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Post by rgs2001uk on May 3, 2019 20:45:15 GMT 7
What would they be?
Downsizing, you can only hold 5 funds, shares, ITs UTs etc, what would you hold and why?
I hold 20 funds at the moment, out of those, 17 are up for debate, the 3 I would sell last are, Croda, Scottish Mort and Polar Capital Tech Trust.
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Post by Fletchsmile on May 4, 2019 1:32:24 GMT 7
1. Lindsell Train Global Equity = Global equities: US, UK, Europe and Japan = great solid global fund giving 4 main regions. Bought via UK 2. UOB Good Corprate Governance = THB and a consisent top 10 performer for Thai equities. Given I live in Thailand and want THB assets, preferably that can beat inflation and current poor cash rates. Particularly as we have Thai school fees to pay taht have been increasing at around 4% p.a. Bonus if I can get the tax break on it as an LTF. But would still pick it even without the tax. Bought via Thailand 3. Royal London Sterling Extra Yield Bond = fixed income. Would want some fixed income, and the yield. Plus a bit more defensive in a down turn. Bought via UK Those would be my first 3 choices and automatically pick themselves for me. I wouldn't equal weight them though and RL fixed income would be more like 10% (possibly 15%) max of the total portfolio 4. A good Asia fund. Pacific Asia Trust - investment Trust via Singapore would be maybe first choice if thinking funds/ investments in isolation and nothing else. I like Asia as a sector, also this gives some EM exposure too. If only 5 funds and already have Thailand, there's a bit of a double count though on Asia and EM. But the problem with PAC is I can't borrow against that as it doesn't qualify. So instead I would pick First State Dividend Advantage unit trust, which I can borrow up to 70% of the value of as a qualifying investment. The borrowing facility is important to me, so trumps other Asia fund choices that I might otherwise prefer because of that. Those would be my first 4 choices.
The last 1 is hard to try and balance things off, but also address other objectives A. Lindsell Train UK Equity or Finsbury Growth & Income Investment Trust = UK equities both managed by Lindsell Train and consistently top performers. Coming from the UK, and possibility I might go back. Also a reasonable chance we might have UK university fees at some point. Bought via UK. Though LT Global Equity has some exposure and RL Sterling Extra Yield is mainly GBP, so this choice perhaps loses out because of that B. Maybe TMB Property Income Fund. To give a reasonable yield, and property diversification. THB assets again living here, with some Singapore thrown in. reduces currency risk for me living in Thailand. Again like RL Sterling extra yield I probably wouldn't want more than 10% in it. Bought via Thailand C. Fundsmith equity would be nice to have as a global fund offering more diversification. It probably loses out though if I can only have 5, as I already have LT Global. This reflects real life. It often loses out to LT Global. Though I do hold a smaller amount for diversification to avoid getting too heavy on LT in reality as I hold a lot more than 5 investments D. A small cap fund would also be nice for some diversification and greater growth potential. Maybe IPU IT from Invesco. Maybe Marlborough UK Micro Cap. Maybe TB Amati Smaller Companies. Maybe T.Rowe US SMaller companies. So many to choose from, I could name 5 smaller company funds alone  . In reality I'd go for more than 5. I also don't like more than 10% (15% max) in any 1 fund, which sort of makes 5 difficult too. I also want some in Thailand, some in UK, and some in Singapore (offshore + able to borrow against) so need to split there too. I want around 30% in THB and THB assets But I guess if 5 only and thems the rules, I'll settle on: 1. LT Global 35% - UK 2. UOB Good Corp Gov 20% - Thailand 3. First State Dividend Advantage 25% - Singapore. Really want that borrowing facility. EUR @ 1%. GBP @ 1.7% 4. Royal London Sterling Extra Yield 10% - UK 5. TMB Property Income Fund 10% - Thailand Would like to cheat and have a 6th smaller company fund though Not easy with just 5 with so many factors to balance. Not quite happy with the % splits either. The Asia weighting is a bit high given the Thailand weighting. But that Singapore holding all has to go into 1 fund |
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Post by Fletchsmile on May 4, 2019 1:38:30 GMT 7
Should probably add that as a second step I would borrow against the First State Dividend Advantage. I could borrow up to 70%. Some of those borrowings would be used to buy more investments, which I could then borrow against too if need be. Though wouldn't use it all to buy more investments, and would keep some headroom So if I started: 1. LT Global 35 2. UOB Good Corp Gov 20 3. First State Dividend Advantage 25 (borrowing limit 70% of 25 = 17.5, none used yet) 4. Royal London Sterling Extra Yield 10 5. TMP PIPF 10 It would actually become more like 1. LT Global 35 2. UOB Good Corp Gov 20 3 First State Div Advantage 35 (borrowing limit 70% of 35 = 24.5, but 10 already used, so 14.5 left) 4. Royal London Sterling Extra Yield 10 5. TMP PIPF 10 6. Cash borrowings -10 Not as happy with the weightings as First State Div now looks a bit heavy. But no choice if I only have 1 Singapore fund to use  and am limited to 5 overall.
