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SIPP - Regular Investments
Richard Proctor
Posted: 04 September 2017 20:08:12(UTC)
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Hello All

I have a SIPP with a current value of £250k and I am making regular contributions of £1,500 per month with around 10 years worth of regular contributions to go. Taking account of the odd lump sum, I would expect a value of £450k without growth. Like most people in the accumulation phase, I would like to best growth I can without taking excessive risk / above average volatility. No DB pension unfortunately.

My platform is AJ Bell and my holdings are weighted towards investment trusts. What I am looking for is suggestions for an asset allocation which can be managed fairly easily in terms of both regular contributions and also rebalancing. Thinking of:

A multi-asset such as Personal Assets or Capital Gearing
A bond fund such as Fidelity Moneybuilder Income
A UK core currently have Temple Bar
A UK small company - not sure about this one?
Two global trusts (growth & income) - currently hold Murray International
Asia Pacific & Emerging Markets - hold Schroder Oriental Income
Japan hold Schroder Japan Growth
Gold ?
Cash - no return available in the SIPP so don't want to hold much in the accumulation phase. Perhaps hold something really liquid such as IS15?

What do you think as a sensible number for regular investment at this level / easy rebalancing? Interested in others' asset allocations in these "interesting" times?

I am interested as to whether others work to a fixed allocation and rebalance as appropriate or do they apply tactical tilts (e.g. moving in an out of gold, or say not holding bonds at the moment)?

Cheers

Colm Maguire
Posted: 06 September 2017 15:30:27(UTC)
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I am several years into my SIPP drawdown and hope I have learned some real lessons in this.
The first is that you don't have a ten year planning horizon. You have 10 plus the years of enjoying pension. A real long term. Advice about "lifestyle" planning an conversion into more secure investments as you reach retirement is only valid if you want to purchase and annuity.

There is no need to spread out into many investments if you are using funds. Just make sure the assets allocation is well balanced.
I manage SIPPs for my children and confine to 5 funds.
UK smaller companies
UK Equity
US smaller companies
Global Technology
Global Equity
20% each
Use FE Trustnet to compare funds.
I add to keep the proportion of original costs at 20% of the fund cost each, but run the profits on each fund.
Bonds are a bad one way bet. Stay clear. Any move on interest rates will costs you.

No need to choose income funds. You can easily sell small portions of the funds to generate income. Don't get confused by the growth vs dividend discussion. It all just money.
9 users thanked Colm Maguire for this post.
Simon Owen on 06/09/2017(UTC), Keith Cobby on 06/09/2017(UTC), Graham Proud on 06/09/2017(UTC), Sara G on 06/09/2017(UTC), andy on 06/09/2017(UTC), Tim D on 06/09/2017(UTC), Guest on 07/09/2017(UTC), martin hargan on 10/09/2017(UTC), Guest on 10/09/2017(UTC)
Law Man
Posted: 06 September 2017 16:01:14(UTC)
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First, well done for taking responsibility for yourself and saving for retirement.

I can not comment on your asset allocation (the most important aspect of choice) as:

(1) you must assess your attitude to risk. With 10 years to go you just about have enough time to be somewhat adventurous.

(2) the spread of your existing assets in the SIPP.

Taking your proposals in isolation, most seem sound.

(1) think about Fidelity Money Builder. You do not need the high income, and the total return is modest. For slightly less cautious look at SIGT.

(2) UK - Temple Bar IT is so so. Consider spreading your bets by adding some other UK ITs. Look at FGT.

(3) UK Small: Look at HSL and SL UK Smaller Cos ITs.

(4) Global: Look at SMT and MNKS.

(5) Cash: given you are phasing in by monthly payments, consider if you need cash. I hold IS15 as my main corporate bond holding. Yes, the yield is only 2.37%, but I fear long duration bonds will fall hard when interest rates rise.

Overall you are not far wrong.
4 users thanked Law Man for this post.
Simon Owen on 06/09/2017(UTC), andy on 06/09/2017(UTC), Richard Proctor on 06/09/2017(UTC), Jim S on 07/09/2017(UTC)
stephen hill
Posted: 06 September 2017 16:42:42(UTC)
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With ten year return of uk smaller company (weighted average) investment trusts of 157% vs 117 all uk companies (AIC source) I would have a high weighting in mid cap trust/s and weight cash flow to these funds for the foreseeable future. Dividend yield is similar. double up on any fall relative to ftse 100 or widening of discount.
Sara G
Posted: 06 September 2017 18:22:34(UTC)
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LWI (Lowland) may be worth considering for general UK exposure - it's more of a multicap fund than TMPL and has done well for me (I buy when the discount widens to more than 10% and reinvest dividends).

For UK small caps I like ASL - unusually for a small cap IT it has a value approach and so complements something like SLS pretty well in my view.

