You are right I wrote an objective but within it is my strategy which is to invest 95%+ in investment trusts with a few shares for trading opportunities
Silverstar64 wrote:Build a diversified portfolio of ITs to produce a dividend income equal to my salary at retirement (additionally I have a current and frozen DB pension, my wife is 100% SIPP), so about half of our current joint income. Also to create a capital value substantial enough to pay any care fees in later retirement assuming a 100 year lifespan.
I would call that an objective not a strategy. And if you hold 51 ITs you have certainly got diversity so that box is ticked.
. I'm firmly on the active side of the fence and moved away from OEICS as I sharply reduced company shares over the years.
1. Stating "build a ... portfolio of ITs to ..."
seems like putting the cart before the horse by jumping straight to an implementation method. Why be so specific about the investment vehicle structure, ruling out alternatives?
2. "produce a dividend income equal to my salary at retirement"
, that's fair enough, although I would make a similar point to 1. in that by specifying "dividends" you've also limited yourself to a specific way of delivering that income as opposed to being agnostic about potential sources of investment return.
"Strategy" is just a word and we can interpret it in very different ways, but I was sort of hoping to see something less about the end objective and more of the ethos behind the investment approach, if there was one.
For example, I've used trend following strategies and followed a quality factor equity strategy (fairly self-explanatory descriptions); I've followed value strategies focused on identifying mis-priced under-researched companies flying below analysts' radars (size and value factors + trend overlay). Etc, etc.
I could hazard a guess that yours is largely an equity income strategy (since you mention a dividend focus), with perhaps a few other non-equity income sources thrown in? Higher dividend yields involve a (mild) tilt towards value, and sometimes the (smaller) size factor, so perhaps they're part of the mix too. But I'm just guessing here.
Have you thought about it in this way and could perhaps describe the method or ethos?
Whatever it is, I think it's unlikely that 51 ITs is the optimal way of implementing it.
I'll mention as well that reading between the lines, it sounds like perhaps part of the focus on dividends and the very large number of trusts could both have a little bit with you playing (different) mental tricks on yourself in order to retain investment discipline. I suspect we all do that sort of thing, and it can sometimes be useful to understand the what and the why of it.
NB I think the analogy to managers of unfettered funds of funds running portfolios comprising dozens and dozens of underlying funds is a bit bogus IMO, since those managers operate within different constraints to PIs: (i) liquidity prevents them from holding a focused number of funds (ii) if they did hold a focused number of funds plenty of investors would see no utility in buying the unfettered fund of funds and would just cut out the middleman and buy the underlying directly, jeopardizing the manager's livelihood; by holding a large number of funds the managers negate these two risks even though the portfolio may as a result be suboptimal.