Portfolio Duplication or Two Portfolio's?

[EssDeeAitch]

Hello, I am new to self investing and would appreciate some feedback on portfolio construction.

Is there any benefit of having a totally unique portfolio for both my wife and myself or having the same portfolio twice? I would like to restrict the funds/IT's to say six or eight so as to make it more manageable but diverse at the same time. Having two unique portfolio's of course doubles the selection.

Any help would be appreciated.

[argoal]

Is there any benefit of having a totally unique portfolio for both my wife and myself or having the same portfolio twice?

I think portfolio construction is very much a personal issue. There is nothing inherently wrong with having different portfolios.

I can think of a number of reasons why you might have different portfolios;

1. Different risk tolerence profiles. One of you may be able to stomach more volatility/loss that the other.
2. Preference for an income strategy over a total return strategy. My wife prefers her portfolio to produce a healthy amount of dividends while I am a little more concerned with total return.
3. Different preferences for a more international or domestic focused portfolio.
4. Different time horizons. Does one of you need access to the capital sooner than the other?

I'm sure that there are other factors that may influence your final decidion on top of these.

Having different assets in the two portfolios may offer additional diserfication but if you select six to eight funds covering all regions and different asset classes the additional diversification may be minimal.

[EssDeeAitch]

Thanks argoal - I should have said that my wife leaves all of this in my hands; so total unity of risk profile/strategy/exposure to markets etc. But your comment has made me consider a few things and I am more inclined to look at a core of perhaps four funds in both portfolios and two unique funds for each. Again, thanks.

[OZYU]

Hello, I am new to self investing and would appreciate some feedback on portfolio construction.

Is there any benefit of having a totally unique portfolio for both my wife and myself or having the same portfolio twice? I would like to restrict the funds/IT's to say six or eight so as to make it more manageable but diverse at the same time. Having two unique portfolio's of course doubles the selection.

Any help would be appreciated.

We are both keen investors and got serious with investing in the early 70s( an interesting decade to invest with vertiginous market movements followed by raging inflation), first with ITs, having messed about with penny shares a bit before that in the late 60s on peanuts money. We have developed our own individual views on risk and preferences, so that our portfolios are different, and in many ways complement each other well, which smooths results. We do discuss things to avoid large overlaps but in practice we overlap little, because my wife prefers collectives, being very well versed into ITs, and I nowadays generally prefer individual holdings, finding them more fun and enjoying the research. We run five portfolios with different strategies, one High Yield ISA each (from PEP days), one mostly Growth oriented nowadays taxed each(one from 1972, one from 1981), and one joint taxed 'US flavour' portfolio(from 1991), we rarely touch the latter anyway for holdings, apart from gradually reducing holdings and passing proceeds over to the grandkids (who are thankfully investing most of it), another four years or so and this portfolio will be gone, having produced really good results so far. We plan to eventually just have the ISAs. Komrad Corbyn might change that plan of course....


I think in your case two strategies or at least two different sets of investments might be beneficial. Would probably reduce volatility to start with, give you more choices, would open up different strategies.... Six to eight might be a bit restrictive, but can sure be made to work, I would personally prefer a few more if funds/cost effectiveness allows...Can't say more without knowing your aims in investing.


Ozyu

[tjh290633]

Hello, I am new to self investing and would appreciate some feedback on portfolio construction.

Is there any benefit of having a totally unique portfolio for both my wife and myself or having the same portfolio twice? I would like to restrict the funds/IT's to say six or eight so as to make it more manageable but diverse at the same time. Having two unique portfolio's of course doubles the selection.

Any help would be appreciated.

If it's any help, I run four bare trusts for my grandchildren and I deliberately chose to use a different Investment Trust for each one. This plan was thwarted when one of them changed its spots and now he and his sister are in the same one.

This approach has allowed me to compare the performance of the remaining three ITs - Witan, F&C, and Alliance, to which have been added F&C Capital & Income. Witan and F&C have been very comparable, if you compare them over similar time periods.

I also had the problem when PEPs stopped and ISAs were introduced. I decided not to duplicate the PEP portfolio in the ISA, but to follow similar rules with different holdings. Fortunately I was able to amalgamate them in 2008.

My inclination would be not to create mirror images. You are not stuck with your initial choice for ever.

