the rates you see are the standard charging rates. Let's just say it's possible to agree other charging structures. When taking everything into account HL suits me as the best overall fit for everything and there's a relationship over decades with 2-way loyalty taken into consideration
|
|
|
Post by Fletchsmile on Jul 26, 2017 21:18:57 GMT 7
This may seem obvious, but it's only just occurred to me, when it comes to rebalancing you can save transaction costs by only rebalancing in one portfolio. (E.g. if in portfolio 1 you need to sell 5 of fund x, and in portfolio 2 you need to sell 3 of the same fund, just sell 8 in portfolio 1 or 2 - whichever has the lowest transaction costs.) Rebalancing only one portfolio (out of an overall total of everything) is one reason my SIPP holdings look odd on a couple of funds % s
|
|
|
Post by Fletchsmile on Jul 26, 2017 21:33:14 GMT 7
A more general question: Once I get my drawdown fund squared away I intend to establish a second portfolio which is not pension related, I'm doing this to make better use of underutilized Sterling that is sat in a UK bank - my risk tolerance for the new portfolio is exactly the same as for my existing drawdown. My question is, having come up with a pension drawdown portfolio that makes a lot of sense to me, would you simply replicate that portfolio or start again from scratch? It seems to me that more or less replicating it is the sensible thing to do since the objective is to utilize funds rather than change the risk profile, I can't see me wanting to change the asset allocation hence changing funds would only protect against individual fund performance. Thoughts? If you've got the same objectives and are using the same platforms with the same access to funds, and same fee structures etc, as AYG says it can make life simpler in terms of monitoring. Don't get too hung up on replicating the % s exactly, but having the same fund names and holdings can be useful for monitoring and saving you time. If the other portfolio is larger, then you might want to add an additional fund or so, but having a lot of overlap will save you time. In the UK my SIPP holds many similar funds to my ISA for the reason you say. But because the SIPP is much smaller though I have fewer holdings: 9 in my SIPP vs 24 in my ISA. Rebalancing overall can often be done by just picking one of the two to rebalance. HL has some nice analysis tools which allow me to aggregate the 2 anyway. If the funds are with different providers and on different platforms with different fee structures and different availabilities of investments then the story will likely be different. This is one reason my UK protfolios focus on Unit Trusts but for Singapore I often pick UK investment trusts. ------------------ Another thing to bear in mind Chiangmai based on what you mentioned is that your pension is in drawdown and capped as to what you can take out. As your pension is limited in what you can take out but your other portfolio probably won't be, then would it make sense to have the more liquid investments or less volatile investments in the other portfolio? That way if you do need to take out large amounts (particularly at short notice) for any reason you get as much access to investments in your other portfolio as possible. A couple of examples: - property funds sometimes can be closed to redemptions in tough times. - Volumes and liquidity on some investment trusts can be thin sometimes. This might make these two for example m a better choice in the pension portfolio. It would be a shame to need to liquidate all your "other portfolio" but find you can't or at unfavourable terms. -similarly bonds/gilts are usually less volatile than equities so might be more suited to the "other portfolio". Again if you need a large lump sump/ your entire "other portfolio" you might be more subject to the risks of market timing It would be a shame to need the cash and have to sell too many equities after a market has tanked because your safer/ less volatile investments are all tucked away in your pension and you can only access 6% of them or whatever at a time/ in a year So while many of the funds might be the same, as mentioned the % s of each may differ. Tax could be a factor too for UK residents paying income/ capital gains taxes. Probably less of an issue for you though as an expat. If it is a factor then shifting money outside the UK might make sense. This would likely put you in a situation though were you wouldn't be able to replicate as easily. Different investments are available in Thailand, Singapore, UK etc on different platforms with different charges Following on from that, if you're over inheritance tax thresholds (IHT) would it make sense to have the investment returns with the lowest potential return in the UK, and those with the highest potential return moved to Thailand in your wife's name Bottom line, there are a lot of factors but overlapping the two may simplify life in the UK at least. Think how you would consolidate / aggregate them as well
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 27, 2017 7:10:53 GMT 7
Looking back through the two threads on this subject, plus various PM's, there's enough material here for a masterclass book on the subject of expat investing!
