Buzzpholio 2017

[buzzzard000]

Previously I reported by abject failure at stock picking and my decision to switch to a purely passive portfolio.

https://www.lemonfool.co.uk/viewtopic.php?f=7&t=191&p=1881#p1881

Migration to my plan took longer than I thought, but I think it is time to put my strategy down in black and white.

Me
43, male, living with my partner.
We have a mortgage which we are currently overpaying.
I should have enough contributions for a full state penison in 10 years and I hope to retire before I'm 60.
I also have a small defined benefit pension which I consider a Bond like investment - I don't include it in any of the figures below.

The strategy
My plan is to be purely passive and to minimise costs where ever possible. This is based on my experience, reading Tim Hale's "Smarter Investing 3rd ed" and a few blogs (mainly monevator). The strategy is:
50% whole world index
10% FTSE 250
10% Europe
10% REIT
20% Cash and bonds

So Basically 80:20 with some tilts:
50% Whole world, cap weighed index tracker - Own the world.
10% FTSE, to give a home market tilt. I prefer the 250 to the all share as it's seemed to perform better for me (since ~2000). I suppose it could be considered a small cap tilt as well.
10% Europe, My partner is from the Continental EU, and I consider the Euro my second "Home currency"
10% REIT, straightforward diversifier.
20% Cash and bonds. This is not the classic 20% bonds. Up to 2016 I had zero Bonds and I was thinking that they are over valued. So, I am very slowly building by bond exposure, while keeping any cash already invested. This is currently a mixture of NS&I index linked bonds (~50%), Mortgage offset @ 2.99% (43%) and cash @ ~0% interest.

Implementation
Apart form the mortgage offset, and current account cash, everything is in a SIPP, ISA, or company pension plan.


ISA - iWEB (zero annual fee)
HSBC MSCI Wold EFT (HMWO) 0.15% annual fee
Blackrock global property fund 0.22% annual fee

SIPP - youinnvest (0.25% annual fee capped at £100)
HSBC MSCI Wold EFT (HMWO) 0.15% annual fee
HSBC Euro Stoxx 50 EFT 0.20% annual fee.
Vanguard FTSE 250 (VMID) 0.10% Annual fee

Employers pension (0.75% annual fee) - A slightly different allocation due to fund avalability:
World excluding UK 40% of monthly investment (reduced as does not include UK)
Uk Equity 20%
property REIT 10%
Europe 10%
Index linked Gilt 10%
Gilt 10%

All my regular investments are into the company pension scheme. I plan to transfer the balance to my SIPP and use this and any dividends to rebalance annually. Any spare cash goes into the offset each month.

I didn't achieve a perfect split of my funds during my re-organisation (2 pension transfers from HL and company pension and purchased as and when cash was availabe), this combined with stock movements has produced the following overall profile:



I'm content with the current allocation, and I will likely rebalance using the cash transfer from my employers pension and dividends this autumn (i.e. no selling).

That is about it. I've tried to make something simple, robust and easy to manage / track. Any comments are welcomed.

Regards

Buzzz

[tjh290633]

Hi, Buzz

It looks fairly straightforward to me, although my choice would still be to avoid bonds like the plague until interest rates have got back to historical levels, about 2.5-3.0%.

You may find rebalancing more of a challenge than you think, and I would be inclined to be wary of where I invested to achieve the balance. I haven't looked recently, but I-L Gilts have been on a negative return in the recent past, and that does not appeal to me at all.

TJH