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2017 debut portfolio
BenjyT
Posted: 18 March 2017 23:06:42(UTC)
#1

Joined: 18/03/2017(UTC)
Posts: 5

Hi all, newly registered here and long time lurker.

I've finally taken the plunge investing a modest amount into a HL Stocks & Shares ISA. I researched for a long while before parting with any money. Please be blunt and honest with me here and tell me what you think of my choices.

100% split equally across 6 funds so 16.67% in the following:

Aberdeen Latin America Equity Class I Acc
Allianz Continental European Class C Acc
Bailie Gifford Developed Asia Pacific Class B Acc
Jupiter India Class X Acc
VT De Lisle American Class B Acc
*MFM Slater Growth Class P Acc

Also, I set up two regular monthly payments into HSCS FTSE 250 index (Class S) accumulation and Vanguard US Equity Index accumulation to build up a bit of hardcore over the years.

*edited to include MFM which I has missed off
TJL
Posted: 20 March 2017 21:51:50(UTC)
#2

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Congratulations on becoming an investor.

You have probably already realised that there are many opposing opinions on where to invest.

Without any personal knowledge of your selection or doing any research, my thoughts are:-

- bold choices
- potentially volatile (is that okay with you?)
- not much UK
- would one or a couple of global investment trusts not give you similar diversification?
- investment trusts are likely to be cheaper than funds (look into it)

I hesitate to make suggestions, but have a look at MYI, SMT, MNL, MNKS (there are several more), all of which have good reputations, performance, and low charges.

Good luck.
1 user thanked TJL for this post.
dlp6666 on 21/03/2017(UTC)
BenjyT
Posted: 20 March 2017 23:02:26(UTC)
#3

Joined: 18/03/2017(UTC)
Posts: 5

Thanks for your reply. I did forget to include MFM which is UK.

I'm happy to take a risk on the funds listed above but would prefer my monthly regular contributions to index trackers to go towards a more safer option to build up a nice reliable (is that word allowed?!) bulk.

I will certainly look into those areas that you have suggested. I'm a complete novice and always appreciate and take on board tips and hints from people with experience.
Jon Snow
Posted: 21 March 2017 00:13:34(UTC)
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Why are you investing?
Joe Soap
Posted: 21 March 2017 04:50:06(UTC)
#6

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I am not familiar with most of the funds you selected. But I would look carefully at Slater Growth. At a first look the overall returns look attractive but looking at the annual returns it seems a bit of a feast and famine type of fund to me. Perhaps it suits regular savers rather than lump sum savers, I don't know really. I have held it on a couple of occasions and I do still have some of it. But I am heading for the exit on this one, I think.
King Lodos
Posted: 21 March 2017 05:30:42(UTC)
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Latin America is quite a specialist area .. I invest in Brazil – and it's one of the few cheap (by some metrics) regions in the world today, along with Russia.

My only concern with having 1/6th in Latin America is that if your other 5 funds do reasonably, and do the typical long-term average 5-7% return (average when you've factored bull and bear markets in) ... if you have Latin America doing really poorly for another 5 years, it could actually neutralise all your positive returns elsewhere..

I've been in that boat, and it's not fun .. The question then becomes whether you stick with it .. Personally I'd go for something like Lazard Emerging Markets instead .. If you want Latin America, I'd choose an allocation in line with the likely risk/volatility of the region .. Many consider 10% a good total allocation to Emerging Markets .. I'd maybe err towards 15% .. I think Burton Malkiel has 30% in EM, split 3 ways: Vanguard Emerging Mkts, India and China .. Brazil and Latin America are considered riskier and more dependent on commodities.
mhindo
Posted: 21 March 2017 06:13:40(UTC)
#11

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Quite honestly if you want the the risk / return level of emerging markets why not keep it simple and go for a global emerging markets IT and stop trying to guess whether this year its Asia or LA or Russia …..I did this in the past and wasn't overly successful. I would go for JEMI and if you want a OEIC McInroy&Wood and JOHCM are good performers with competitive charges. Skagen Kon Tiki is more expensive but also a good performer.

