Growthy Funds required for Pot > LTA

[ffacoffipawb64]

Posted on another forum, but posted here fir a different perspective ...

have done a part transfer of my Aviva works pension to Hargreaves Lansdown.

It will likely all be subject to LTA tax when crystallised so I am going to leave it until I am 75 in 20 years time, unless I croak first.

Anyway, I wish this to be speculative with 10 - 15 funds in total. Equal split in cost for aesthetic purposes.

I have selected 4 already ...

Fundsmith
Blue Whale Growth
Lindsell Train UK Equity
Lindsell Train Global Equity

I have gone for income units to pay Hargreaves Lansdown's platform fees.

The cashback outside of the pension is a nice £500. Main motivation was a better choice of funds, even if my costs will be higher.

(I would have transferred to A J Bell Youinvest but they combine crystallised and uncrystallised funds in one pot, which I don't like and which makes different investments between the two notional pots tricky without very regular rebalancing)

Anyway, does anyone have any suggestions for other funds that would compliment these four?

We are talking about £150,000 in total here so £10,000 to £15,000 in each fund, depending on number. It is about the quarter of the size of my crystallised pot which is invested in 13 different income generating investment trusts and is reasonably stable (aka is going nowhere).

What remains with Aviva is their version of Baillie Gifford Managed.

Attitude to risk is on a par with my four current choices above. Maybe 5 out of 7 on the risk scale, maybe one 7 amongst the choices?

As the government will take at least 40% of the proceeds when crystallised I may as well get as much as I can out of this money.

I am still paying into my employer scheme, which may seem silly above LTA but I want to be sure we have enough for retirement. It issn't for much longer anyway.

Thanks

[Aminatidi]

Buffettology
Evenlode Global Income
Finsbury Growth and Income Trust (pretty much Lindsell Train UK Equity in Investment Trust format)
Scottish Mortgage Trust
Monks
Edinburgh
Morgan Stanley Global Brands

Tons...

[ffacoffipawb64]

Buffettology added.

[OhNoNotimAgain]

Just be aware that 82% of the US market returns since 1960 have come from dividends according to this:

https://www.hartfordfunds.com/dam/en/do ... /WP106.pdf

[GoSeigen]

Just be aware that 82% of the US market returns since 1960 have come from dividends according to this:

https://www.hartfordfunds.com/dam/en/do ... /WP106.pdf

Nope. that is not what the article said**. And even if it did the author makes the same mathematical error as OhNoNotimAgain.


GS
** What the article ACTUALLY said is "From 1930–2018, dividend income’s contribution to the total return of the S&P 500 Index averaged 43%." Which is a bit less than the 50% that mathematically-able Fools agree is the expected figure.

[Alaric]

** What the article ACTUALLY said is "From 1930–2018, dividend income’s contribution to the total return of the S&P 500 Index averaged 43%." Which is a bit less than the 50% that mathematically-able Fools agree is the expected figure.

A bit of general reasoning.

If the Index remained absolutely static, then the total return would be 100% dividend. If there were no dividends, it would be 100% growth. In practice it's between the two, depending on the relative balance between the contributions of dividends and those of growth,

[Lootman]

Just be aware that 82% of the US market returns since 1960 have come from dividends according to this:

https://www.hartfordfunds.com/dam/en/do ... /WP106.pdf

Except that the very same article goes on to state:

"Looking at average stock performance over a longer time frame provides a more granular perspective. From 1930–2018, dividend income’s contribution to the total return of the S&P 500 Index averaged 43%."

Another way to see why you are completely wrong about this is to look at the numbers in annual terms. Over the cited time period the total return of the S&P 500 has been about 10% per annum. For a good number of years now the average dividend yield has been 2%. (The article states that the longer-term average dividend yield is 2.7%). Clearly the other 8% of return each year comes from capital growth.