For Asia Pacific I would recommend comparing performance using the charts on the HL site (or similar). You will find that the growth ITs have outperformed the income-oriented funds on a TR basis very significantly over 5 Years. With 10 years to go, I would say it's worth investing quite aggressively in this region as your core UK choices will balance that out. I'm looking at JAI, but SDP (Schroder Asia Pacific) is a solid choice with a good track record and currently on a discount of 10.6%.

You can balance out risk with PNL and maybe some gold.

FWIW my asset allocation is currently as follows:

60% Core equity funds (overweight Small Caps, Asia Pacific & Emerging Markets, Technology, Miners, and underweight Europe,the US and Consumer staples)

20% Cash
10% Precious metals
5% Multi asset
5% Private Equity
5 users thanked Sara G for this post.
Richard Proctor on 06/09/2017(UTC), Micawber on 06/09/2017(UTC), Guest on 07/09/2017(UTC), Jim S on 07/09/2017(UTC), Guest on 10/09/2017(UTC)
Jim S
Posted: 06 September 2017 18:32:59(UTC)
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Hi Richard
I've just taken the plunge in transferring my company pension to a SIPP, so have been seeing whats available and puttng together my own plan.

For defensive/multi asset, I have been looking at RCP, Ruffer and Hawksmoor Vanburgh. They have all been recommended on this forum by posters who seem to know their stuff. I will have around 20% here as I'm not going for bonds or gold or much cash, and I'd like to take risks in other areas. Not sure if I will just get one or two of the above. I plan to use this 20% as a rebalancing tool later.

For gold, I guess you could go for cheap ETF or Black Rock Gold & General?

For UK, there are a lot of options. I've had good experience with both Marlborough UK Microcap Growth managed by Giles Hargreave, and Fundsmith Equity managed by Terry Smith.
There are good ITs as well, and they might be better bet than funds because discounts in UK sector are still relatively high (due to Brexit). I won't put more than 10% in UK SCs due to brexit & currency risk. I don't know much about SVM UK Emerging or Chelverton Growth, but they are both on 20-25% discount to NAV, quite generous with +120% performance over 5 years. Chelverton SC divi, F&C High Income and JP Morgan are on 0, -8% and -12% discounts respectively, but they each have 160-200% growth over last 5 years. Have a nose around on Trustnet.

For Global, SMIT seems an obvious choice, slight premium but I plan to buy and hold longterm. F&C Global smaller companies, Edinburgh, Witan all look strong.
I like the concept and holdings in MIGO, but its pricey nowadays and if IT discounts widen, it will give double trouble.

For AP/EM, you have Schroder Oriental Income which is a fine performer. I don't know much about it, but its at a slight premium. Currently I'd prefer FAS (-9%) Invesco Asia (-12.5%) or Schroder AP (-11%). For EM there's Blackrock Frontiers IT which leads the small EM IT pack. I also like 2 single country ITs at the moment, FCSS (google the v interesting recent dale nicholls video) and ICG. If interested in OEIC funds, Hermes (I'd never heard of them) seem to have one good fund for EM and another good one for Asia.

Schroder Japan Growth looks fine, but if I went for a Japanese IT to hold long term it would be Baillie Gifford Shin Nippon

I will get one Private Equity IT, you might want to consider this too. I already have PIN and PINR in ISA, so I might go Harbourvest or Princess (if theres a GBP offering soon). I notice you don't have anything specifically Europe. SLPE focusses on European PE so that might complement your other holdings nicely. With the US valued quite high at the moment, I guess estimated NAV is more conservative for European PE.

Biotech. Biotech Growth Trust is at -7.5 discount.

I hold IEM (environmental) and Pictet Robotics (robotics and automation) already in ISAs, I like both and will put some in my SIPP.

The MNL discount is still fairly OK if you want to park something in a holding of big tech.

Hope that's vaguly helpful :)

Here's my own very tentative list so far:

% Code Focus
20% RCP Defensive
10% SMIT Global Tech/Disruption
10% HBPE Private Equity
10% JPM Euro SCs European Small Cos
10% SVM UK Emerging UK Small Cos
10% Impax EM IT Global environment
10% BG Shin Nippon Japan Small Cos
5% FCSS China
5% ICG India
5% Biotech Growth Trust Biotech
5% Pictet Robotics Robotics & Automation

Any feedback on my own plans would be gratefully welcomed.
3 users thanked Jim S for this post.
Richard Proctor on 06/09/2017(UTC), Guest on 07/09/2017(UTC), DGL on 10/09/2017(UTC)
andy
Posted: 06 September 2017 18:55:43(UTC)
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Hope all are well ... I have been focusing on work for a few months.

I split between ISA and SIPP - putting income generating assets into ISA and using my SIPP for conservative income and growth - with capital preservation in mind. I suggest that while not wanting to time the market we are closer to the next recession than the last one. I am very underweight the UK due to already seeing a sharp drop in UK confidence following the BREXIT "negotiations".