On the other funds I agree with other comments - keep it simple and select a number of proven IT's in accordance with your regional / risk profile. If you are globally orientated and quite aggressive MYI, SMT, MNKS, FCS, EWI should provide you with sufficient diversity.
Good luck !
2 users thanked mhindo for this post.
Mickey on 21/03/2017(UTC), dlp6666 on 21/03/2017(UTC)
Mickey
Posted: 21 March 2017 09:52:47(UTC)
#12

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Bold choices for sure with heavy weighting risky areas. If this is what you want then those funds look fine to me though I'd go with the flow here and prefer something less risky such as a Global IT which would manage regional exposure for you. As someone has mentioned, Scottish Mortgage would be one to take a look at.

Why not monitor your choices against something like SMT, do that for a year or so and you'll be able to judge your choices. I'm less sure about adding the two trackers as a drip feed, I would have preferred to start if with a core 70% into a tracker with 30% in the risky funds and then add the drip feed pro-rata into the core and satellite funds. As it is, adding the trackers last will possibly water down the portfolio going forward though that may be your intention anyway.

Thanks for sharing your choices.
2 users thanked Mickey for this post.
Arabella Tullo on 21/03/2017(UTC), applemint on 23/03/2017(UTC)
mc2
Posted: 21 March 2017 14:36:24(UTC)
#13

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when advising to buy trackers now..I understand buying trackers when markets are down, but what is the point of buying trackers when the market is at an all time high?... Ok, you can say, the market can keep rising to doomsday...BUT FOR NOW the market is at an all time high and you got to accept that as a fact... so what's the point of buying a tracker now?... so, I humbly submit, wouldn't the only reason to buy a fund now be your faith into that fund beating the market?...

King Lodos
Posted: 21 March 2017 15:46:35(UTC)
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The real problem is that you can spend a LONG time waiting for a correction..

John Hussman didn't believe the 2009 market recovery – in fact valuations only *just* got down to average (and they should have perhaps gone down much further).

So he's sat on the sidelines, defensively positioned, waiting for the *real* correction, for the best part of a decade ... Some legendary managers made this mistake in 1990 – stocks were expensive, making new highs, and yet you had one of the best decades for stock returns on record..

If you look at a long-term chart of stock market returns, actually a huge amount of the time, stocks are making new highs, that they never go below again .. Which is why optimists tend to do very well over the long term.

The best you can do is build a portfolio that balances upside risk against downside .. And the best time to build it is always now .. Graham said "Never more than 75% in stocks, never less than 25%" .. Well Warren Buffett is about 55% stocks at the moment, and he's a real optimist.
3 users thanked King Lodos for this post.
Arabella Tullo on 21/03/2017(UTC), dlp6666 on 21/03/2017(UTC), Cyrus Zaydan on 21/03/2017(UTC)
kWIKSAVE
Posted: 21 March 2017 16:42:51(UTC)
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Agree with some others...bold choices even for small amounts and particularly for a first time investor if you are one.
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applemint on 23/03/2017(UTC)
BenjyT
Posted: 22 March 2017 17:23:16(UTC)
#5

Joined: 18/03/2017(UTC)
Posts: 5

Jon Snow;44873 wrote:
Why are you investing?



I'm just trying to pay off my mortgage within 10 years. I'm overpaying that each month but I'm also trying to take a gamble I guess and hoping to try and get a much better return than in the banks/p2p, which I also dabble with via BondMason.
BenjyT
Posted: 22 March 2017 17:26:53(UTC)
#7

Joined: 18/03/2017(UTC)
Posts: 5

Joe Soap;44875 wrote:
I am not familiar with most of the funds you selected. But I would look carefully at Slater Growth. At a first look the overall returns look attractive but looking at the annual returns it seems a bit of a feast and famine type of fund to me. Perhaps it suits regular savers rather than lump sum savers, I don't know really. I have held it on a couple of occasions and I do still have some of it. But I am heading for the exit on this one, I think.



The swing on MFM is quite extraordinary. During the first fews weeks it dipped, then rose substantially and today alone there has been a 3% loss!
BenjyT
Posted: 22 March 2017 17:30:49(UTC)
#10

Joined: 18/03/2017(UTC)
Posts: 5

King Lodos;44876 wrote:
Latin America is quite a specialist area .. I invest in Brazil – and it's one of the few cheap (by some metrics) regions in the world today, along with Russia.

