The Lemon Fool

Morning all - here's the results for the past 12 months for my above portfolios. Initially, the capital sum I invested was split equally between the two to get to my chosen capital target. The investments are all in my SIPP held with Hargreaves and I plan to take out 25% tax-free cash as soon as I reach age 55 in about three years and slowly transfer to ISAs as and when the allowances dictate:

Investment Trusts:



The list of ITs is as follows (brace yourselves)... I use John Baron's Summer Portfolio which is probably / deep down I know it is, too excessive in terms of holdings:



So, well on the way to getting to my target value in about 15 years' time and hopefully if reached before then, may choose to keep working to get a bit of a buffer behind me, or think about stopping earlier. My target value is increased by 3.5% each year as an assumptive inflation figure and then adjusted later in September when the actual inflation figure is known.

Passive Portfolio:



And the portfolio...



Again, hopefully on the way to reaching my target in 15 years' time.

I tend now to re-invest dividends generated within my SIPP to both these portfolios (depending on what holding is behind) rather than my HYP (although I do the odd top-up there if I wish to). Hopefully the annual growth required over the next 15 years for these portfolios isn't too challenging (even after inflation) and I hope to meet the target capital value with a couple of years to spare.

Looking at the above, I don't know why I don't save myself hassle and the John Baron annual fee and just throw everything into passive funds! I won't do, but it might dictate where further funds are directed.

As always, comments appreciated and welcome.

Cheers, OLTB.

Interesting, are you contributing each month ? ~What’s the performance of each holding, each year, a little more information would be useful.

Hi OLTB

Helpful post.

I hold a similar mix of ITs and ETFs.

With the benefit of 20 years of hindsight, like you I'm wondering whether the diverse portfolio/ragbag of investments (take your pick) would better have been served with a total return approach with VWRL, and spending more time doing other things.

I used the John Baron service for a couple of years. It was helpful in getting me to think about asset allocation, but some of their individual recommendations were pants, so I've stopped.

Your current IT portfolio is perhaps a bit equity heavy given where you are on the journey. With 10 ITs in UK equities alone, you are (arguably) simply creating an expensive tracker, and paying 1% per year for doing so, rather than .1%. The caveat is you have peace of mind if they are consistent payers.

My IT strategy is to use them in areas I don't want to actively invest in directly myself/find them boring/have no knowledge viz. infrastructure/corporate bonds/renewables.

Like you, I'm thinking about stripping back my portfolio over the next few years to a simpler core holding. In the event I died, my wife wouldn't have a clue what to do, whereas a simple collection of ITs would probably be fine for her.

'“A simple portfolio is actually the ultimate in sophistication. It almost always lowers cost (including taxes), makes analysis easier, simplifies rebalancing, simplifies tax-preparation, reduces paper-work and record-keeping, and enables caregivers and heirs to easily take-over the portfolio when necessary. Best of all, a simple portfolio allows the investor to spend more time with family and friends.”'
'“Don’t assume that a complex strategy is better than a simple strategy. The only thing extra complexity is likely to add is extra cost.”'
https://www.whitecoatinvestor.com/the-m ... implicity/

I pretty much agree, JohnW.

My approach is pretty simple

1. Decide equity vs bond percentage (as it happens 66/34 for my wife and I, 75/25 for the kids)
2. Decide passive vs active within each of the above (I don't think one is always better, so 50/50 for us)
3. Pick one investment trust for each active component (i.e. 2 of 4, EA* & BA*)
4. Pick one ETF for each passive component (i.e. also 2 of 4, EP* & BP*)
5. Rebalance as far as possible when practical (monthly for us, with each contribution & reinvestment, or immediately if the equity component gets +/-5% - not been needed thus far)

If OLTB decides at some point to start simplifying, he could gradually move to something similar (but with his own parameters of course).

Regards, Newroad

* E = Equity, B = Bond, A = Active, P = Passive

PS As an aside, to support my assertion re active vs passive (and why I don't make a choice between them), here's a TrustNet chart



This contains all the Global Investment Trusts I do or did hold* (only WTAN is no longer) and an approximately equivalent Global ETF, ACWI, to that which I do hold (VWRL - which doesn't have a long enough history to make the graph sensible).

As can be seen over this timeframe, the ETF did the same as the poorest Investment Trust, which itself was "in the lead" most of the time until around the end of 2017.

Regards, Newroad

* but, as per the above, only one per portfolio, except for the JISA's (which have two - the additional one for my in-laws component of the contributions)

I have been divesting myself of IT holdings and hold very few now although with concentrated positions and a 50:50 Active:Passive split but over time see this heading towards 100% passive. There comes a time when my fear of making a mistake outweighs the upside. However I think I may take a long time to get to 100% as it's always nice to have a UK Small Cap IT holding.

Call it survivor bias but my active holdings have done well. I have been lucky, except for the Patient one who shall not be named, which taught me a lot of lessons including the one about mirror OEIC investments and how they can harm ITs.

Having looked at the above I need to look at Martin Currie. It's bound to be on a premium if it looks appealing!

Hi AWOL.

If interested, a UK Small Cap ETF - CUKS: https://www.ishares.com/uk/individual/en/products/253474/ishares-msci-uk-small-cap-ucits-etf

Regards, Newroad