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Lowish maintenance and fairly simple to measure portfolio

A helpful place to also put any annual reports etc, of your own portfolios
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Lowish maintenance and fairly simple to measure portfolio


Postby Newroad » November 23rd, 2020, 9:44 pm

Hi All.

I'm not sure if this will be of interest - maybe it will, maybe it won't - but just in case it is for some, here goes. Thanks for the input, direct and indirect, from many Lemon Fools, who have influenced the thinking behind it.


At present, the family portfolio consists of six sub-portfolios: ISA * 2 (my wife and I), SIPP * 2 (my wife and I), JISA * 2 (one for each kid). For each sub-portfolio, their target splits in equity/bond terms are 66.6%/33.4% for the adults, 75%/25% for the kids. Those splits are further split 50/50 passive/active via an ETF and an Investment Trust. The actual holdings are for each are


The rebalancing to achieve (or get nearer) the target splits is via the free once a month investment and re-investment to the Interactive Investor held accounts. This is perhaps easier for us than some as we are all still in the accumulation phase of our lives, so the ISA's and JISA's get regular contributions - with the SIPPs, it's a little more lumpy (mainly triggered by a change of employment in some form).

I have decided to use only one tool (and only one measurement within it) to keep my hand on the tiller and calibrate the rebalancing - Morningstar's X-Ray facility within Interactive Investor (II). Within the X-Ray, I am looking at the "Net Stocks" percentage for each sub-portfolio. In simple terms*, if it is above target, I buy bonds this month, if it below target, I buy equities this month. Within that decision, if the passive holding is worth more than active, I buy the Investment Trust, if the active holding is worth more than passive, I buy the ETF. Though I do look more often than that, for interest, I measure for rebalancing only once a month (on the 1st).

Finally, I have decided to do a full rebalance (to target percentages) should a sub-portfolio go +/- 10% of target. This means +/- 7.5% for the kids 75% and +/- 6.66% for the adults 66.6%, in both cases for equities. This has not yet been required.

In the interests of full disclosure, the JISA's each also have a modest MYI holding, courtesy of one set of grandparents (my in-laws). This does count towards the X-Ray figures (and does distort them slightly, being around 85% equities) but I do not adjust it as part of the monthly rebalancing exercise - it just gets the grandparental top-up. I like to keep it separate from the rest so that I can demonstrate to them easily what their contribution has got for the kids.

* only very slightly over-simplified


I don't actually measure the performance of the portfolio or the sub-portfolios - judging the effort is not worth the reward. Before you recoil in horror, I do measure a more convenient proxy - the target sub portfolios - which I expect will give a pretty good approximation of the performance of the actual ones (and hence the overall portfolio). I measure these once a month at the same time as planning the rebalancing.

I have backtested these only as far as 01st June 2019, as that is the first month where there is data for VAGP (it was available on the LSE from May 2019) and once again, don't judge the effort is worth it to figure out what it might have synthetically been before that. My (half) switch into passive bonds happened in April 2020 and similarly into passive equities in May 2020. From 01st May 2020 to 01st November 2020, the target portfolios performed as follows (with performance from 01/06/2019 in brackets) ...

ISA: +10.34% (+4.46%)
SIPP: +10.57% (+8.52%)
JISA: +10.17% (+8.92%)

I have a reasonably complex spreadsheet which took a while to create, but now with the once a month entry (simply of the value of each ETF/Investment Trust holding and the X-Ray percentages) it now calculates the the rebalancing needed and performance detail. It also calculates the nominal yields - currently ...

ISA: 2.64%
SIPP: 2.65%
JISA: 2.19%

The Past

The genesis of each sub-portfolio was standalone. The first were the SIPP's. These used to be fully invested in ATST within Alliance Trust Savings (ATS) and were populated by sweeping up older SIPPS, Stakeholder Pensions etc from previous employers. Second were the kids JISA's (then CTF's). These used to be fully invested in FCIT with BMO and its predecessor. Third were the ISA's. These used to be fully invested in WTAN with Witan Wisdom (WW).

When WW was about to close and move to Hargreaves Lansdown, I didn't like the look of them and opened up the II accounts instead, transferring the holdings across. When ATS also closed, their accounts moved by default to II. Finally, I decided to move the kids CTF's with BMO into JISA's with II, both to save fees and allow flexibility.

From there, to change the risk profile, I moved from 100% equities into equity/bond splits (then 60/40 and and 70/30 respectively). I later moved to the passive/active bits described earlier. Moving the splits from 60/40 to 66.6/33.4 and from 70/30 to 75/25 respectively is a more recent decision - having reflected and consequently factored in that we own our own house and have reasonable cash reserves - hence can warrant a higher risk profile in the portfolios. Having the active bond component being predominantly high yield raises the risk profile a little further again.

The Future

I'm not a great fan of WTAN or MYI, so may look to change one or both those at some point (possibly to MNP and/or MNKS in some combination) and if so, it will be a complete and straight swap. I'm happy enough with ATST and FCIT.

In general, let's see how it goes, rebalancing as needed, until retirement becomes seriously in prospect. If I get a clear retirement date in mind, I may well move to a 100-age or similar equity target for that date and figure out a steady rebalancing rate to that position from the current 66.6/33.4 splits. Other than that, maybe keep a weather eye on inflation expectations - perhaps the one thing which might cause me to seriously re-evaluate.

Wish me luck! :)

Regards, Newroad

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