And this should not surprise you or anyone else since the companies that have added the most shareholder wealth, and so contributed the most to the index's gains, have generally not paid a dividend. Of the six largest US shares, four have never paid a dividend (Google, Facebook, Amazon and Berkshire Hathaway). Another, Apple, only started paying one a few years ago, when its growth rate slowed. It currently yields 1.5%. The 6th is MicroSoft which pays a modest 1.3%.

If instead you had picked a basket of 6 US high yielders like Dow, GM, GE, Macys, AT&T and Wells Fargo, you would have massively under-performed the index. Your advice is dubious even for a yield-obsessed UK investor. It would have been a disaster in the US in recent decades.

[shawsdale]

To respond directly to the original question, a few possible absences from the suggestions thus far include:

- Asia (e.g. JP Morgan Asia JAI)
- Emerging and Frontier Markets (JP Morgan Emerging JMG, Blackrock Frontiers BRFI)
- Smaller/mid cap exposure (Smithson SSON, early days, but encouraging so far)
- Technology (Allianz Technology ATT, Polar Capital Technology PCT)
PCT's annual results statement out today contains some interesting commentary on the technology sector:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PCT/14148483.html
- Biotech/Healthcare (International Biotechnology IBT, Worldwide Healthcare WWH)

Thinking more broadly (and I stress pragmatically rather than ideologically) I wonder if some current political trends make ESG an important consideration for the long-term investor, leading to an investigation of trusts and funds in the environmental/sustainable/positive impact spaces. Examples might include Impax Environmental Markets (IEM) and open-ended vehicles such as Montanaro Better World, Baillie Gifford Positive Change.

Finally, if I were constructing such a 'growthy' portfolio today I'd reserve one space for the most contrarian and superficially unattractive option I could find. I'm not sure what that would be, perhaps a 'value' trust or fund? Europe? UK?

[OhNoNotimAgain]

Just be aware that 82% of the US market returns since 1960 have come from dividends according to this:

https://www.hartfordfunds.com/dam/en/do ... /WP106.pdf

Except that the very same article goes on to state:

"Looking at average stock performance over a longer time frame provides a more granular perspective. From 1930–2018, dividend income’s contribution to the total return of the S&P 500 Index averaged 43%."

Another way to see why you are completely wrong about this is to look at the numbers in annual terms. Over the cited time period the total return of the S&P 500 has been about 10% per annum. For a good number of years now the average dividend yield has been 2%. (The article states that the longer-term average dividend yield is 2.7%). Clearly the other 8% of return each year comes from capital growth.

And this should not surprise you or anyone else since the companies that have added the most shareholder wealth, and so contributed the most to the index's gains, have generally not paid a dividend. Of the six largest US shares, four have never paid a dividend (Google, Facebook, Amazon and Berkshire Hathaway). Another, Apple, only started paying one a few years ago, when its growth rate slowed. It currently yields 1.5%. The 6th is MicroSoft which pays a modest 1.3%.

If instead you had picked a basket of 6 US high yielders like Dow, GM, GE, Macys, AT&T and Wells Fargo, you would have massively under-performed the index. Your advice is dubious even for a yield-obsessed UK investor. It would have been a disaster in the US in recent decades.

In part because the US stock market has been rerated over the last decade of QE fuelled expansion.

https://www.macrotrends.net/2577/sp-500 ... ings-chart

The US market has gone up more because earnings have become more highly valued than because earnings have risen.

The secondary question of how trustworthy those earnings are will not be revealed until the next recession.

The lack of a bear market in the last decade has increased confidence that this economic cycle will continue. That may be true, but if it doesn't the next downturn will undoubtedly reveal stuff auditors overlooked.

[DrGuid]

Maybe look at some infrastructure funds too.

I'm also with HL. I like their website. I just opened a Fidelity account and theirs seems a lot more basic by comparison.

As to growth...

Fundsmith, Train etc. have done well but they have quite a small portfolio which could go the way of Woodford if a number of their stocks simultaneously did a Keir/A.G. Barr.