Thanks to all for making the effort and contributing.
|
|
AyG
Crazy Mango Extraordinaire
Posts: 5,871
Likes: 4,555
|
Post by AyG on Jul 27, 2017 8:11:05 GMT 7
- property funds sometimes can be closed to redemptions in tough times. Strictly speaking, it's physical property funds that tend to close for redemptions. Property share funds remain liquid. However, property shares don't have the same diversification benefits as physical property. Investment trusts investing in physical property remain liquid (though maybe not at a good price), so are well worth considering if this is an asset class you're interested in and can't abide being locked out from your investment. Following on from that, if you're over inheritance tax thresholds (IHT) would it make sense to have the investment returns with the lowest potential return in the UK, and those with the highest potential return moved to Thailand in your wife's name Rather than lowest potential return, it should strictly be lowest potential capital return, assuming you're taking the natural income.
|
|
|
Post by Fletchsmile on Jul 27, 2017 10:23:39 GMT 7
- property funds sometimes can be closed to redemptions in tough times. Strictly speaking, it's physical property funds that tend to close for redemptions. Property share funds remain liquid. However, property shares don't have the same diversification benefits as physical property. Investment trusts investing in physical property remain liquid (though maybe not at a good price), so are well worth considering if this is an asset class you're interested in and can't abide being locked out from your investment. That's right it is more likely to be funds holding physical properties that close for redemptions. An investor would often need to look at what's actually held in a portfolio to identify this. The naming of the fund often won't help. Most property funds holding physical properties will often be referred to simply as "property funds". We had a thread on this a while back bigmango.boards.net/thread/5891/property-funds-suspend-trading-brexitAberdeen, Henderson, SLI are often simply referred to as "property funds" and were among several suspended in unit trust "property" fund sector. If someone looks at Trustnet at the property fund sector they'll see funds investing in property shares mixed together with funds investing in property shares as well as those which hold both. So the term property funds unfortunately covers all these and someone needs to look at the underlying portfolio ------------------------------------------ Investment trusts as closed ended funds and effectively as shares traded on exchanges are worth considering and have some advantages over open-ended funds like unit trusts in the type of situations mentioned. Open-ended property funds may close to redemptions to stop outflows. As AYG says investment trusts (as closed funds) are not worried about redemptions as the actual shares don't get redeemed when someone sells unlike units in a unit trust. So when UTs are closed to redemptions, ITs are still traded although someone will likely get a poor price and the discount to NAV will widen. ITs can have their disadvantages though compared to unit trusts as part of this cycle. As the property sector and physical properties become more liquid or as desire to sell subsides then the unit trust will likely start allowing redemptions again. It's possible UTs may still apply market value adjustments to prices but in time these will disappear too. The result is the unit trust investor can now obtain a fair price based on NAV. Unfortunately for the IT investor though the sector may continue to be unloved and while they have always been able to sell there's a very good chance they still won't be able to get NAV for their investments. Even if they bought at a discount years back, there's a good change the discount has widened against them in difficult times. So they could still remain with a double whammy - hit once by the fall in value of physical underlying properties and hit again by the discount to NAV widening and not being able to get a price close to the value of the properties. While the heavy sellers may have stopped, the IT discount to NAV may take some time to recover. Discounts to NAV are unpredictable and can last for years. This may be an opportunity for IT buyers to buy at a discount, but can remain a pain in the backside for sellers. The second related problem for ITs is that liquidity/ volumes in the shares may dry up. So not only do you have to accept a price which could be well below NAV but you may also have to take some time to actually sell what you want. My take is that at the peak of the cycle's problems ITs will be preferable if you really need to sell as you can at least get something out. Once things are past the worst though UTs may be preferable as poor pricing of ITs can drag on for years. If part of a portfolio you can allow for eventual recovery of UTs, but for ITs the issue of price being below NAV may drag on for years after the peak of the crisis and is very hard to predict. If you're holding long term for income that's maybe not a problem, but if you're selling shares to take out of a portfolio to generate your "income" that worsen portfolio survival rates. (The opposite of course is that in very rosy time the IT may allow you to profit more) To be honest though the last couple of times it has happened and I've held unit trusts I just tend to sit it out and wait. They are 1) less than 5% of my portfolio 2) long term holds anyway and 3) as mentioned often deliberately put in something like a pension with restrictions on access anyway which is something that struck me after this happening in the past
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 28, 2017 7:09:59 GMT 7
And today's challenge is:
I'm nearly finished making the changes to my pension portfolio but am stumped trying to find (my last) new fund that is suitable to fill a gap. I'm looking for an Asian/Far eastern equities fund that is minimal UK/US/EU - I'm persuaded against Schroders Asian Total Return by earlier comments - Invesco Perpetual Asian is a similar beast which I actually quite like, I also think emerging markets might be a tad too adventurous for my purpose. Stewart/First State Asia Pacific Leaders and Schroder Oriental Income are the best I've found thus far but performance is not great plus it's 30% in India (which may not be a bad thing, I was simply looking for greater market diversification). Thoughts and pointers much appreciated.
