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

Ideal number of investments
Harry Trout
Posted: 15 September 2017 09:01:11(UTC)
#22

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)

When I first started investing in funds I was looking for a benchmark and used Hargreaves Lansdown Special Situations because their Fund of Funds approach seemed to most closely represent what I was doing - investing in funds around the world.

I invested some money in this fund in late 2011 and it has done quite well with a CAGR for me of 12.7% to date.

It was on the recommendation of someone on this forum though that I changed my benchmark to VWRL. I have today noticed that the HL Special Sits fund almost perfectly tracks VWRL over 5 years. This makes me feel that VWRL is a good benchmark.

Thus it's possible that the HL fund has become an expensive tracker? Which is kind of ironic given that HL (rightly) talk about "diworsification" - the effect of having so many funds that your portfolio becomes a tracker!

HL Special Situations fund holds 20 funds and isn't churned much it seems to me which could be why.

Thus it would be interesting to know if the original poster SAP churns their portfolio much and whether this has been successful compared to VWRL or other world index? With just 8 funds in SAP's portfolio it would be interesting to know.







1 user thanked Harry Trout for this post.
Jeff Liddiard on 15/09/2017(UTC)
King Lodos
Posted: 15 September 2017 09:15:47(UTC)
#23

Joined: 05/01/2016(UTC)
Posts: 1,735

Thanks: 290 times
Was thanked: 2284 time(s) in 942 post(s)
I think the HH Multi-Manager funds are perfect examples of how the extra effort and risk you put it to generate a higher return are usually offset perfectly by added costs.

It's really a testament to them they can keep up with the FTSE World, as conventional wisdom is they'd lag by about 1% a year (and maybe they will once we've been through another bear market).

And that's with investment professionals making all the decisions .. Retail investors tend to do far worse, and risk making really huge mistakes when they come up against unknown and unfamiliar situations


Harry Trout
Posted: 15 September 2017 09:41:18(UTC)
#24

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)

Thanks KL, I find investing both fascinating and maddening!

Whilst I aspire to end my investing days with a nice chart that shows my outperformance to VWRL I honestly think I wouldn't mind if I "only" track VWRL.

I really enjoyed the phrase you posted on here "Don't just do something, stand there". So often I think it would be easier just to chuck it all on VWRL. However I enjoy investing a lot and would much prefer to have a go than go passive.

Warren Buffet - "We enjoy the process more than the proceeds". Though with his proceeds you would say this, wouldn't you??

I started buying Berkshire Hathaway B shares at the beginning of 2013. 18.7% CAGR to date for me. VWRL gives BRK a run for its money too!

Hey hum .......
1 user thanked Harry Trout for this post.
Mickey on 15/09/2017(UTC)
King Lodos
Posted: 15 September 2017 10:03:55(UTC)
#25

Joined: 05/01/2016(UTC)
Posts: 1,735

Thanks: 290 times
Was thanked: 2284 time(s) in 942 post(s)
Well just to play devil's advocate .. Since 2009, markets have really just been rising on central bank liquidity – so lots of companies that probably shouldn't still be around have risen with the tides – everything's been brought up together.

So in this environment, simple, cheap market exposure will look pretty unbeatable.

The question is what happens through a whole market cycle? If we got a downturn now, Berkshire Hathaway may probably be better positioned to take advantage, as it's sitting on 35% cash .. The Tech funds that have done really well – maybe they'll fall harder, because they've really led this rally?

1 user thanked King Lodos for this post.
Harry Trout on 15/09/2017(UTC)
Harry Trout
Posted: 15 September 2017 10:39:12(UTC)
#26

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)

Indeed and I like my BRK shares for that very reason.

I keep an eye though on the fact that, since 2000, CAGR on BRK has been more like 9% i.e. market returns. Buffet has said himself that BRK will now struggle to outperform the market given its size.

