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Post by rgs2001uk on Apr 10, 2019 22:39:28 GMT 7
Since I will not be implementing my new pension portfolio on the HL platform before I return to the UK next month I have been using the time to read watch and learn, inevitably that has led to a tweak or two! Oh no I hear you cry, not again!! In fact, what I have done is to take on earlier advice that I had previously disregarded and I have dumped Jupiter European, as AyG had strongly suggested. The reason I have done so is that a majority of sources I read have suggested being underweight Europe plus, a Europe only fund leaves no room for escape by the fund manager if things go tits up, despite Europe being a large diverse entity in its own right. The second reason I did this was to reduce the overall risk level of my holdings and to reduce average volatility levels and number f funds. So thank you AyG, it took a while but I finally got there. I've gone full circle and am now back at 75/25%, equities/bonds which I now think is quite OK, from what I've read and the performance I've observed, I don't think this model is dead, yet. US allocation remains high at 20% but it is the biggest market in the world and Trump seems determined to make it rock. EM Asia at 9% made me pause for a moment but then of course that includes China which I think is a gamble worth taking. UK at 17%, in spite of Brexit, whatever are you thinking some will say....CM stands up, salutes and bursts into choruses of Rule Britannia. Cannot open, what format was it saved in?
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chiangmai
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Post by chiangmai on Apr 11, 2019 6:00:05 GMT 7
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Post by rgs2001uk on Apr 11, 2019 12:01:17 GMT 7
Ok, that explains it, using my iPad and can open it now.
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Post by rgs2001uk on Apr 11, 2019 20:40:46 GMT 7
Just had a quick gander, sorry have nothing to offer.
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chiangmai
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Post by chiangmai on Apr 12, 2019 2:25:45 GMT 7
Just had a quick gander, sorry have nothing to offer. Others may disagree but here's my view of matters and the rationale, for the benefit of others who may be following the subject and have an interest: Positives Geographically diverse and balanced All very experienced highly regarded Fund Managers with proven track records Key funds are able to switch between geographic regions and are not locked in to just a single region A manageable number of funds without being excessive Average risk and volatility levels are only just above average Achieves a 75/25 ratio Historic performance exceeds the 1A Global benchmark Average fund fee is 0.59% Potential Less Than Perfects Some overlap between funds EM may be a tad high Overly aggressive? I haven't been able to x-ray all of the sectors and holdings completely but from the detail I have seen there's nothing that jumps out at me as potentially high risk, consumer staples and financials appear to be the two biggest holdings plus there's only two holdings greater than 1.6% and that's Heineken and Diego. Could it be improved on, of course, everything can, but it matches my risk appetite and I doubt that given my knowledge levels of the subject matter I could knowingly improve it substantially or even marginally.
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Post by Fletchsmile on Apr 12, 2019 12:53:16 GMT 7
In fact, what I have done is to take on earlier advice that I had previously disregarded and I have dumped Jupiter European, as AyG had strongly suggested. The reason I have done so is that a majority of sources I read have suggested being underweight Europe plus, a Europe only fund leaves no room for escape by the fund manager if things go tits up, despite Europe being a large diverse entity in its own right. The second reason I did this was to reduce the overall risk level of my holdings and to reduce average volatility levels and number f funds. I'd disagree with your rationale around Jupiter European. Some key points as to why:
1) Although some European economies are struggling, it's important to distinguish economic prospects from stock market prospects
2) While the no-where to escape argument often applies to single countries, there are ball park 40 countries - depending on which definition you are using - in Europe. Given there are only ball park 200 countries in the world, that's a big choice. So for me the nowehere to flee argument isn't valid. The PIGS are different from the more Germanic countries, which are different than some of the Med countries, the Nordic countries, Switzerland/Luxembourg have different focuses, not to mention some of the "newer" Europeans etc etc. European Union/non-European Union, EUR denominated/not EUR The mandate also includes UK. That's before even drilling down into individual countries
3) Europe is home to a lot of businesses that make money globally - including high growth countries like China, Asia, EMs. So particularly in th large company sector it is not purely an EU play. If you look at the Morninstar analysis it will show Jupiter European as large cap + growth being a key box (In their 9 box matrix: size vs growth/value/blend), though it does also invest in mid-caps for growth.