In reality I could borrow further and buy a 6th fund = the smaller companies I wanted and/or a 7th lower risk multi-asset fund and/or 8th low volalitility global fund via Singapore instead of more First State Asia to address the large Asia exposure.
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AyG
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Post by AyG on May 4, 2019 6:58:06 GMT 7
4. A good Asia fund. Pacific Asia Trust A minor point, but PAC is Pacific Assets Trust. |
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88
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Post by 88 on May 4, 2019 7:51:32 GMT 7
This is interesting. The guy makes a strong case for only needing a total of 2 funds.
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AyG
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Post by AyG on May 4, 2019 8:30:03 GMT 7
I've held Pacific Assets Trust for perhaps 20 years now. The mention of it earlier prompted me to have a look at its current holdings. The top 6 countries currently are:
India 32.4%
Taiwan 11.0%
Philippines 8.2%
Hong Kong 7.7%
Indonesia 6.6%
Japan 6.2%
This is radically different from what I thought I owned. The trust has done very well over the years, and I hadn't bothered to look under the hood.
Going back to the oldest annual report I can find (2009) the allocation then was:
China 20.9%
Hong Kong 19.5%
Korea 19.9%
Taiwan 11.0%
India 5.9%
Thailand 4.9%
With a 10 year annualised return of >15% I'm not complaining. Still, the high allocation to India, and only a single holding in China in the top 50 holdings does give me cause for thought.
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AyG
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Post by AyG on May 4, 2019 8:57:38 GMT 7
Selecting just 5 funds, I would go for (equally weighted):
(1) A Thai large cap equity fund - probably TISCO Strategic.
(2) Phatra Property Dividend fund
(3) Lindsell Train Global Equity
(4) Lazard Global Listed Infrastructure
(5) Aberdeen Standard Asia Focus [AAS]
There are really two themes here. The first is to weight the portfolio towards my home economy (#1, #2) and the neighbouring region (#5). The second is to provide some protection against inflation, both locally (#2) and globally (#4).
With the Thai large cap fund, I could equally have chosen Krung Thai Smart Equity or Krungsri Dynamic. I really haven't found a fund in which I have particularly great confidence. The management charges are also nigh on criminal.
I would prefer the non-dividend version of the Phatra fund, but it's closed to new investors. The charging structure is different from TMBPIPF and it works out cheaper if you're holding it for a few years.
These days I'm increasingly drawn to concentrated funds which hold high quality companies, hence #3. I could also have gone for Lazard Global Equity Franchise, but it's managed by substantially the same team as #4, so I didn't.