TJH

[Dod101]

I will try not to muddy the waters too much and I think if you are thinking of the assets in the two portfolios as being in effect 'pooled', ie all jointly owned (my first wife and I were like that) then you could think of the two portfolios as being one pot and so simply plan on that basis. It would not matter where assets were held but if it is two separate pots of funds 'his and hers' as it were then they are surely two separate portfolios and the considerations of argoal become much more important. I have had experience of both and the former is much easier to handle! I think your approach is a good one because then you will have the opportunity to see how different funds are performing at the periphery, but the common core holdings will ensure that the portfolios are unlikely to be too far apart.

Dod

[JohnB]

If your portfolios are not tax sheltered, then having variation allows capital gains bed and breakfasting without penalty. You sell A and buy B, she sells B and buys A.

If you view your finances totally intertwined, then having different holdings means each can be twice the size, so less record keeping, but not much.

[richfool]

EsDH, I would suggest two (different) portfolios.

If you both hold the same stocks, then you would be duplicating your buying and selling costs and arguably increasing risk. By having two different portfolios, you can (between you) hold a wider (more diversified) range of stocks, and reduce/minimise fees and risk.

[EssDeeAitch]

Many thanks to all who have replied to my question. It seems to be to be the common wisdom that I would do well to create two different portfolios so as to broaden scope, diversify risk and allow for greater flexibility.

That is just what I shall do.

[Hariseldon58]

I think the process of having two portfolios for a broader scope , diversifying risk or flexibility is “illusionary” if only one person is choosing the stocks ....

If two people are individually selecting portfolios then you will have two approaches ...

[EssDeeAitch]

I think the process of having two portfolios for a broader scope , diversifying risk or flexibility is “illusionary” if only one person is choosing the stocks ....

If two people are individually selecting portfolios then you will have two approaches ...

What I have learned so far is that if you get four people together discussing investment strategies, there will be five opinions - it's complicated. So yes, it may be difficult but certainly not illusionary.

[Backache]

If it's any help, I run four bare trusts for my grandchildren and I deliberately chose to use a different Investment Trust for each one. This plan was thwarted when one of them changed its spots and now he and his sister are in the same one.



TJH

Thats an interesting approach , my mother has asked me to help with the portfolio's for her grandchildren (my kids and their cousins) and I have deliberately kept them identical so they can all be seen to be getting the same.

[mc2fool]

I think the process of having two portfolios for a broader scope , diversifying risk or flexibility is “illusionary” if only one person is choosing the stocks ....

If two people are individually selecting portfolios then you will have two approaches ...

What I have learned so far is that if you get four people together discussing investment strategies, there will be five opinions - it's complicated. So yes, it may be difficult but certainly not illusionary.

I have to agree with Hariseldon in that I think you are conflating portfolio, which is your collection of investments to implement your asset allocation, diversification, risk level etc, with the mundane matter of accounts, which is just where you hold them.

I use three different brokers and across them have three dealing accounts, two ISAs and a SIPP; six accounts in total but really only one portfolio. I suppose on one view I could say I have two, a direct shares portfolio and a collectives (ETFs, ITs & OEICs) portfolio, but each of those is also spread across, variously, some of the six accounts (but no holding is in more than one), and I suppose I could sub-divide them further but on no sub-division would one be "the IWeb ISA portfolio"; that'd just be an account where some holdings happen to be held.

So really what you have, at the overall level, is one portfolio that happens to be spread across two accounts. To broaden scope and diversify risk etc you may well choose to have more smaller holdings rather than fewer larger holdings, but which accounts each of those holdings is in is (largely) immaterial (there may be tax considerations).

[EssDeeAitch]

So really what you have, at the overall level, is one portfolio that happens to be spread across two accounts. To broaden scope and diversify risk etc you may well choose to have more smaller holdings rather than fewer larger holdings, but which accounts each of those holdings is in is (largely) immaterial (there may be tax considerations).

Yes, this is the track I am thinking on, it just needs a little more thought on my part but I am getting there, thanks for the input.

[mickeypops]

I manage mine and Mrs MP's investment accounts (mostly SIPPs, plus Isas) and treat them as one consolidated portfolio so that I can manage the asset allocation properly.

Best wishes

MP