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 28, 2017 8:10:13 GMT 7
The geographic percentage split of the overall portfolio is a follows:
UK - 53 US - 14 EU - 7 Asia - 2 Japan - 3 Other - 20
Excluding UK Gilts, the location breakdown % is:
UK - 43 US - 18 EU - 9 Asia - 3 Japan - 3 Other - 25
And when considering equities only it is:
UK - 40 US - 19 EU - 8 Asia - 4 Japan - 5 Other - 23
Note: "other" is high because I haven't been able as yet to identify all the geographic locations of all my funds although I am working on this.
Note 2: I have chosen to retain some UK funds that have performed well thus far hence they contribute to the extent that the portfolio is still somewhat UK centric.
Note 3: Previously the fund was split 78% UK, 22% non-UK.
|
|
|
Post by Fletchsmile on Jul 28, 2017 11:30:54 GMT 7
And today's challenge is: I'm nearly finished making the changes to my pension portfolio but am stumped trying to find (my last) new fund that is suitable to fill a gap. I'm looking for an Asian/Far eastern equities fund that is minimal UK/US/EU - I'm persuaded against Schroders Asian Total Return by earlier comments - Invesco Perpetual Asian is a similar beast which I actually quite like, I also think emerging markets might be a tad too adventurous for my purpose. Stewart/First State Asia Pacific Leaders and Schroder Oriental Income are the best I've found thus far but performance is not great plus it's 30% in India (which may not be a bad thing, I was simply looking for greater market diversification). Thoughts and pointers much appreciated. I've held Stewart/First State Asia Pacific Leaders for years and have been happy with its overall sector out-performance. If looking at the current performance tables a little care is needed. The last 12 months have been weak by their standards and they have been 4th quartile. It ranks 38th out of 94 over 5 years cumulatively www.trustnet.com/ia-unit-trusts/price-performance?univ=O&Pf_Sector=O:FEEXJAP&Pf_sortedColumn=P60M,UnitNameFull&Pf_sortedDirection=DESC&RowsPerPage=100 This is where someone needs to look a little closer at the performance and the dangers of looking at just one metric, and should look wider. Over 1 year it returned "only" 10.3% vs 23.1% for the sector and ranks 4th quartile. The last 12 months has been weak by their standards. This also naturally drags down the 3 year and 5 year as well. The impact on the 3yr period will obviously be bigger than the 5 year Looking at discrete years though, it beat the sector in each of the previous four 12 month periods 12-24m, 24m-36m, 36m-48, 48m-60 before this weak last year. So that's 4/5 discrete years its above average In addition to outperforming the sector over discrete periods more often than not (4/5) it has also been more consistent its returns which range between +4.8% to +18.9% compared to the average sector 1.2% to 23.1%. Being more consistent than a sector average in itself is interesting if you think about it. If someone looks at standard deviations/ volatility it is also lower than average volatility (risk) compared to peer averages Looking at the cumulative 10 year period though, (which is also more relevant to me personally given my long holding period). It has returned 212.7% vs 120.3% sector average. On an annualised basis that equates to 12.1% vs 8.2% in its favour. Over 10 years the "poor" relative last 12 months has less impact than on the 3 year and 5 year cumulatives. Past performance is no guarantee of future but 212.7% vs 120.3% and 12.1% p.a. vs 8.2% are strong past performances and nice to have banked. So basically it comes down to a single poor (relative) 12 month performance. The previous 9 years had been solid. For this reason I'd say someone needs to be careful saying performance has not been great. Not great in the last 12 months yes, but that isn't really a true reflection of longer term past performance. As to why the last 12months haven't been great relatively, you then have to look at holdings, objectives, style, fund manager etc. One thing that sometimes comes up is change of fund manager. In this case Angus Tulloch the previous manager did leave just over 12 months ago. I rated him highly and he has a good reputation. So a superficial look might call that change into question as a factor. However, the guy that took over, David Gait is from the First State/Stewart stable. He leads the Sustainable Funds Group for them and has managed Stewart Investors Asia Pacific Sustainability fund since 2005. The performance of that fund was also weak in the last 12 months. However, over 5 and 10 years it has done even better than Asia Pacific Leaders 10 years cumulative 262.2% or annualised 13.7%. So the replacement clearly has a history and pedigree in the Asia sector, but again had a weak last 12 months. So it looks more of a First State general performance in the last 12 months than an individual fund manager. First State Asia Pacific