Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Introduction: My Portfolio
King Lodos
Posted: 10 January 2018 17:34:37(UTC)
#38

Joined: 05/01/2016(UTC)
Posts: 2,077

Thanks: 388 times
Was thanked: 2966 time(s) in 1176 post(s)
MrC;55221 wrote:
All,

Just thought I'd update on where I am with this. I had a chance to sit down and do some reading/analysis over the Christmas period, including a lot more historical reading on here. There are some great discussions and it has made me understand that in the past I have had overlap on some of the funds I held.

Therefore, I decided that I would look to spread which areas my portfolio covers, and hence to begin with looked at what sectors I invested in. Having added PCT and JEO in the past couple of months I now have as follows:

IA UK Equity Income - Schroder Income Maximiser
IA UK Smaller Companies - Marlborough UK Micro Cap
IA Sterling Strategic Bond - GAM Star
IA Global - L&G Global Health
IA Technology & Telecommunications - PCT
IT Global - SMT
IT Europe - JEO

I would like to add a Japanese/Asia element but having read suggestions that maybe 7 is a max to the number I should hold, I haven't bought it. The plan is to - through regular investments - try and balance the amount of money invested in each one, with a small pot available such that if anything dips, I can put some additional money in.

Cheers


I'd say it's lacking *core* holdings.

SMT and JEO are very much growth funds – and growth, as a strategy, can be very cyclic. The 90s equivalent might've been Tech Stocks.

PCT too .. I'd say that's very much the same bet as SMT .. JEO's also quite invested in Tech .. And bear in mind, Tech is the worst performing sector since the 60s .. So there might be quite a bit of recency bias in what looks good now – and my feeling is these areas are probably going to keep being the best places to be .. until they're not.

Schroder Income, Marlborough and GAM Star (two of my favourite funds) are also quite big bets on the UK .. And a lot of these funds are very large, and unlikely to time the next turn (that's more the preserve of hedge funds).

If the aim is to diversify, I think you'd want to cover more eventualities .. Otherwise you're stuck with a certain allocation to Technology, and Healthcare, and who knows, the next 20 years might be dominated by banks and mining? (historically both better performers than Tech)

An index fund would fix this .. Or a fund where a very good manager is making decisions on which sectors to keep you in (and some sectors, like Consumer Staples, tend to be very good neutral bets)




3 users thanked King Lodos for this post.
Jim S on 10/01/2018(UTC), Bellabeck on 10/01/2018(UTC), Tim D on 10/01/2018(UTC)
Jim S
Posted: 10 January 2018 18:19:24(UTC)
#39

Joined: 08/12/2016(UTC)
Posts: 81

Thanks: 177 times
Was thanked: 96 time(s) in 52 post(s)
King Lodos;55236 wrote:
MrC;55221 wrote:
All,

Just thought I'd update on where I am with this. I had a chance to sit down and do some reading/analysis over the Christmas period, including a lot more historical reading on here. There are some great discussions and it has made me understand that in the past I have had overlap on some of the funds I held.

Therefore, I decided that I would look to spread which areas my portfolio covers, and hence to begin with looked at what sectors I invested in. Having added PCT and JEO in the past couple of months I now have as follows:

IA UK Equity Income - Schroder Income Maximiser
IA UK Smaller Companies - Marlborough UK Micro Cap
IA Sterling Strategic Bond - GAM Star
IA Global - L&G Global Health
IA Technology & Telecommunications - PCT
IT Global - SMT
IT Europe - JEO

I would like to add a Japanese/Asia element but having read suggestions that maybe 7 is a max to the number I should hold, I haven't bought it. The plan is to - through regular investments - try and balance the amount of money invested in each one, with a small pot available such that if anything dips, I can put some additional money in.

Cheers


I'd say it's lacking *core* holdings.

SMT and JEO are very much growth funds – and growth, as a strategy, can be very cyclic. The 90s equivalent might've been Tech Stocks.

PCT too .. I'd say that's very much the same bet as SMT .. JEO's also quite invested in Tech .. And bear in mind, Tech is the worst performing sector since the 60s .. So there might be quite a bit of recency bias in what looks good now – and my feeling is these areas are probably going to keep being the best places to be .. until they're not.

Schroder Income, Marlborough and GAM Star (two of my favourite funds) are also quite big bets on the UK .. And a lot of these funds are very large, and unlikely to time the next turn (that's more the preserve of hedge funds).