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Post by Fletchsmile on May 4, 2019 9:53:47 GMT 7
4. A good Asia fund. Pacific Asia Trust A minor point, but PAC is Pacific Assets Trust. . Thanks for pointing out the typo |
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Post by Fletchsmile on May 4, 2019 10:37:42 GMT 7
I've held Pacific Assets Trust for perhaps 20 years now. The mention of it earlier prompted me to have a look at its current holdings. The top 6 countries currently are: India 32.4%
Taiwan 11.0%
Philippines 8.2%
Hong Kong 7.7%
Indonesia 6.6%
Japan 6.2%
This is radically different from what I thought I owned. The trust has done very well over the years, and I hadn't bothered to look under the hood. Going back to the oldest annual report I can find (2009) the allocation then was: China 20.9%
Hong Kong 19.5%
Korea 19.9%
Taiwan 11.0%
India 5.9%
Thailand 4.9%
With a 10 year annualised return of >15% I'm not complaining. Still, the high allocation to India, and only a single holding in China in the top 50 holdings does give me cause for thought.That's two of the things I like about Stewart Investors as a fund group:
1) Just let them get on with it when it comes to Asia, and don't worry too much second guessing their allocations and holdings.
2) They actually take real positions and views. Unlike those fund management groups that are closet index trackers or just take the index and tweak it a bit. Those with that style are too worried about short term performance figures so don't want to deviate too much from an index.
That said, bit surprised thei China weighting is currently so low, and India so high.
That would have worked very well in 2018 where Indian indices were relatively strong with positive performances, eg Sensex up 14.6% in 2018 when many markets were down, and China was weak, eg CSI 300 down 2.9% But in 2019, CSI 300 is up 30% but Sensex only around 8%. Obviously stock picking is important, but on the first 4 months of the year, that's a lot to miss out on in 2019 in terms of geography. China has been one of the best performing markets in the world in 2019.
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Post by Fletchsmile on May 4, 2019 10:50:56 GMT 7
Another factor that may be relevant is your choice of vehicle. If only picking 5 funds, that pushed me away from some of the investment trusts, which can often be low on liquidity and less easy to deal if you need your money quickly. If you stick a couple of thousand in an IT or even couple of tens of thousand, then often you're OK, and few problems dealing, but if you've got hundreds of thousands then it can become a problem with some ITs if you want to sell large quickly. Particularly in times of financial market distress. It frustrates the hell out of me sometimes dealing ITs. Even on small amounts and even setting limit bids. I remember for HDIV and IPE (bond funds I wouldn't touch again) getting stupid take-ups of my offers of 1 share in a day, 8 shares etc. Similarly some of the single country funds, and many small size funds. I often don't get what I want on the day I want it. Try getting GBP 100,000+ for example of a Thailand IT - difficult to get in and annoying is bad enough. If you want to get out that can be even more of a nightmare. In contrast when I did that for a Thai unit trust when the previous king was about to pass away, I placed the order and it goes thru same day. OK most times you don't need to liquidate hgh proportions of your whole portfolio. But events happens. Emergencies, market events etc, so you might. So needs to be a facor. 5 investment trusts @ 1k worth GBP 5k = who cares. 5@ 10k worth 50K = Not much trouble. 5 ITs @ 100K be careful and give it some thought etc |
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Post by Fletchsmile on May 4, 2019 11:05:10 GMT 7
This is interesting. The guy makes a strong case for only needing a total of 2 funds. I see the theory.
Global bond + global equities then just choose your allocation. Some merit in it to an extent, and makes sense to raise it
The key drawbacks:
- 2 isn't really enough for me as a UK guy living in Thailand though. It would work better for an American living in America, given the US weighting in global indices is so high at 60%+ and the high weighting in US bonds globally
- As someone who would be 90% equities and 10% bonds or perhaps 85%/15%, I'm not that comfortable in putting virtually all my eggs in one basket. What about also the very small probability high impact events such as fraud, something unforeseen where something happens to that fund and takes time to sort out. The second fund in contrast is small by comparison and hardly worth it. Feels like picking just one investment, even though technically it say 3000+ underlying investments, they're still all under the same umbrella.
- Global funds will tend to focus a bit too much on developed markets, as I think one of his slides shows. Missing a lot on EMs, Asia, etc etc
---------------
Also seen a few of his other VDOs
Just on the guy and his VDOs BTW, he has a tendency to go off a bit on tangents and waffle (yes I know takes one to know one ).