Leaders is a concentrated fund with approx 40-60 holdings, almost entirely in larger companies, with a bias towards more defensive stocks. Large stocks and defensive would generally lead to lower volatility also. www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/stewart-investors-asia-pacific-leaders-class-b-accumulation/research Being concentrated may be a factor that actually leads to higher volatility, but to be honest I prefer good active fund managers to take views, rather than spray and play or be closet index trackers just tweaking an index. Lindsell Train is also concentrated, as is Woodford. I believe it's no coincidence they're top quartile over long periods too. I like the focus this gives. More often than not they get it right, which shows in consistent long term performance. In occasional years though they have bad years and it works against them. No-one gets it right all the time. Given the history of out-performance, style and objective of funds, strong quality fund management group with an expertise in EM and Asia in particular, I'm comfortable letting one poor relative 12 month performance go. 10%+ is not exactly a disaster either. If negative and it tanked that's maybe a different story - but it just did less well. Perhaps just a case of less good in bull markets/ strong time. So for now I would recognise it's happened, but am inclined to just put it down to 1 year given the last 10. It happens. If repeated next year and the year after that starts to become a different story though Stewart Asia Pacific Sustainability is also worth a look. It's only GBP 400mn or so in size www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=QOF96&univ=O
|
|
AyG
Crazy Mango Extraordinaire
Posts: 5,871
Likes: 4,555
|
Post by AyG on Jul 28, 2017 13:18:39 GMT 7
The geographic percentage split of the overall portfolio is a follows: UK - 53 US - 14 EU - 7 Asia - 2 Japan - 3 Other - 20 Excluding UK Gilts, the location breakdown % is: UK - 43 US - 18 EU - 9 Asia - 3 Japan - 3 Other - 25 And when considering equities only it is: UK - 40 US - 19 EU - 8 Asia - 4 Japan - 5 Other - 23 Note: "other" is high because I haven't been able as yet to identify all the geographic locations of all my funds although I am working on this. Note 2: I have chosen to retain some UK funds that have performed well thus far hence they contribute to the extent that the portfolio is still somewhat UK centric. Note 3: Previously the fund was split 78% UK, 22% non-UK. I know that you're going to ignore what I write, but you are suffering very seriously from "home country bias". By what rational standard do you think that the UK market is going to perform so well that it's worth allocating 53% of your portfolio? And by what standard do you think that Asia, which such great companies as Aurobindo, Hutchinson, LG, OCBC, Sun Pharma, TATA, Taiwan Semiconductor, Tencent, Vinamilk aren't worthy of your investment?
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 28, 2017 13:49:59 GMT 7
The geographic percentage split of the overall portfolio is a follows: UK - 53 US - 14 EU - 7 Asia - 2 Japan - 3 Other - 20 Excluding UK Gilts, the location breakdown % is: UK - 43 US - 18 EU - 9 Asia - 3 Japan - 3 Other - 25 And when considering equities only it is: UK - 40 US - 19 EU - 8 Asia - 4 Japan - 5 Other - 23 Note: "other" is high because I haven't been able as yet to identify all the geographic locations of all my funds although I am working on this. Note 2: I have chosen to retain some UK funds that have performed well thus far hence they contribute to the extent that the portfolio is still somewhat UK centric. Note 3: Previously the fund was split 78% UK, 22% non-UK. I know that you're going to ignore what I write, but you are suffering very seriously from "home country bias". By what rational standard do you think that the UK market is going to perform so well that it's worth allocating 53% of your portfolio? And by what standard do you think that Asia, which such great companies as Aurobindo, Hutchinson, LG, OCBC, Sun Pharma, TATA, Taiwan Semiconductor, Tencent, Vinamilk aren't worthy of your investment? That's a very silly thing to say, I am not going to ignore anything that you write on this subject AyG and I wouldn't have asked for your input were I intending to do so! I kinda hoped that my comments at the bottom of that post would head off any comments such as the one you made but apparently not, so let me be more clear about the why the numbers are as they are: I explained earlier that I am not prepared at this early stage to ditch all of my UK Gilts, I've shed two Gilts funds already but I need more confidence in what I'm learning currently than I have at present before I ditch more - holding those two UK only funds distorts the overall averages somewhat. I've also explained that I have decided to hold on to some of my existing funds that have performed well thus far and some of these are UK