My only concern with having 1/6th in Latin America is that if your other 5 funds do reasonably, and do the typical long-term average 5-7% return (average when you've factored bull and bear markets in) ... if you have Latin America doing really poorly for another 5 years, it could actually neutralise all your positive returns elsewhere..

I've been in that boat, and it's not fun .. The question then becomes whether you stick with it .. Personally I'd go for something like Lazard Emerging Markets instead .. If you want Latin America, I'd choose an allocation in line with the likely risk/volatility of the region .. Many consider 10% a good total allocation to Emerging Markets .. I'd maybe err towards 15% .. I think Burton Malkiel has 30% in EM, split 3 ways: Vanguard Emerging Mkts, India and China .. Brazil and Latin America are considered riskier and more dependent on commodities.


I have got Lazard and Vanguard on my list now for my next wave of lump sum investments, thanks.

I've also decided to set up a regular monthly payment now into BlackRock Consensus 85.

I can't decide if I'm being sensible or erratic!
King Lodos
Posted: 22 March 2017 19:25:57(UTC)
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Well the sensible thing would probably be to just purchase either Vanguard LifeStrategy 80, or BlackRock's Consensus 85 .. Or a FTSE World tracker.

Because that gives you everything, and ensures you're not paying too much for it .. No dealing or rebalancing costs – no need to review holdings – it's just the market. (Every other stock fund you add will simply overweight or underweight things you already hold.)

Then the next thing to add would be either something to increase returns (by taking more risk) – like a Global Small Companies fund, or extra exposure to Emerging Markets ... Or reduce risk by diversifying returns – like a diversified income or cash-builder fund, or maybe a defensive fund like Ruffer Total Return or Troy Trojan ... So that would be a logical approach ... More active trading/decisions give you potential to both outperform and underperform, significantly – so it helps if you're doing something really smart (or at least lucky).
4 users thanked King Lodos for this post.
MJPM on 22/03/2017(UTC), Jon Snow on 22/03/2017(UTC), bill xxxx on 23/03/2017(UTC), applemint on 23/03/2017(UTC)
16
Posted: 23 March 2017 10:08:29(UTC)
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King Lodos;44970 wrote:
Well the sensible thing would probably be to just purchase either Vanguard LifeStrategy 80, or BlackRock's Consensus 85 .. Or a FTSE World tracker.

Because that gives you everything, and ensures you're not paying too much for it .. No dealing or rebalancing costs – no need to review holdings – it's just the market. (Every other stock fund you add will simply overweight or underweight things you already hold.)

Then the next thing to add would be either something to increase returns (by taking more risk) – like a Global Small Companies fund, or extra exposure to Emerging Markets ... Or reduce risk by diversifying returns – like a diversified income or cash-builder fund, or maybe a defensive fund like Ruffer Total Return or Troy Trojan ... So that would be a logical approach ... More active trading/decisions give you potential to both outperform and underperform, significantly – so it helps if you're doing something really smart (or at least lucky).

16
Posted: 23 March 2017 10:09:58(UTC)
#17

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King Lodos;44970 wrote:
Well the sensible thing would probably be to just purchase either Vanguard LifeStrategy 80, or BlackRock's Consensus 85 .. Or a FTSE World tracker.

Because that gives you everything, and ensures you're not paying too much for it .. No dealing or rebalancing costs – no need to review holdings – it's just the market. (Every other stock fund you add will simply overweight or underweight things you already hold.)

Then the next thing to add would be either something to increase returns (by taking more risk) – like a Global Small Companies fund, or extra exposure to Emerging Markets ... Or reduce risk by diversifying returns – like a diversified income or cash-builder fund, or maybe a defensive fund like Ruffer Total Return or Troy Trojan ... So that would be a logical approach ... More active trading/decisions give you potential to both outperform and underperform, significantly – so it helps if you're doing something really smart (or at least lucky).