If the aim is to diversify, I think you'd want to cover more eventualities .. Otherwise you're stuck with a certain allocation to Technology, and Healthcare, and who knows, the next 20 years might be dominated by banks and mining? (historically both better performers than Tech)

An index fund would fix this .. Or a fund where a very good manager is making decisions on which sectors to keep you in (and some sectors, like Consumer Staples, tend to be very good neutral bets)



Yes, I agree with KL, you are very overweight in tech/disruption & in UK (also healthcare but that feels less risky). This might work out a good approach (eg. the UK might do very well regardless of Brexit concerns and play catch-up) but it might not.

I don't know much about the GAM Star bond or how much cash you also hold, but overall your mix seems like it could use some defensives (eg. gold ETF or Hawksmoor Vanburgh maybe) & maybe a quality global fund as KL suggested (I'm a fan of Fundsmith Equity). A Mixed fund like RCP or similar might cover both those gaps in one.

Having said all that, my approach is a lot like yours, I tend to go for equity/growth & find the defensives a bit boring. Also I struggle to understand how safe defensives are or what I should look in historical performance (does good performance since 2008 mean a defensive fund is less 'safe'?). Nevertheless, if you have a decent % in defensives and cash, it give you more confidence with more aggressive holdings (disruption, PE or whatever), plus you can rebalance annually to give your portfolio a smoother ride overall and take advantage of dips.
2 users thanked Jim S for this post.
gillyann on 10/01/2018(UTC), King Lodos on 10/01/2018(UTC)
Alan Selwood
Posted: 10 January 2018 18:29:52(UTC)
#47

Joined: 17/12/2011(UTC)
Posts: 2,481

Thanks: 487 times
Was thanked: 3857 time(s) in 1446 post(s)
Without being able to put a finger on it (though it might just be a feeling that when lots of money has been made in a few sectors, it could be time to move to others!), I find myself wondering whether the good run in tech stocks and in the 'new era disruptors' such as Facebook, Amazon, Netflix, Google (Alphabet) and Far East equivalents, and biotechnology is due for a reversal.

If we get a shaky period, reduced cash flooding the markets, higher funding costs for companies needing to borrow to maintain their position or expand, the urge comes upon me to consider a gradual move towards other sectors where there is a scenario of 'we have to buy this whether we can afford it or not', 'it's a product or service that can't be disrupted, because of strong market share, patents, vertical integration between manufacture, disstribution chain, etc.

Time to go (back) into alcohol brands, basic foods, agricultural commodities, etc? And payment processors like VISA (despite the attractions of Bango, Monzo, etc)?

CTY, Fundsmith, Temple Bar?
4 users thanked Alan Selwood for this post.
Jeff Liddiard on 10/01/2018(UTC), Tim D on 10/01/2018(UTC), gillyann on 10/01/2018(UTC), Alex Peard on 10/01/2018(UTC)
Keith Cobby
Posted: 10 January 2018 19:28:25(UTC)
#48

Joined: 07/03/2012(UTC)
Posts: 430

Thanks: 233 times
Was thanked: 645 time(s) in 261 post(s)
I don't care much for the UK Equity Income sector and sold out in the last couple of years. One of the global funds I topped up, and which I have held for decades (and which is never mentioned on these forums) is Bankers. A solid global portfolio that produces some income.
1 user thanked Keith Cobby for this post.
Vince. on 10/01/2018(UTC)
MrC
Posted: 10 January 2018 20:07:54(UTC)
#49

Joined: 25/07/2017(UTC)
Posts: 5

Thanks: 6 times
Was thanked: 4 time(s) in 2 post(s)
King Lodos and Jim S, thanks for the feedback; Hawksmoor Vanburgh looks interesting to thanks for the tip.

I think one of the things with funds is there is so many and everytime I have finished researching a particular field, I come across another fund in that field that looks interesting, research that etc etc and end up not actually investing!