Given his own long term prognosis I hold and buy in the dips but not with conviction to date. It's a share I would probably trade in and out of going forward for fun, it does go on some nice runs from time to time.
King Lodos
Posted: 15 September 2017 13:26:31(UTC)
#27

Joined: 05/01/2016(UTC)
Posts: 1,735

Thanks: 290 times
Was thanked: 2284 time(s) in 942 post(s)
I still like BRK a lot .. But yeah, if outperformance is the aim over many market cycles, it's historically been better to focus on the smallest, cheapest companies.

The college endowment portfolios outperform by loading up on things like Private Equity and Emerging Markets – I think Yale only has around 6% in US Stocks, and even less in Bonds.

Personally (and I think Ruffer share this view), I think it's largely academic whether you beat an index or not, because no one knows whether the index is going to do 20 years of 12% annual returns, or 20 years of negative returns .. Really what most investors want are good positive returns regardless of what the market's doing – which is why things like Standard Life GARS were so popular (but perhaps also demonstrate how hard that can be)



Harry Trout
Posted: 15 September 2017 13:47:44(UTC)
#28

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)
Agreed re BRK.

My overarching aim is to achieve a CAGR of 10% after all costs on the portfolio I started at the beginning of 2007. In other words - as you say - good positive returns regardless of what the market is doing.

This contrasts with my benchmark which is VWRL. This benchmark gives me my bearings.

If I outperformed VWRL over my investing career but didn't get to 10% CAGR then I think I would feel that I have failed in my financial objective.

This 10% CAGR after all costs is where it's at for me, through the good times and the bad. The times have been good since 2007!

Hope this clarifies.
Tug Boat
Posted: 15 September 2017 14:43:14(UTC)
#30

Joined: 16/12/2014(UTC)
Posts: 93

Thanks: 1 times
Was thanked: 107 time(s) in 46 post(s)
There isn't one
King Lodos
Posted: 15 September 2017 15:34:45(UTC)
#29

Joined: 05/01/2016(UTC)
Posts: 1,735

Thanks: 290 times
Was thanked: 2284 time(s) in 942 post(s)
Harry Trout;51141 wrote:
Agreed re BRK.

My overarching aim is to achieve a CAGR of 10% after all costs on the portfolio I started at the beginning of 2007. In other words - as you say - good positive returns regardless of what the market is doing.

This contrasts with my benchmark which is VWRL. This benchmark gives me my bearings.

If I outperformed VWRL over my investing career but didn't get to 10% CAGR then I think I would feel that I have failed in my financial objective.

This 10% CAGR after all costs is where it's at for me, through the good times and the bad. The times have been good since 2007!

Hope this clarifies.


10% could be tricky – given where we are in the debt cycle and in the market .. it depends what your approach is.

Since 2000, US stocks (in dollars) have returned 5.38% annualised .. Through two bear markets and two bull markets .. But that would involve being 100% invested in stocks (which means you could have a disastrous result over 10-20 years).

Research Affiliates has a good interactive chart of expected asset class returns – and an optimal portfolio generating about a 6.6% nominal return over the next 10 years (with heavy bets on European Private Equity and EM):
https://interactive.researchaffiliates.com/asset-allocation.html#!/?currency=USD&model=ER&scale=LINEAR&terms=REAL

For a return of 10%, you'd be needing to find stocks on PE ratios around 10, and bonds on yields around 10% – unless you're successfully market timing.

But as long as there's liquidity being pumped into markets, this is all academic .. If/when that stops, we go back to markets being driven by fundamentals (high valuations, high debt), which will be a very different game


1 user thanked King Lodos for this post.
Tim D on 15/09/2017(UTC)
Harry Trout
Posted: 15 September 2017 17:11:21(UTC)
#31

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)
Thanks KL, I appreciate the sounding board and the devils advocate stuff. It's all really helpful.

I'm chuffed that you have said that my target is going to be tricky because I had actually wondered when someone reading my posts might say I was aiming too low!

Firstly, another tick in the box for BRK which has delivered 8.7% CAGR since 01/01/2000 which compares nicely to your 5.4% for the US market over that time.

Hope is at hand from the S&P 500 which from 1965 - 2016 has delivered 9.7% (source - Berkshire Hathaway 2016 accounts). This is probably why Buffet recommends Vanguard S&P 500 tracker so highly.

