terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.
I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.
20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust
I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.
The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.
I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.
Any opinions will be welcome
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Collectives vs Individual company holdingsMakes sense if you want to invest for a long horizon, and not spend too much time and effort on managing the portfolio.
# of holdingsWhile you would need 15-20 holdings to get adequate diversity for individual stocks, going for collectives means that 5-10 would do.
YieldAs you are accumulating for 15 years, it makes sense not to worry about income level at this stage; you have plenty of time later to rebalance for more yield
'Old' ITsVery much agree with you that these are likely to be more conservative than flashy, and would take great pains to maintain their track record
CompositionI hold F&C, and have looked closely at DIG & Mercantile. These are all reasonable bets. Haven't looked at Scottish American & Scottish Investment Trust enough to have an opinion.
Other things worth looking at* In line with the 'old money' approach, I would be tempted to include one of the ITs that represent an old family money investment house. I hold RIT Capital Partners (RCP) which is in effect the Rothschild banking family IT. There are other examples such as Caledonian & Brunner.
* ETFs. You are investing with a long enough horizon, that it is worth trying a couple of things to allow you to fine tune your approach later. Run a low cost world ETF tracker (VWRL?) alongside something like FCIT, and see how they perform.
* I would also be tempted to have at least one of my bets on a potential high risk/reward fund focused on new technology/disruptive businesses. Something like Scottish Mortgage or Monks.