So for this year I decided what strategy I was going to follow and commit to it

I ran the holdings I have currently through the Morningstar X ray tool and you are correct it is quite heavily weighted that way towards tech especially. I did consider Fundsmith - and I may live to regret going with that..... - but thought I'd give some more riskier funds some time to see if they can carry the momentum

FYI, I am trying to maintain at least 50% of my savings in cash, although tending towards 60% currently; I enjoy the researching of stocks/funds, reading this forum and seeing cause and effect with what is going on in the world.
DJLW
Posted: 10 January 2018 20:17:34(UTC)
#51

Joined: 06/01/2014(UTC)
Posts: 22

Thanks: 18 times
Was thanked: 21 time(s) in 13 post(s)
[FYI, I am trying to maintain at least 50% of my savings in cash, although tending towards 60% currently; I enjoy the researching of stocks/funds, reading this forum and seeing cause and effect with what is going on in the world. [/

If you have 50-60% cash I think that may change some of the comments above. Rather than needing to be more defensive perhaps you can afford to be a little more aggressive ...or invest some cash
King Lodos
Posted: 10 January 2018 21:59:48(UTC)
#40

Joined: 05/01/2016(UTC)
Posts: 2,077

Thanks: 388 times
Was thanked: 2966 time(s) in 1176 post(s)
Jim S;55237 wrote:
Also I struggle to understand how safe defensives are or what I should look in historical performance (does good performance since 2008 mean a defensive fund is less 'safe'?)


It's been said the strangest thing about this bull market is how quality/defensive stocks have rallied as strongly as anything.

I think two bear markets in a row have taken their toll, psychologically – I've got in my mind a quote along the lines of: when this train goes off the cliff, you want to be with Mickey Mouse (i.e. quality stocks like Disney) and not Mickey Mouse companies.

Sounds like something Alan Sugar might have said to me in a fever-dream .. But I don't think quality/defensive stocks are anything like as overvalued as they probably should be .. I think it's bog-standard stocks that look too expensive – lots of things are up in PEs around 20, and lots of really great companies only on PEs around 25
3 users thanked King Lodos for this post.
Tim D on 10/01/2018(UTC), Jim S on 10/01/2018(UTC), Jenki on 11/01/2018(UTC)
King Lodos
Posted: 10 January 2018 22:14:28(UTC)
#50

Joined: 05/01/2016(UTC)
Posts: 2,077

Thanks: 388 times
Was thanked: 2966 time(s) in 1176 post(s)
MrC;55244 wrote:
I ran the holdings I have currently through the Morningstar X ray tool and you are correct it is quite heavily weighted that way towards tech especially. I did consider Fundsmith - and I may live to regret going with that..... - but thought I'd give some more riskier funds some time to see if they can carry the momentum


I'm sure they can – I have a big weighting towards Tech .. But momentum is often a later-stage sign of a mature market, and while momentum's easy to buy into (buy what's going up), you do have to combine that with being able to get out if necessary.

Otherwise, it's just a strategy of buying high and hoping.

I'm reading What Works on Wall Street at the moment, and there's a LOT of emphasis in early chapters about how common these hot sectors and fantastic growth stories are .. And I think what's smart with a portfolio like Fundsmith's is you have exposure to that, but it's balanced against things like food and soft drinks .. And that's what diversification really is: people might stop buying Microsoft Office, but they'll still be buying Marmite.
Jim S
Posted: 10 January 2018 23:01:53(UTC)
#41

Joined: 08/12/2016(UTC)
Posts: 81

Thanks: 177 times
Was thanked: 96 time(s) in 52 post(s)
King Lodos;55250 wrote:
Jim S;55237 wrote:
Also I struggle to understand how safe defensives are or what I should look in historical performance (does good performance since 2008 mean a defensive fund is less 'safe'?)


It's been said the strangest thing about this bull market is how quality/defensive stocks have rallied as strongly as anything.

I think two bear markets in a row have taken their toll, psychologically – I've got in my mind a quote along the lines of: when this train goes off the cliff, you want to be with Mickey Mouse (i.e. quality stocks like Disney) and not Mickey Mouse companies.

Sounds like something Alan Sugar might have said to me in a fever-dream .. But I don't think quality/defensive stocks are anything like as overvalued as they probably should be .. I think it's bog-standard stocks that look too expensive – lots of things are up in PEs around 20, and lots of really great companies only on PEs around 25


Interesting stuff. I've been reenthused by Fundsmith recently after watching their AGM online. I think we could all do a lot worse than invest 80% in Fundsmith Equity, 20% in FEET, then leave it all alone.....buy quality compainies at the right price and then do nothing. It probably wouldnt make for very interesting forum conversations though.