centric funds. There is absolutely no point in dumping say Baillie Gifford which has returned 137% over five years or Lindsell Train Uk Equities that has returned 122% over the same period, in favour of an Asian focused fund, just to reduce the UK weighting of my holdings. I have thus far replaced fifty percent of my holdings with funds that are more suitable and have a different geographic spread, as a newbie to this field that's about as much as I feel comfortable replacing at this early juncture. I have taken all the steps that I think are reasonable at this stage to reduce the UK focus of my holdings from 72% to just 40% in the case of equities, that's quite a change I think you'll agree. As we move forward, as I learn more about what I'm doing here and as I gain more confidence, I may well trade additional funds and when I do, geographic spread will be foremost in my mind, behind asset allocation. Finally, rest assured that I am extremely grateful for all the comments made in this thread and if I disagree with any of them I will say why, in the absence of me doing so you can rest assured that all points have been noted and stored, perhaps not acted on right now and never ignored, just stored.
|
|
AyG
Crazy Mango Extraordinaire
Posts: 5,871
Likes: 4,555
|
Post by AyG on Jul 28, 2017 14:02:36 GMT 7
I know that you're going to ignore what I write, but you are suffering very seriously from "home country bias". By what rational standard do you think that the UK market is going to perform so well that it's worth allocating 53% of your portfolio? And by what standard do you think that Asia, which such great companies as Aurobindo, Hutchinson, LG, OCBC, Sun Pharma, TATA, Taiwan Semiconductor, Tencent, Vinamilk aren't worthy of your investment? That's a very silly thing to say, I am not going to ignore anything that you write on this subject AyG and I wouldn't have asked for your input were I intending to do so! I kinda hoped that my comments at the bottom of that post would head off any comments such as the one you made but apparently not, so let me be more clear about the why the numbers are as they are: I explained earlier that I am not prepared at this early stage to ditch all of my UK Gilts, I've shed two Gilts funds already but I need more confidence in what I'm learning currently than I have at present before I ditch more - holding those two UK only funds distorts the overall averages somewhat. I've also explained that I have decided to hold on to some of my existing funds that have performed well thus far and some of these are UK centric funds. There is absolutely no point in dumping say Baillie Gifford which has returned 137% over five years or Lindsell Train Uk Equities that has returned 122% over the same period, in favour of an Asian focused fund, just to reduce the UK weighting of my holdings. I have thus far replaced fifty percent of my holdings with funds that are more suitable and have a different geographic spread, as a newbie to this field that's about as much as I feel comfortable replacing at this early juncture. I have taken all the steps that I think are reasonable at this stage to reduce the UK focus of my holdings from 72% to just 40% in the case of equities, that's quite a change I think you'll agree. As we move forward, as I learn more about what I'm doing here and as I gain more confidence, I may well trade additional funds and when I do, geographic spread will be foremost in my mind, behind asset allocation. Finally, rest assured that I am extremely grateful for all the comments made in this thread and if I disagree with any of them I will say why, in the absence of me doing so you can rest assured that all points have been noted and stored, perhaps not acted on right now and never ignored, just stored. Sorry I was a bit too harsh. I understand that you are making substantial changes in your asset allocation. However, I'm not sure that you have an end goal in mind. I would suggest that you draw up your ideal asset allocation for your circumstances, totally ignoring what you currently hold. Then look at how you get from where you are now to that ideal asset allocation. You might find that it means selling everything you currently hold, or at least a substantial part of it. The longer you wait before moving towards a less UK-centric asset allocation, the more opportunity you're missing. It's really important to think globally, rather than sticking to the UK - particularly with the uncertainties surrounding Brexit. Putting things slightly differently, by far the most important factor in successful investing is asset allocation - not market timing, not fund selection. To do your best, you need to sort out that top level asset allocation first. It might be that some of your existing holdings fit into that asset allocation. But if they don't, ditch them, even if they have performed well in the past. (And past performance is no guarantee of the future.)
