chiangmai
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Post by chiangmai on Nov 28, 2015 6:06:10 GMT 7
Hi all.
Can I just say thank you to the posters who have moved this thread forward particularly to Fletch. and AyG for their knowledgeable input.
I am very new to the investment arena so I'm starting from scratch and I intend to use this thread to "think aloud" so please bear with me and feel free to critic as necessary. I'm in this position now because I recently lost access to my longstanding and much trusted onshore UK IFA and I have 50,000 very real, not fantasy Pounds that I want to put to work, as you can imagine I'm paying very close attention to what's being said!
I'm historically a low risk investor but for this particular investment I'm prepared to increase my risk tolerance to moderate - I'm investing primarily for income and secondarily for growth.
I have sufficient THB on hand to cover my needs in Thailand for several years but my income is split between GBP and THB, 80%/20%. And since my investment pot is already in GBP I'm inclined to invest in that currency rather than convert to another, unless there is an unexpected swing in exchange rates soon although I don't expect this to happen. Risk Number 1: The five year outlook for GBP/THB may result in serious loss of value.
I know I want to invest a lump sum for reasons already mentioned and I agree that's a better approach - I'm also happy to delay my market entry until such time as I am comfortable with my approach. I'm currently trying to decide the asset allocation across sectors and regions hence the recent discussion is particularly helpful.
I envisage buying into around ten different fund products rather than investing at a micro level and buying individual stocks, simply I don't have the skill to manage that. I anticipate that some 60% of the portfolio will comprise equity funds and that 60% of that amount will be in regional funds. I expect that the remaining 40% will be split between growth bond funds and perhaps long dated gilts or Treasuries for stability, my next task is to decide on market sectors and groupings and this is research I've just now started.
I'll feed back again when I get to the next stage and/or when I have questions.
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Deleted
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Post by Deleted on Nov 28, 2015 6:53:23 GMT 7
Hi all. Can I just say thank you to the posters who have moved this thread forward particularly to Fletch. and AyG for their knowledgeable input. I am very new to the investment arena so I'm starting from scratch and I intend to use this thread to "think aloud" so please bear with me and feel free to critic as necessary. I'm in this position now because I recently lost access to my longstanding and much trusted onshore UK IFA and I have 50,000 very real, not fantasy Pounds that I want to put to work, as you can imagine I'm paying very close attention to what's being said! I'm historically a low risk investor but for this particular investment I'm prepared to increase my risk tolerance to moderate - I'm investing primarily for income and secondarily for growth. I have sufficient THB on hand to cover my needs in Thailand for several years but my income is split between GBP and THB, 80%/20%. And since my investment pot is already in GBP I'm inclined to invest in that currency rather than convert to another, unless there is an unexpected swing in exchange rates soon although I don't expect this to happen. Risk Number 1: The five year outlook for GBP/THB may result in serious loss of value. I know I want to invest a lump sum for reasons already mentioned and I agree that's a better approach - I'm also happy to delay my market entry until such time as I am comfortable with my approach. I'm currently trying to decide the asset allocation across sectors and regions hence the recent discussion is particularly helpful. I envisage buying into around ten different fund products rather than investing at a micro level and buying individual stocks, simply I don't have the skill to manage that. I anticipate that some 60% of the portfolio will comprise equity funds and that 60% of that amount will be in regional funds. I expect that the remaining 40% will be split between growth bond funds and perhaps long dated gilts or Treasuries for stability, my next task is to decide on market sectors and groupings and this is research I've just now started. I'll feed back again when I get to the next stage and/or when I have questions. Good to see you here, Chiang Mai - I'll leave you in the hands of the experts.