I have a leaning towards investment trusts but its not strict.

So ...I have 11 total holdings (plus cash)

Cash 10%
Multi Asset 40% (SIGT, RICA, RCP)
Equities 35%
Property 10%
Private Equity 5% (Deutsche Beteilugungs AG)

Things I am building positions in / watching - TRIG, HDIV, IEM

Would be thankful for peoples comments on infrastructure / renewables - I like the principle but I cant make up my mind on this - clearly its a satellite type of holding but if the economy tanks or if (when?) interest rates rise - I could see them getting hit very hard.

I dont hold gold (other than in RICA) but I do remember people talking about SGLN as a good option but I have only put it in the back of my head for when people ask about it.

As always DYOR - hope everyone is well and have enjoyed the summer.
1 user thanked andy for this post.
Jim S on 07/09/2017(UTC)
Richard Proctor
Posted: 07 September 2017 19:59:19(UTC)
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Thanks for the replies everyone. Some interesting suggestions.

Sara - I will have a look at Lowland again. I hold SLET alongside TMPL.SLET has done quite well for me although the discount has narrowed in recent months. I have been considering FGT as a core holding, but I worry that "consumer staples" is something of a crowded trade at present.

I note you hold 20% cash. Do you manage to get some kind of return by investing in something like IS15 or do you hold it as a tactical tilt and accept virtually no return?

Regards

Richard
Sara G
Posted: 07 September 2017 22:58:09(UTC)
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Richard Proctor;50880 wrote:
Thanks for the replies everyone. Some interesting suggestions.

Sara - I will have a look at Lowland again. I hold SLET alongside TMPL.SLET has done quite well for me although the discount has narrowed in recent months. I have been considering FGT as a core holding, but I worry that "consumer staples" is something of a crowded trade at present.

I note you hold 20% cash. Do you manage to get some kind of return by investing in something like IS15 or do you hold it as a tactical tilt and accept virtually no return?

Regards

Richard


Sadly there's little or no return on the cash... but I expect to be reinvesting at least some of it before the end of the year as opportunities arise. I don't worry too much about the lack of return, as a key purpose of holding cash is to reduce the impact of losses elsewhere, and any loss from inflation could be more than offset from investment gains once the cash is deployed (assuming I'm buying things that are relatively undervalued and so have higher potential future returns).
Richard Proctor
Posted: 13 September 2017 06:50:02(UTC)
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Morning

I have been considering adding private equity to my portfolio.
I believe Harbourvest is recommended by KL primarily due to its diversification.
Discounts in the sector have narrowed considerably after a very strong run so my question is, if you don't have private equity in your portfolio, would you consider it now or wait for a better entry point?
Any particular favourites?

Thanks

Richard
john brace
Posted: 13 September 2017 08:08:41(UTC)
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I wonder why WWH is never mentioned - a buy and forget trust for me
Also WTAN
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Mickey on 13/09/2017(UTC), Guest on 13/09/2017(UTC)
Mr Helpful
Posted: 13 September 2017 08:24:15(UTC)
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Richard Proctor;50742 wrote:

Interested in others' asset allocations in these "interesting" times?

I am interested as to whether others work to a fixed allocation and rebalance as appropriate or do they apply tactical tilts (e.g. moving in an out of gold, or say not holding bonds at the moment)?


Well into retirement but we have generally always used a (lagging) valuation driven Variable Ratio Formula for that all important main split between the Growth portion (Stocks) and the Defensive portion (Bonds/Real Estate/Renewable Energy/Infrastructure/Cash,etc).

Today Stock target is a mere 25% of liquid portfolio (this may well be unduly conservative even for retirees, only time will tell).

For Stock sub-division into Regions/Sectors : Constant Ratio Formula, with Constant Value employed to some extent to highlight discrepancies.

For Defensives; sub-division much the same.

Hope this sheds some light.


P.S. Bonds do seem a problem today, so have avoided anything other than short-term.
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Tim D on 13/09/2017(UTC)
Tim D
Posted: 13 September 2017 08:51:48(UTC)
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Richard Proctor;51051 wrote:
I have been considering adding private equity to my portfolio. I believe Harbourvest is recommended by KL primarily due to its diversification. Discounts in the sector have narrowed considerably after a very strong run so my question is, if you don't have private equity in your portfolio, would you consider it now or wait for a better entry point?
Any particular favourites?


Bloomberg had some food for thought the other day for anyone thinking of going into PE now: https://www.bloomberg.co...e-that-hedge-funds-lost

Of my few PE holdings, I'm most fond of HgCapital and the broad IPRV ETF. But for me the whole sector is more a "hold" than a "buy" these days. Maybe there's some value to be found in the UK with everyone on brexit tenterhooks though. Last punt in the area I took was Downing's strategic micro cap trust, which claims "our investment style is more akin to private equity than to typical public market investing".
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