I also agree you should look at Asia. I live and work there. Thailand in particular is booming as it's 3hrs away from most of India and China. Asian brands are going to dominate whole sectors soon (e.g. household appliances in 3-5 years, in 20 years aircraft and defence stuff). Meanwhile here in the UK the BBC seems obsessed with equality and diversity. That's totally at odds with why so many people voted for Brexit. So for that reason I've been cutting my UK exposure to around 25%. I see a generation of underperformance here as the uncertainties drag on. Being geographically next to dying Europe won't help growth either.

Also green energy could be good to get into. That's the other thing I've noticed since coming back to the UK. Seemingly everything on the TV is pushing the global warming theme. I just bought into the VT Gravis Clean Energy Income Fund. It's got a decent yield and has lower fees than the Pictet one.

[ffacoffipawb64]

Just for interest I have made equal £10,000 in the following 15 funds:

Baillie Gifford Managed
CFP SDL UK Buffettology
Fundsmith
Jupiter Global Value
Blue Whale Growth
Lindsell Train UK Equity
Lindsell Train Global Equity (bit of an overlap there)
TB Evenlode Global Income
TB Evenlode Income
Troy Trojan Income
Blackrock Consensus 100
HSBC Global Strategy Adventurous Portfolio
Vanguard Lifestrategy 100% Equity
Legal and General Multi Index 7
Baillie Gifford Global Alpha Growth

All income units to pay the platform fees, apart from the HSBC which was only available as accumulation units.

Please feel free to comment / criticise these choices

[Peltiq]

Just for interest I have made equal £10,000 in the following 15 funds:

Baillie Gifford Managed
CFP SDL UK Buffettology
Fundsmith
Jupiter Global Value
Blue Whale Growth
Lindsell Train UK Equity
Lindsell Train Global Equity (bit of an overlap there)
TB Evenlode Global Income
TB Evenlode Income
Troy Trojan Income
Blackrock Consensus 100
HSBC Global Strategy Adventurous Portfolio
Vanguard Lifestrategy 100% Equity
Legal and General Multi Index 7
Baillie Gifford Global Alpha Growth

All income units to pay the platform fees, apart from the HSBC which was only available as accumulation units.

Please feel free to comment / criticise these choices

I am curious to know why you are using HL.

The platform fee for these 15 OEICs is going to be roughly £670 whereas the cost of equivalent investment trusts will be capped at £45.

[ffacoffipawb64]

Just for interest I have made equal £10,000 in the following 15 funds:

Baillie Gifford Managed
CFP SDL UK Buffettology
Fundsmith
Jupiter Global Value
Blue Whale Growth
Lindsell Train UK Equity
Lindsell Train Global Equity (bit of an overlap there)
TB Evenlode Global Income
TB Evenlode Income
Troy Trojan Income
Blackrock Consensus 100
HSBC Global Strategy Adventurous Portfolio
Vanguard Lifestrategy 100% Equity
Legal and General Multi Index 7
Baillie Gifford Global Alpha Growth

All income units to pay the platform fees, apart from the HSBC which was only available as accumulation units.

Please feel free to comment / criticise these choices

I am curious to know why you are using HL.

The platform fee for these 15 OEICs is going to be roughly £670 whereas the cost of equivalent investment trusts will be capped at £45.

My drawdown SIPP (nothing drawn down yet just PCLS taken) is with Youinvest and uses investment trusts. Sadly they wont allow a separate SIPP for uncrystallised funds.

The platform fees may be capped at HL for IT SIPPS (£200 not £45) but some OCFs on these ITs may be quite high.

Thought I would give funds a try. There are good ones here that are not available in IT form and there are discounts on some of these too.

This SIPP is going to be (pretty much all) in excess of LTA so may as well go for broke with these funds really given the Government will take 25% of it when I take it into drawdown. May just leave it until age 75 if I dont need to crystallise in the immediate future.