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AyG
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Post by AyG on Nov 28, 2015 8:01:13 GMT 7
I'm inclined to invest in that currency [GBP] rather than convert to another I'm also happy to delay my market entry until such time as I am comfortable with my approach. The actual denomination of the fund is irrelevant (unless it's a curry hedged fund). What actually matters is the currencies of the underlying investments and how they perform. So, investing in, say, a UK, GBP-denominated German fund is the same as investing directly in a Euro-denominated German fund. If you're accounting in THB, for the first case the exchange rates are EUR/GBP then GBP/THB, so the GBP cancels out. In the second case it's simply EUR/THB. So I think you're right in avoiding the costs of converting to another currency - provided you already hold a couple of years' living expenses in Thailand so you can ride out any bad patches in FX rates. Delaying market entry a.k.a. market timing is, in my opinion, never a good idea. Who knows if the market is going to go up or down? Anyone who could predict that with any reliability would by now be fabulously wealthy. At the moment people might think "don't invest in Emerging Markets now. They've done badly for the last 5 years. Wait until things pick up." Well, things will inevitably pick up, but by the time you notice that, you'll have missed a chunk of the potential upside. Personally, I like to spend a long time thinking about asset allocation, a short time on investment selection within each asset class, and then immediately invest. I know some (including Fletchsmile) advocate phasing investment over a period (so called "pound cost averaging). I don't. As for your asset allocation, I'd suggest you have a look at my post bigmango.boards.net/post/50091/thread. From what you've said, I think you're requirements are similar to those of the person I constructed this portfolio for. I've primarily used Investment Trusts for this portfolio. I prefer them to funds, and over time, an Investment Trust will out perform a similar Unit Trust/OEIC. However, if you're keen on unit trusts, you could choose your own funds whilst keeping the asset allocation. (Incidentally, you'd want the GBP denominated classes of the USD denominated investments in my portfolio.)
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The Arrow
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Post by The Arrow on Nov 28, 2015 12:17:30 GMT 7
Welcome Chiangmai. Thanks for the comments and positive feedback. Yes weve a few knowledegable posters around here and BM is growing to be useful place as well as fun place. If you dont mind Ive moved your post to a separate thread as it looks like an interesting topic in itself.
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chiangmai
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Post by chiangmai on Nov 28, 2015 12:24:36 GMT 7
Just for clarification:
The decision to invest using GBP refers to an earlier decision not to convert to THB before hand. At some point in the future my investment will likely need to be converted into THB since that is the currency I spend and the beneficiary of my will is Thai. For the time being however it seems prudent to spread my assets over more than one currency hence the decision re. GBP - the denomination of investment assets is another subject that I have yet to come to grips with.
And my statement about being prepared to delay entry into the market refers to me finding my own comfort level with the decisions involved here rather than any fool hardy attempt to second guess the market.
Thank you for the link you provided, I will go over that in detail and come back to you with queries, if I may.
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Post by Fletchsmile on Nov 30, 2015 19:15:45 GMT 7
Nice to see you around Chiangmai. Have enjoyed your posts elsewhere over the years. Thanks. Based on those and what you've written above, I know you've some sensible approaches on money, wealth management, wills etc so thanks for sharing them.
There's a few things people could probably suggest as ideas. As a reasonable starting point though, makes sense to understand a bit more where you're coming from. For your previous UK based investment, you sound happy and comfortable with them and used a UK IFA.
What were the products you used, and where were they based?
What was it you liked about them?
Are you looking for someone who would make the investment decisions for you or looking to play some part in that / do it all yourself?
With what you had before is there anything you would have done differently or thought could be improved on / didn't like? You mention about being open to a bit more risk.
Being comfortable with your investments is an important part of investing. People sometimes tell you that to be an experienced investor you need to be emotionally detached. For most people that is much easier said than done, and in reality for most people investment decisions are often emotional decisions as well as technical ones
BTW As you mention spreading your money across funds is one option. Although I started out in individual equities, and although I enjoy investing as I get older and also in mind with what comes next for us all, I'm less and less inclined to spend time researching individual stocks.
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Post by rgs2001uk on Nov 30, 2015 21:46:06 GMT 7
I would stick with Investment Trusts.
You may wish to consider the following which I hold.
Alliance Trust Scottish Mortgage Standard Life Equity Witan Worldwide Healtcare Trust
I dont hold this one, but am watching it, 3i
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chiangmai
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Post by chiangmai on Dec 1, 2015 15:05:50 GMT 7
It takes a lot of time for me to feel comfortable with another person making financial recommendations for my money, trust is actually more important that skill I think. And I had developed that trust over many years with my IFA, many years of exploring avenues that didn't go anywhere, checking the advice he was providing against other sources and building up a relationship that was very trusting, I was truly gutted when he said he'd sold his business because of the overhead cost of regulation. I was even further gutted when I realized that I wouldn't be allowed a replacement onshore IFA and that I had become persona non gratis as far as UK plc was concerned, just because I live in Thailand.
