diversification into collectives

[bluedonkey]

My HYP is my main retirement provision and consists of the usual shares that we are familiar with. This year I decided to put future investment only into collectives for these reasons:

a) reduce some management time for my successors;
b) reduce the UK-specific risk;
c) reduce company-specific risk.

I decided not to change my overall reliance on equities though, so I decided against gilts, gold, vintage wine (!), etc.

I chose the Far East as helping to meet these objectives. Investment has been made in Vanguard FTSE Dev Asiapac Xjpn Ucits ETF (VAPX). This tracks Far East stocks, in practice it majors on Australia, South Korea and Hong Kong and excludes Japan and China.

The other Far East investment I made was Aberdeen Asian Income Investment Trust (AAIF). This was chosen in part due to its discount and its yield.

Finally today I have made the final investment in this process which is the Fundsmith OEIC. This is clearly not an income investment but I felt there should be some very growth oriented investment to balance out the very predominant HYP income element.

In future, I suspect I will simply buy non-UK low cost ETF trackers, up to a total of say 15% of the portfolio.

[Steveam]

About 2 years ago I had a largish sum to add to the investment pot and decided to diversify away from my high yield (ish) portfolio. I’ve added ETFs and ITs (I already held some of the F&C stable as my ISA has been with F&C for many years).

I’ve added iShares World Tracker (accumulation), Vanguard: VWRL, VHYL, VAPX, VFEM, VJPN, VERX, VMID and the following ITs: Henderson Far East, JP Morgan Indian, Caledonia IT (already held but I’ve added some more).

I could, of course, have just gone for more of a world tracker but I have some biases and beliefs which are reflected in the weightings. I have no need of extra income so this is also a consideration.

Best wishes,

Steve

[JNC3]

I have diversified into the seven vanguard regional ETF's (VUSA, VUKE, VMID, VAPX, VERX, VJPN, VFEM). It would have been more simple just to have bought VWRL as I don't think the average investor can successfully predict which region to over or underweight.

One thing I noticed - when comparing the total 5 year return from UK dividend focused ETFs (IUKD or UKDV) with Cap weighted ETFs like (VUKE) - the cap weighted FTSE 100 etf (VUKE) produced the bigger total return (obviously the dividend was lower though) . You get the same result when comparing the total return from all world high dividend etf VHYL with VWRL- the World Cap weighted VWRL produced the biggest total return over 5 years. Is this because dividend focused ETFs exclude growth shares where the biggest returns have been or do dividend shares generally command higher valuations and thus the (TR) total return is lower ?

[bluedonkey]

I have diversified into the seven vanguard regional ETF's (VUSA, VUKE, VMID, VAPX, VERX, VJPN, VFEM). It would have been more simple just to have bought VWRL as I don't think the average investor can successfully predict which region to over or underweight.

Yes I agree. I don't think I can predict which region will do best. I've chosen a Far East region for reasons of diversification vs the UK. The Vanguard World Index ETF would probably be my next choice as money becomes available, though I do find the <2% yield a bit galling due to my long habit of HYP-ing.

[JNC3]

I've chosen a Far East region for reasons of diversification vs the UK. The Vanguard World Index ETF would probably be my next choice as money becomes available, though I do find the <2% yield a bit galling due to my long habit of HYP-ing.

I suppose you could have chosen an investment trust like HFEL to maximise the yield but I assume the TR total return would be less than a cap weighted tracker or ETF like VAPX