King Lodos
Posted: 11 January 2018 02:00:51(UTC)
#42

Joined: 05/01/2016(UTC)
Posts: 2,077

Thanks: 388 times
Was thanked: 2966 time(s) in 1176 post(s)
Jim S;55254 wrote:
Interesting stuff. I've been reenthused by Fundsmith recently after watching their AGM online. I think we could all do a lot worse than invest 80% in Fundsmith Equity, 20% in FEET, then leave it all alone.....buy quality compainies at the right price and then do nothing. It probably wouldnt make for very interesting forum conversations though.


I love their transparency, pragmatism, and Smith's knowledge of accounting (evidently a skillset lacking in fund management) .. I also wouldn't forget Lindsell Train – I think in some ways their approach is even truer to Buffett's – and exposure to Japan, the performance of the Global fund, and the IT's performance through the financial crisis, are all big ticks.

What could be interesting is building a database of everything Fundsmith and Lindsell Train invest in, and buying these world-class companies when they appear to be trading at reasonable values.

*If* we're faced with a low-return future, a 1% fee could be 20% profits you're giving away each year, and over time that compounds
4 users thanked King Lodos for this post.
gillyann on 11/01/2018(UTC), Tim D on 11/01/2018(UTC), Jim S on 11/01/2018(UTC), Tyrion Lannister on 11/01/2018(UTC)
Jim S
Posted: 11 January 2018 10:00:39(UTC)
#43

Joined: 08/12/2016(UTC)
Posts: 81

Thanks: 177 times
Was thanked: 96 time(s) in 52 post(s)
King Lodos;55257 wrote:

I love their transparency, pragmatism, and Smith's knowledge of accounting (evidently a skillset lacking in fund management) .. I also wouldn't forget Lindsell Train – I think in some ways their approach is even truer to Buffett's – and exposure to Japan, the performance of the Global fund, and the IT's performance through the financial crisis, are all big ticks.


Yeah, I bought some Lindsell Train global at the same time as Fundsmith and they've kept pace with each other nicely.
A UK fund run along quite similar lines is CFP SDL UK Buffettology. I want to be underweight UK for a while so haven't opened a position yet, but been keeping an eye on it.

King Lodos;55257 wrote:

What could be interesting is building a database of everything Fundsmith and Lindsell Train invest in, and buying these world-class companies when they appear to be trading at reasonable values.
*If* we're faced with a low-return future, a 1% fee could be 20% profits you're giving away each year, and over time that compounds


It would be nice if there was a cheap etf which used similar filters to Fundsmith/Lindsell Train/Buffetolgy, or even better tracked their holdings ;-)
I think if you bought some of their holdings direct and did a bit of range trading & regular rebalancing (don't know if the funds do this themselves routinely) that might work quite well as a DIY approach. But I don't begrudge the managers of these particular funds their fees.
1 user thanked Jim S for this post.
Jeff Liddiard on 11/01/2018(UTC)
King Lodos
Posted: 11 January 2018 10:55:06(UTC)
#52

Joined: 05/01/2016(UTC)
Posts: 2,077

Thanks: 388 times
Was thanked: 2966 time(s) in 1176 post(s)
You can certainly get Quality ETFs which will hold a lot of the same companies .. I think where Fundsmith and Lindsell Train are more robust is in combining quantitative factors (profitability, growth) with qualitative factors (how safe is Visa's business model from disruption?), and then NOT holding too many companies.

I've backtested portfolios with these types of companies and results are excellent .. These mega-cap companies are a lot like funds themselves – the underlying businesses are very solid, which means price fluctuations create regular opportunities .. If you just held the 6 best companies, you'd look a lot more like a Berkshire Hathaway or hedge fund, and as Buffett says, that kind of concentration is how you do really well.

Buffettology's a great fund – I held it for a while but sold before Brexit (I think to move into Fundsmith) .. It's much more more at the small end of the spectrum .. It holds companies like Games Workshop and Victrex .. Not things I'd be *as* confident to endlessly buy as Johnson & Johnson .. I did quite a bit of research on Games Workshop, and it's hard to tell whether it's just had a good year, or whether it's a genuinely great business

1 user thanked King Lodos for this post.
Jim S on 11/01/2018(UTC)
3 PagesPrevious page123
+ Reply to discussion

Markets

Other markets