4) Virtually all the sectors: Healthcare, ConsumerCycle, FS, Industrials, Technology etc are represented, unlike some single countries. So there's the ability to shift sectors
5) The strong performance record - even in difficult times, highlights how the fund manager has been able to identify quality investments - and hasn't been stuck in low potential markets, despite weak prospects for the EU itself
6) The fund manager's style of investing means has done well in a variety of market conditions (again not necessarily needing a good economy either)
As a minor point on your second point of "reducing overall risk and volatility and number of funds", I'm not sure how you are measuring the risk and volatility, but generally removing a region and reducing number of funds tend to increase overall portfolio risk. So that may not be the case. One way to perfaps measure it is use Trustnet with and without this one UT to see what the portfolio FE score, volatilities etc are. There's a good chance the FE score, vols etc go up a little without this fund, given your other holdings, if you simply remove it, without replacing it. So risk may have gone up.
Lastly, if you have sold, and despite disagreeing as above, I wouldn't rush to buy it back. The fund manager is stepping down from the fund this year, which could significantly affect potential going forward. That would be the single biggest reason for potentially offloading it. For me I consider it a "hold" now to see what happens. Jupiter is still a quality fund management house, with good research etc, and while the manager is moving on, he is still within the company and the rest of the infrastructure there. Previously it was a fund I would have added without hesitation if I didn't hold and was starting from scratch. That's the reason I wouldn't rush to buy it now though if not holding already, rather than issues with the European economy.
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chiangmai
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Post by chiangmai on Apr 12, 2019 14:09:14 GMT 7
Indeed you have made many of those arguments previously and I did re-read them several times, the decision therefore to exclude Jupiter European was not the easiest because I recognize all the arguments are valid. I suppose what it came down to for me was a combination of factors, each in their own right wasn't conclusive but the sum total was sufficient to tell me not to go there....yet!
Maneuvering room was one reason and I do fully accept the 40 country argument; an apparent consensus of opinion from large players suggesting that being underweight was a good thing was a second point; removal of Jupiter reduced the number of funds making things easier to manage leaving a 7% holding in Europe, so I'm not exactly deserting the sector completely, was a third.
The risk argument is a little more tricky (for me). Jupiter has a volatility rating of 127, the third highest of all my holdings. Leaving Jupiter in place gave me a weighted average volatility across all funds of 89, after removing it the average was 84, not exactly material but just another influencing factor to add to other influencing factors.
I should remind that I haven't actually made any purchases yet, my holdings on Transact remain as they have been for a couple of years, the list I am preparing here is for May when I'm back in the UK and for when I submit my HL application. I have however plugged the intended portfolio into Trustnet and observed it by comparison to my Transact portfolio, the time frame is far too short to be anything like conclusive but my initial view is that the proposed portfolio gains more quickly but looses more slowly.
One further aspect that I've modified (on paper) is to switch from US Smaller Companies to UK Smaller Companies, this in recognition that many of the FTSE companies have US income which makes the regional split too heavily weighted in favour of the US. Making that change, even though it's only a 6% change, gives a more balanced regional split - that change also reduces average portfolio volatility, and average fund fee costs.
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naam
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Post by naam on May 19, 2019 18:37:37 GMT 7
I would want to add:
1) Some exposure to EMs. They've been beaten up over recent years, but will turn around and have potential going forward.
Objection Your Honour if your comment covers also EM high yield / high risk bonds.
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Post by Fletchsmile on May 19, 2019 18:42:06 GMT 7
I would want to add:
1) Some exposure to EMs. They've been beaten up over recent years, but will turn around and have potential going forward.
Objection Your Honour if your comment covers also EM high yield / high risk bonds. Always welcome to object Dr.Naam. Long time no hear. How's things?
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siampolee
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Post by siampolee on Jul 2, 2019 6:43:15 GMT 7
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chiangmai
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Post by chiangmai on Jul 24, 2019 16:01:15 GMT 7
I just had a chat with the UK Money Advice Service and very useful it was too, I've been away from the UK system for so long I wanted to catch up on what todays rules are. I was specifically interested in what will happen when I reach age 75, under the old rules any SIP would have to be turned into an annuity and that was worrying me. It now seems that some of my new options are: - remain invested as is, the annuity at age 75 is no longer a threat. - convert the capped drawdown to flexible drawdown (at any time) which is easily done, this removes the cap effect and makes the entire pot accessible (subject to tax) - upon my demise, have my SIPP convert my drawdown policy to a successor or nominee drawdown, this means my wife could continue to receive income from the pension whilst remaining invested, (subjects to tax) Perhaps you knew all those things, I didn't, if you didn't, you do now.
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