I've always taken the view that I would contract out the services I can't perform well and/or are specialized. I ran a management consulting business for twenty five years and my legal, accountancy and financial planning services were always bought in from experts in the past so that I could concentrate on things that I do well. Now in retirement with more time on my hands to learn new skills I find it harder to do so, perhaps as a result of aging and/or perhaps as a result of the complexity of the subject matter, my jury is therefore still out as to which way I should go albeit I'm going to give the DIY approach a shot.
The investment instruments I hold currently are on the Transact platform in London and I'm very pleased with the reporting of that service, that portfolio is in its four year and continues to perform better than expected returning a net yield of around 5.2%, not bad for an investor whose risk profile is frequently beyond cautious - my IFA managed my expectations superbly by under promising and over delivering consistently for four years. The mix of products in that portfolio is the classic structure of equity, bonds and gilts, one income fund, one growth fund and all based around Europe, UK and the US (5%). In going forward my ideal would be to use a single entity who understands my risk profile and objectives and could structure a balanced series of products under a Transact lookalike, somewhere in a regulated environment - when presented with that sort of inventory I can easily examine and critic it to determine if it's suitable, to compile it from scratch myself my not be the ideal because that looses part of the check and balance system, I never was very good at objectively critiquing my own work! And yes I am prepared to accept a moderate level of risk on this investment, I'm prepared to be more adventurous because the money is not a key part of my financial survival, it's almost mad money yet it well being and growth remains very important to me.
As for cost: a 3% up front charge to establish the above is not unduly onerous in my world, in fact it's a small price to pay considering the nature and scale of it all, others of course may not share that view so each to their own.
I'm currently working my way through an analysis of a likely product mix and it's a real slog although I will get there at some point. One point that I don't understand in the process is the source for the wrapper and what determines a good one, it seems to me it's mostly fee driven, perhaps somebody can comment on this?
I'll report back when I have something concrete, in the meantime I hope the above helps build a better picture.
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Post by rgs2001uk on Dec 1, 2015 18:39:29 GMT 7
^^^^, the good thing about this forum is, the advice is free often based on personal experience, and no one has any hidden agenda or ulterior motive.
The ITs I mentioned I have held for years and have no problems with, use them as nothing more than a benchmark, a starting point for comparison purposes only.
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Post by Fletchsmile on Dec 3, 2015 12:15:23 GMT 7
Based on what you've said it seems that your IFA did a good job of meeting your needs. The mark of a good advisor, is understanding you, what you're looking for, risk etc. It's always possible to have achieved higher returns, but to get those may not be appropriate. The return he was achieving sounds reasonable for the risk taken, and ball bark not dissimilar to returns I've been getting for my mum with again a lower risk than I take for myself:)
Sounds also like your advisor was looking to create a robust long term portfolio to meet your needs, rather than take advantage specifically of market opportunities, which should mean that there shouldn't be a need for drastic changes, and you've probably time to long around getting comfortable with anything new. So should need to drastically re-invent the wheel
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Post by Fletchsmile on Dec 3, 2015 12:24:05 GMT 7
If you'll still have access to your platform, and you want to start selecting funds yourself, one thing you could do to help is see whether they have any "model portfolios". While these won't be tailored to you they can be useful reference points. So check out whether they have any. Platforms often do this as a way to encourage interest in their products and make it easier / help you to become a customer
These model portfolios can be useful not just for the specific investments, but also in looking at how they are structured and why, eg how much in equities vs bonds as you say. How many funds to spread across, as well as obviously some examples of funds.
