The Lemon Fool

Hi - i've been investing on a monthly basis since ISAs started and now have a portfolio worth 300k. I'm looking to rebalance it and tidy it up by selling off some smaller investments and have come up with the following as my new target portfolio. I'd be keen to get any views from people on this portfolio (Please be gentle i'm a newbie!!).

(As background I'm 40, like to take risks and am willing to ride out the market during crashes, but I avoid buying single stocks after having many bad experiences with them. I've also tended to stay out of bonds although am using Vanguard total retirement as my biggest holding to decrease my equity exposure as I get older)

I'm not a fund type of guy - prefer stockpicking - but I will ask the question:
How much overlap is there in the funds' shareholdings?
E.G. Do all 3 Vanguard funds hold very different baskets of shares or are they all concentrated in HSBC, Unilever, Glaxo etc?

You're going down to having individual 1.5% holdings, no way I'd do that it's just asking for perpetual admin headaches. I wouldn't go beyond 20-25 individual stocks [ie say 5-4% each). If in collective instruments, IDK yet for sure, but likely 10 max ie c10% each max., as so many have overlap.
IME the older you get, the more simplicity matters, meanwhile often the less time/interest you have, and the more security of income becomes really importsant.

absolutezero wrote:I'm not a fund type of guy - prefer stockpicking - but I will ask the question:
How much overlap is there in the funds' shareholdings?
E.G. Do all 3 Vanguard funds hold very different baskets of shares or are they all concentrated in HSBC, Unilever, Glaxo etc?

For me too this is the salient question when looking at portfolios of funds and funds of funds etc. It's a laborious exercise to do but it should be possible to work out how much you have - indirectly - invested in the Top 10 holdings of each of those listed (normally listed on their websites), and summate. More than likely you may find that most of those holdings are drawn from the FTSE100, S&P500, and Euro Stoxx 50. Which then begs the question - why not cut out the middle men, and their fat fees, and buy/hold those shares directly?

moorfield wrote:

absolutezero wrote:I'm not a fund type of guy - prefer stockpicking - but I will ask the question:
How much overlap is there in the funds' shareholdings?
E.G. Do all 3 Vanguard funds hold very different baskets of shares or are they all concentrated in HSBC, Unilever, Glaxo etc?

For me too this is the salient question when looking at portfolios of funds and funds of funds etc. It's a laborious exercise to do but it should be possible to work out how much you have - indirectly - invested in the Top 10 holdings of each of those listed (normally listed on their websites), and summate. More than likely you may find that most of those holdings are drawn from the FTSE100, S&P500, and Euro Stoxx 50. Which then begs the question - why not cut out the middle men, and their fat fees, and buy/hold those shares directly?

Or just buy the Vanguard trackers that follow those indices and typically charge less than 0.15% a year.

Some thought has been applied but looks a bit sweet shop-like to me, and also overly concerned with attempting to hit a few minor moonshots (satisfy gambling tendencies?).

At a minimum, I'd get shut of:
- the 10% allocation to High Yield / Income
- the 7.5% to Themes
- the 4% to Commodities / Other

...with this lot largely being re-allocated to your main Global Multi-Asset bucket. I'd be surprised if this didn't give you a better long term result, certainly in risk-adjusted terms, not least by avoiding esoteric duds and minimising costs. Plut a lot less hassle (and costs) for you with monitoring/re-balancing.

We could argue all day about the individual constituents of each bucket, so I'll not bother with that.

I think overlap could be a problem and you have too many holdings. You might want to consider John Baron's Growth Portfolio.
MM

Thanks for all the comments - very useful indeed. I'll look to simplify further

What are people's views of high yield dividend ETFs. Don't they take care of the quality screening approach and identification of high yield shares that any HYP portfolio would be attempting to do (without all the manual effort).

dingdong wrote:Thanks for all the comments - very useful indeed. I'll look to simplify further

What are people's views of high yield dividend ETFs. Don't they take care of the quality screening approach and identification of high yield shares that any HYP portfolio would be attempting to do (without all the manual effort).

The performance of IUKD was enough to put me off ETFs. They were indiscriminate and over-formulaic. Things have changed since then, of course.

TJH

I am very new to self investing and am already regretting some decisions I have made in regards too many funds etc. I am able to give quite a bit of time to the task and I can say that with as many funds as you have here, it would need a lot of time.

I cannot comment on the constituents of your portfolio (other contributors will guide you on that) but you seem to have given it some thought and come to sensible conclusions.