Agree with above approach.
Simple and easy to understand.
1 user thanked 16 for this post.
King Lodos on 23/03/2017(UTC)
Joe Soap
Posted: 23 March 2017 11:02:42(UTC)
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BenjyT;44965 wrote:
Joe Soap;44875 wrote:
I am not familiar with most of the funds you selected. But I would look carefully at Slater Growth. At a first look the overall returns look attractive but looking at the annual returns it seems a bit of a feast and famine type of fund to me. Perhaps it suits regular savers rather than lump sum savers, I don't know really. I have held it on a couple of occasions and I do still have some of it. But I am heading for the exit on this one, I think.



The swing on MFM is quite extraordinary. During the first fews weeks it dipped, then rose substantially and today alone there has been a 3% loss!

Yes, I'm looking for the exit soon.
applemint
Posted: 23 March 2017 20:58:20(UTC)
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"Aberdeen Latin America Equity Class I Acc
Allianz Continental European Class C Acc
Bailie Gifford Developed Asia Pacific Class B Acc
Jupiter India Class X Acc
VT De Lisle American Class B Acc
*MFM Slater Growth Class P Acc

Also, I set up two regular monthly payments into HSCS FTSE 250 index (Class S) accumulation and Vanguard US Equity Index accumulation to build up a bit of hardcore over the years."


On the plus side you haven't gone mad and added loads of funds - 8 (6 + the 2 monthly ones) is a decent and manageable number.

1/6th in Latin America would not be my choice - as others have said an emerging markets fund or IT may be better, if you like Latin America perhaps choose one with a higher weighting there. For example, as far as funds goes Henderson Emerging Market Opportunities has 27% or so in Latin America and looks like an interesting option?
http://www.morningstar.c...shot.aspx?id=F00000ONHT

Your weightings to Asia and Europe I would be fine with - they are very similar to mine actually - however see point below.

India - again I would not want 16% here - too much risk for me although obviously the potential is there for high returns. Had a quick look at your BG Asia fund and it's 66% invested in Japan- http://www.morningstar.c...shot.aspx?id=F0GBR04HVJ so perhaps an Asia Pacific ex Japan fund with a high weighting to India, rather than a single country India only fund? Pacific Assets IT for example has 33% in India. Also keep in mind that if you went for an emerging markets fund/IT that will also probably have some exposure to India.

The US fund and weighting, again I would be okay with that - bit worried about current valuations but your weighting is fairly low. Plus you have the regular monthly payment which will up your weighting/exposure over time but also drip feed your money into the market

The UK fund - it's an interesting one that one - never held it myself though. As one of your regular monthly payments is going into a FTSE 250 tracker I might have gone for a small companies fund or IT instead of the MFM fund - lots of good UK small company funds and IT's to choose from.

Those are my thoughts on your asset allocations/ weightings - but there will be lots of different opinions on this.

As for the funds - I am also not familiar with most of the funds you selected so cannot really comment on them, but assume you have checked them out on Citywire/ Morningstar etc and they looked okay to you.

Some of the ideas above are good - like going down the passive route and then adding small holdings in a few active funds to (hopefully) boost your returns. Keeps it simple and low cost (even lower if you don't use HL).

Or the idea of a couple of global IT's is good too - if you want something more 'racy' then there is Scottish Mortgage and perhaps balance that with something with more of a capital preservation bent like RIT - both also have some exposure to interesting areas like private equity, which could do well on a ten year basis and is a sector which is difficult to access via funds. I also quite like the multi manager approach of Witan IT.

If you use the Portfolio X-Ray (either the free trial or on HL by using whatever HL call their version, that can also be very helpful in giving you an overview of your portfolio- underlying holdings, past performance, including biggest overall rises and falls over various periods, overlaps, country weightings etc).

2 users thanked applemint for this post.
MJPM on 23/03/2017(UTC), bill blayney on 23/03/2017(UTC)
Jon Snow
Posted: 23 March 2017 22:02:41(UTC)
#20

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applemint;45037 wrote:

If you use the Portfolio X-Ray (either the free trial or on HL by using whatever HL call their version, that can also be very helpful in giving you an overview of your portfolio- underlying holdings, past performance, including biggest overall rises and falls over various periods, overlaps, country weightings etc).


I may be missing a trick as I can't get the HL X-Ray to X-Ray my IT holdings, it just reports them as a blob of equities.

Which is pretty darn useless when you want to find your total exposure to BAT or BP or GSK etc.
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