Also he often presents a case using various evidence then a conclusion that doesn't really fit well, eg he has one on Fundsmith and whether it could continue to outperform. 95% of the VDO suggests he will answer yes, and looks reasonable analysis. Then in the last 5% he hastily concludes but very few funds ever do so, hence the answer is no. He could have just cut to the chase with that.
Below is the one on Fundsmith. Starts well but disapointing conclusion/ finish. About a year ago
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Post by Fletchsmile on May 4, 2019 16:53:46 GMT 7
...With the Thai large cap fund, I could equally have chosen Krung Thai Smart Equity or Krungsri Dynamic. I really haven't found a fund in which I have particularly great confidence. The management charges are also nigh on criminal. I would prefer the non-dividend version of the Phatra fund, but it's closed to new investors. The charging structure is different from TMBPIPF and it works out cheaper if you're holding it for a few years. These days I'm increasingly drawn to concentrated funds which hold high quality companies, hence #3. I could also have gone for Lazard Global Equity Franchise, but it's managed by substantially the same team as #4, so I didn't. Not sure why you can't find a Thai equity fund to have confidence in. We've been saying for donkeys years UOB Good Corportate Governance, Bualuang Top Ten etc
I know rgs and others hold UOB GCG too
I've looked at Bualuang Top10 many times over the years. The only reason I never invested in it, was my providers didn't offer it. Only available thru Bualuang/BBL, and I didn't want to open yet another account
.....
UOB Good Gorp Gov and Bualuang Top 10 have featured in the top 10 list for longer period performances year after year for as long as I can remember. UOB GCG was launched in 2004 with LTFs being new. I've been with it for well over a decade. After 5 years after LTFs were launched (2004), i.e 2009 onwards, I can't ever remember not seeing them both in top 10 for the longest available period shown. I don't look every day though
If you look today, ranked by performance UOB GCG is number 3. Bualuang Top 10 happens to be number 1:
Over 10 years
UOB GCG annualised + 18.06% = No.3 Bualuang annualised +18.47% = No.1
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Post by rgs2001uk on May 4, 2019 21:02:44 GMT 7
...With the Thai large cap fund, I could equally have chosen Krung Thai Smart Equity or Krungsri Dynamic. I really haven't found a fund in which I have particularly great confidence. The management charges are also nigh on criminal. I would prefer the non-dividend version of the Phatra fund, but it's closed to new investors. The charging structure is different from TMBPIPF and it works out cheaper if you're holding it for a few years. These days I'm increasingly drawn to concentrated funds which hold high quality companies, hence #3. I could also have gone for Lazard Global Equity Franchise, but it's managed by substantially the same team as #4, so I didn't. Not sure why you can't find a Thai equity fund to have confidence in. We've been saying for donkeys years UOB Good Corportate Governance, Bualuang Top Ten etc
I know rgs and others hold UOB GCG too
I've looked at Bualuang Top10 many times over the years. The only reason I never invested in it, was my providers didn't offer it. Only available thru Bualuang/BBL, and I didn't want to open yet another account
.....