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Post by Fletchsmile on Dec 3, 2015 13:32:32 GMT 7
For examples of model portfolios that platform providers might suggest here's some from Hargreaves Lansdown. I use them for their platform and services, and although I look at their models from time to time, I prefer more actively selecting for my own needs. They're useful ideas/ reference points though. Other providers do similar. They have what they call "Master Portfolios". You select lump sum amounts and / or monthly investments: www.hl.co.uk/funds/master-portfolios#For Medium Risk Portfolio suggestion The following five funds have been selected by our award-winning research team to provide a balanced, ready-made portfolio with good growth potential, but without taking excessive risk. CF Woodford Equity Income 20% Artemis Strategic Assets (Class I) 20% Newton Real Return (Class U) 20% Old Mutual UK Alpha (Class U1) 20% Lindsell Train Global Equity (Class D) 20% For Conservative: The following four funds have been selected by our award-winning research team to provide a conservatively balanced portfolio by blending exposure to shares and bonds. Invesco Perpetual Tactical Bond (Class X)25% Newton Real Return (Class U)25% Troy Trojan (Class O) 25% Artemis Strategic Assets (Class I) 25% They're useful for core fund starting ideas. Clicking around a bit on the funds you could see more Just a couple of comments: - They tend to select about 4/5 funds. This keeps it very simple. - However, personally I'd prefer more on GBP 50k. About is not unreasonable. - I also select either a % limit and/or a maximum absolute cash value I'm prepared to put into any one fund. This prevents too much concentration risk on any single fund. This can be useful in different markets, if fund managers leave etc etc. The downside sometimes is you lose a little focus if too many - While these portfolios are probably suitable for someone in the UK. If in Thailand, someone would need to think how they might be altered a bit to reflect Thailand and not UK is your home country
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Post by Fletchsmile on Dec 3, 2015 13:52:13 GMT 7
HL have also recently introduced what they call Portfolio+. This would also be worth taking a look at for ideas. You select say income or growth, and then conservative, balanced, aggressive etc These take advantage of their "Multi-Manger Funds". These "Multi Manager Funds" are essentially each "a fund of funds". The downside is it adds another level of fees/ extra cost, although not excessively so. What it means though is they adjust which funds they think are best. So when a fund manager leaves they will remove or add if necessary. www.hl.co.uk/funds/portfolio-plusExamples: Porfolio+ Conservative Income Shares 39.5% Bonds 50.6% Other 9.90% Their Multi-manager funds HL Multi-Manager Equity & Bond 40% HL Multi-Manager Strategic Bond 40% HL Multi-Manager Income & Growth 20% I'm not personally a keen fan of fund of funds approach, as I prefer to remove the extra level of fees, by being more active and picking individual funds. It's a simple strategy though for less experienced investors or those not wanting to be personally be active. What is more interesting to me is to then look at the underlying funds within their multi-manager funds. It shows Top5 but you can see more, eg Top 10 underlying holdings (%) CF Woodford Equity Income 9.5% Invesco Perpetual Tactical Bond 8.6% M&G UK Inflation Linked Corporate Bond 7.1% Fidelity MoneyBuilder Income 6.9% Kames Investment Grade Bond 6.3% Artemis Income 6% Threadneedle UK Equity Alpha Income 5.4% M&G Optimal Income 5.2% JOHCM UK Equity Income 4.3% Jupiter Strategic Reserve 4.1% ------ For Balanced Income Shares 67.9% Bonds 25% Other 7.10% HL Multi-Manager Income & Growth 55% HL Multi-Manager Equity & Bond 27.5% HL Multi-Manager Strategic Bond 17.5% Underlying Funds CF Woodford Equity Income 14.1% Artemis Income 11% Threadneedle UK Equity Alpha Income 9.8% JOHCM UK Equity Income 8.2% Marlborough Multi Cap Income 7.2% Invesco Perpetual Tactical Bond 4.4% Majedie UK Income 4.2% M&G UK Inflation Linked Corporate Bond 3.6% Jupiter Income 3.6% Fidelity MoneyBuilder Income 3.5% A nice thing also is you can see them back test historic returns, and get an idea of past returns/ volatility even though not a guarantee of the future Backtested, and since launch, performance Nov 10-11 Nov 11-12 Nov 12-13 Nov 13-14 Nov 14 - Jun 15 Jun 15 - Nov 15 3% 10.2% 20.6% 4.5% 9.7% -3.4% Again it's based on someone in the UK, but gives idea So all in all from the above, you get ideas of: - Asset allocations: equity/ bonds etc - What's agressive, balanced or conservative - ideas of historic returns - As well as specific funds to look at I use mainly just for ideas, and pick my own funds. BTW The other thing I like for me is that by using HL, I know if anything happened to me, then other people with different levels of experience could go to them for help. eg - my brother in UK could just follow their model portfolios. In addition to his own money he would also be looking after my UK money - my mum in UK could just say look my son used to manage my money thru you. He's passed away/ no longer able to. Could you do it all? They probably switch her to a portfolio service or model portfolios, but there'd be some continuity So I'd be comfortable HL and them taking over to manage things in safe hands