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 28, 2017 14:34:25 GMT 7
That's a very silly thing to say, I am not going to ignore anything that you write on this subject AyG and I wouldn't have asked for your input were I intending to do so! I kinda hoped that my comments at the bottom of that post would head off any comments such as the one you made but apparently not, so let me be more clear about the why the numbers are as they are: I explained earlier that I am not prepared at this early stage to ditch all of my UK Gilts, I've shed two Gilts funds already but I need more confidence in what I'm learning currently than I have at present before I ditch more - holding those two UK only funds distorts the overall averages somewhat. I've also explained that I have decided to hold on to some of my existing funds that have performed well thus far and some of these are UK centric funds. There is absolutely no point in dumping say Baillie Gifford which has returned 137% over five years or Lindsell Train Uk Equities that has returned 122% over the same period, in favour of an Asian focused fund, just to reduce the UK weighting of my holdings. I have thus far replaced fifty percent of my holdings with funds that are more suitable and have a different geographic spread, as a newbie to this field that's about as much as I feel comfortable replacing at this early juncture. I have taken all the steps that I think are reasonable at this stage to reduce the UK focus of my holdings from 72% to just 40% in the case of equities, that's quite a change I think you'll agree. As we move forward, as I learn more about what I'm doing here and as I gain more confidence, I may well trade additional funds and when I do, geographic spread will be foremost in my mind, behind asset allocation. Finally, rest assured that I am extremely grateful for all the comments made in this thread and if I disagree with any of them I will say why, in the absence of me doing so you can rest assured that all points have been noted and stored, perhaps not acted on right now and never ignored, just stored. Sorry I was a bit too harsh. I understand that you are making substantial changes in your asset allocation. However, I'm not sure that you have an end goal in mind. I would suggest that you draw up your ideal asset allocation for your circumstances, totally ignoring what you currently hold. Then look at how you get from where you are now to that ideal asset allocation. You might find that it means selling everything you currently hold, or at least a substantial part of it. The longer you wait before moving towards a less UK-centric asset allocation, the more opportunity you're missing. It's really important to think globally, rather than sticking to the UK - particularly with the uncertainties surrounding Brexit. Putting things slightly differently, by far the most important factor in successful investing is asset allocation - not market timing, not fund selection. To do your best, you need to sort out that top level asset allocation first. It might be that some of your existing holdings fit into that asset allocation. But if they don't, ditch them, even if they have performed well in the past. (And past performance is no guarantee of the future.) I'm actually very comfortable with the asset allocation percentages I've arrived at and they is broadly at the level I had imagined (I said initially 50/50), which is 53% equities and 47% bonds/gilts. Remember my starting point was 30%/70% hence I've increased my risk tolerance levels from an unrealistically low level, up to an acceptable level, it would be silly for me to push that envelope too far in the other direction and end up at an unrealistically high level. So for me at this moment in time I think asset allocation is a done deal. Geographic allocation is slightly more tricky at this stage but hand on heart I can say I don't have any bias for or against any geographic area. The issue there is identifying suitable assets that offer a different geographic spread and that means lots of research, research that requires confidence in my ability to accurately and correctly evaluate funds. I have drawn heavily on the advice offered by yourself and Fletchsmile thus far, for which I am extremely grateful. But going forward I need to develop my own capability and stand on my own feet when it comes to fund identification and evaluation - I'm not there yet! I can foresee there being a point in the not too distant future when I will want to trade at least one of my existing gilts and perhaps one other UK equities fund (Threadneedle) but the catalyst to do that will be my comfort level combined with a range of options that I can switch to. I hear you when you say the clock is ticking but for the moment that's OK, more haste and less speed etc. And yes, Brexit is a concern and its potential impact noted. I don't know how long you have been managing your own investments, clearly Fletchsmile's been at it a long time, I've been in the game for one week and six days so don't beat me up too much (or I'll have to have my best mate the duck from the other forum come issue a warning or two).
|
|
chiangmai
Crazy Mango Extraordinaire
Posts: 6,481
Likes: 5,570
|
Post by chiangmai on Jul 30, 2017 6:04:58 GMT 7
I always look at the standard deviation and beta numbers of a fund but I don't have a good feel for what is considered to be too high, my sense is that a standard deviation over 12 means higher risk whilst a beta that is lower than 0.60 means lower risk and probably unacceptably lower than (benchmark) returns. I do understand however that the composition of holdings n a fund will impact those numbers.
Does that sound reasonable?
|
|