UOB Good Gorp Gov and Bualuang Top 10 have featured in the top 10 list for longer period performances year after year for as long as I can remember. UOB GCG was launched in 2004 with LTFs being new. I've been with it for well over a decade. After 5 years after LTFs were launched (2004), i.e 2009 onwards, I can't ever remember not seeing them both in top 10 for the longest available period shown. I don't look every day though
If you look today, ranked by performance UOB GCG is number 3. Bualuang Top 10 happens to be number 1:
Over 10 years
UOB GCG annualised + 18.06% = No.3 Bualuang annualised +18.47% = No.1
That wasnt by choice or design Fletch, it was caused by companies pulling out of Thailand, just goes to show, you can have your ducks lined up, and the rug gets pulled from under your feet, to this day I still lament HSBC pulling out. |
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Post by rgs2001uk on May 4, 2019 21:05:35 GMT 7
1. Lindsell Train Global Equity = Global equities: US, UK, Europe and Japan = great solid global fund giving 4 main regions. Bought via UK 2. UOB Good Corprate Governance = THB and a consisent top 10 performer for Thai equities. Given I live in Thailand and want THB assets, preferably that can beat inflation and current poor cash rates. Particularly as we have Thai school fees to pay taht have been increasing at around 4% p.a. Bonus if I can get the tax break on it as an LTF. But would still pick it even without the tax. Bought via Thailand 3. Royal London Sterling Extra Yield Bond = fixed income. Would want some fixed income, and the yield. Plus a bit more defensive in a down turn. Bought via UK Those would be my first 3 choices and automatically pick themselves for me. I wouldn't equal weight them though and RL fixed income would be more like 10% (possibly 15%) max of the total portfolio 4. A good Asia fund. Pacific Asia Trust - investment Trust via Singapore would be maybe first choice if thinking funds/ investments in isolation and nothing else. I like Asia as a sector, also this gives some EM exposure too. If only 5 funds and already have Thailand, there's a bit of a double count though on Asia and EM. But the problem with PAC is I can't borrow against that as it doesn't qualify. So instead I would pick First State Dividend Advantage unit trust, which I can borrow up to 70% of the value of as a qualifying investment. The borrowing facility is important to me, so trumps other Asia fund choices that I might otherwise prefer because of that. Those would be my first 4 choices.
The last 1 is hard to try and balance things off, but also address other objectives A. Lindsell Train UK Equity or Finsbury Growth & Income Investment Trust = UK equities both managed by Lindsell Train and consistently top performers. Coming from the UK, and possibility I might go back. Also a reasonable chance we might have UK university fees at some point. Bought via UK. Though LT Global Equity has some exposure and RL Sterling Extra Yield is mainly GBP, so this choice perhaps loses out because of that B. Maybe TMB Property Income Fund. To give a reasonable yield, and property diversification. THB assets again living here, with some Singapore thrown in. reduces currency risk for me living in Thailand. Again like RL Sterling extra yield I probably wouldn't want more than 10% in it. Bought via Thailand C. Fundsmith equity would be nice to have as a global fund offering more diversification. It probably loses out though if I can only have 5, as I already have LT Global. This reflects real life. It often loses out to LT Global. Though I do hold a smaller amount for diversification to avoid getting too heavy on LT in reality as I hold a lot more than 5 investments D. A small cap fund would also be nice for some diversification and greater growth potential. Maybe IPU IT from Invesco. Maybe Marlborough UK Micro Cap. Maybe TB Amati Smaller Companies. Maybe T.Rowe US SMaller companies. So many to choose from, I could name 5 smaller company funds alone . In reality I'd go for more than 5. I also don't like more than 10% (15% max) in any 1 fund, which sort of makes 5 difficult too. I also want some in Thailand, some in UK, and some in Singapore (offshore + able to borrow against) so need to split there too. I want around 30% in THB and THB assets But I guess if 5 only and thems the rules, I'll settle on: 1. LT Global 35% - UK 2. UOB Good Corp Gov 20% - Thailand 3. First State Dividend Advantage 25% - Singapore. Really want that borrowing facility. EUR @ 1%. GBP @ 1.7% 4. Royal London Sterling Extra Yield 10% - UK 5. TMB Property Income Fund 10% - Thailand Would like to cheat and have a 6th smaller company fund though Not easy with just 5 with so many factors to balance. Not quite happy with the % splits either. The Asia weighting is a bit high given the Thailand weighting. But that Singapore holding all has to go into 1 fund Fletch, I will take the middle path and cut you some slack, I am talking UK funds only, not asia or Thai funds. |
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Post by Fletchsmile on May 5, 2019 16:18:20 GMT 7
That wasnt by choice or design Fletch, it was caused by companies pulling out of Thailand, just goes to show, you can have your ducks lined up, and the rug gets pulled from under your feet, to this day I still lament HSBC pulling out. That was on the banking side, though. HSBC pulled out of banking.
UOB asset manegement had been around in its own right. UOB Good corporate governance is from the asset management side.
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. 
and am limited to 5 overall. 