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Post by Fletchsmile on Dec 3, 2015 14:14:03 GMT 7
Just for a few more ideas and examples on contstructing portfolios and how they may differ: - I posted my own UK portfolio here on the link below. It's probably more aggressive than what you'd be looking for. I cap the maximum in any one fund at 15%. Neil Woodford being the top as I have 2 versions of it, one in ISA that pays income. One in SIPP that doesn't bigmango.boards.net/post/53302/thread----------------------------------------------------------- Here's what I've done for my mum for the last few years since my father passed away and I manage money for her. The objective is to generate returns of about 6% a year, to take out around 4-5% via dividends and sales, without reducing capital. It leaves a little growth in the portfolio, but not necessarily to keep pace with inflation, based on age etc Average return in the last 5 years was just above 6% after all charges taken into account. If I include this year as well it will drop below 6% to 5.X% because 2015 has been a weak year. I'm mindful also that bond returns will be less this year. Plus 18 funds is probably a bit high in number. This is mainly because I was very (perhaps overly) conservative in not putting too much in any single fund when I started out. <Ducking> up with your own money is one thing, but with your mum's money is another thing altogether . However, as the funds kept meeting objectives, I didn't reduce the number much Key Holdings % International Bonds 22.7% International Shares 22.4% UK Shares 22.1% UK Bonds 16.0% Cash & Equivalents 4.7% Hedge Funds 4.6% (=absolute return/ strategic funds) Property 4.3% Others = balance UK 39.1% Developed Europe - Excl UK 16.2% North America 13.4% Emerging Asia 5.1% Cash and Equivalents 4.7% Alternative Trading Strategies 4.5% Unclassified Funds 3.6% South & Central America 2.8% Japan 2.2% Emerging Europe 2.0% Non-Classified 1.7% Australia & New Zealand 1.4% Developed Asia 1.2% Commodities 1.0% Property 0.7% Middle East & Africa 0.4% 1 Woodford CF Woodford Equity Income Class Z 10.7% UK Equity Income 2 AXA Framlington Managed Balanced Class ZI 7.9% Mixed Investment 40-85% Shares 3 Invesco Perpetual Monthly Income Plus Class Y 7.3% £ Strategic Bond 4 Artemis Strategic Bond Class MR 7.2% £ Strategic Bond 5 Invesco Perpetual Corporate Bond Class Y 7.2% £ Corporate Bond 6 Newton Global Income Class W 6.9% Global Equity Income 7 Artemis Strategic Assets Class R* 6.6% Flexible Investment 8 Royal London Sterling Extra Yield Bond Class B 6.2% Fixed Int-Sterling 9 Aberdeen Fund Managers Emerging Markets Equity Class I 6.1% Global Emerging Markets 10 J O Hambro CM UK Equity Income Class Y 5.5% UK Equity Income 11 Franklin Templeton (Lux) Templeton Global Bond Class A 5.4% Global Bonds 12 Kames Capital High Yield Bond Class A 5.3% £ High Yield 13 Standard Life Investments Global Absolute Return 4.5% Absolute Return 14 Jupiter Strategic Bond Class A 4.4% £ Strategic Bond 15 Henderson UK Property OEIC Class I 3.6% Property 16 Jupiter European 2.1% Europe Excluding UK 17 Schroder Tokyo Class H 1.7% Japan 18 BlackRock Gold & General Class DI 1.5% Specialist 19 Cash 0.1% [N/A] I have a couple of additional guidelines: 1) I either own the fund myself which helps me monitor and track quality; and/or 2) It's on HL's Wealth 150 list of top 150 funds - again a quality control check and 3) No more than about 10% in any one fund. Neil Woodford's fund is a slight exception
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AyG
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Post by AyG on Dec 3, 2015 14:14:46 GMT 7
one thing you could do to help is see whether they have any "model portfolios". While these won't be tailored to you they can be useful reference points. However, do be aware that these model portfolios are designed for people living in the UK - that is to say, they are heavily biased towards the investor's home market and home currency. For someone living in Thailand temporarily this may or may not be appropriate, depending upon investment objective. However, for someone planning to use the end fruit of their investment here (e.g. to fund their retirement) it most definitely won't be appropriate, and investments will probably need to be biased towards (in decreasing order of importance), Thailand, the Asian region, the rest of the world.
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