What your challenge does is to focus my mind. Of the 28 positions in my portfolio that I have held for over a year only 5 have a CAGR below 10%. 9 have achieved over 15% and 3 over 20%. However I am absolutely realistic that it has been a bull market since my portfolio started in 2007.

An answer is to bank some of the good times since 2007 to build in some fat for possible leaner times ahead. I don't find myself reaching for that option (yet).

Equally I don't feel discouraged but clearly much head scratching and plan formulation is in prospect .....

Thanks again
1 user thanked Harry Trout for this post.
King Lodos on 15/09/2017(UTC)
Simon Owen
Posted: 17 September 2017 07:49:04(UTC)
#32

Joined: 05/02/2012(UTC)
Posts: 30

Thanks: 15 times
Was thanked: 12 time(s) in 7 post(s)
Hi KL
Thanks for posting your portfolio, most interesting.
I recall from previous threads that you are around 35% equity?
The rest being cash, hedge funds & bonds. Is this the complete portfolio bar cash?
I note includes bonds & hedge fund like holdings (Ruffer & Vanbrugh). Intrigued whether the 50% return to date is across the whole portfolio including cash or whether the large (I think) cash element drags down the total. Presumably the actual percentage holdings demonstrates the barbell effect as well.

You did say you were always happy to talk about your portfolio 😀

Cheers

Simon
King Lodos
Posted: 17 September 2017 09:11:18(UTC)
#33

Joined: 05/01/2016(UTC)
Posts: 1,735

Thanks: 290 times
Was thanked: 2284 time(s) in 942 post(s)
Simon Owen;51186 wrote:
Hi KL
Thanks for posting your portfolio, most interesting.
I recall from previous threads that you are around 35% equity?
The rest being cash, hedge funds & bonds. Is this the complete portfolio bar cash?
I note includes bonds & hedge fund like holdings (Ruffer & Vanbrugh). Intrigued whether the 50% return to date is across the whole portfolio including cash or whether the large (I think) cash element drags down the total. Presumably the actual percentage holdings demonstrates the barbell effect as well.

You did say you were always happy to talk about your portfolio 😀

Cheers

Simon


The 50% return's just stocks – but yeah, that's pretty much the complete portfolio at the moment, bar a bit in P2P lending and Bullionvault.

If you say I'm 35% stocks (on a 50% return), 35% cash (on 0%), and 30% hedge funds and bonds (25%), then I'm on about a 25% rolling return .. Paying a price for defensiveness – and still refining what I do .. The problem is I really wouldn't want to be less than 35% cash with markets where they are – and the hedge funds and bonds have been really useful (especially on weeks like this one).

This is across the portfolio – dollar-weighted .. It's possibly closer to 30% (as when I put outside money in, it takes the return down) .. Portfolio value is the value of most non-cash investments, and isn't a 0-100% scale, but gives a clue how much I go to cash, rather than give back returns.


paul armstrong
Posted: 17 September 2017 09:51:50(UTC)
#34

Joined: 14/03/2010(UTC)
Posts: 13

Was thanked: 7 time(s) in 4 post(s)
I reckon you need to hedge against manager risk in addition to fretting about asset allocation. Try as I might I struggle to have less than 12 investments for a £300k portfolio, with cash and gold as two. There is no puritanic reward for achieving some ideal minimum level of holdings. Keep the costs down and consider the objectives, especially if they are at risk from politicians, eg property taxes and IHT. Good luck.
2 users thanked paul armstrong for this post.
SAP on 18/09/2017(UTC), AJW on 20/09/2017(UTC)
marcos alexander
Posted: 18 September 2017 18:55:37(UTC)
#35

Joined: 18/09/2017(UTC)
Posts: 2

@KL

Hi King, I have a similarly diverse portfolio of funds broadly spread around the world, although I have three funds in Japan.

How were you looking this morning? As I was down 2.18%, across the board every fund was down with one exception.
Tyrion Lannister
Posted: 19 September 2017 22:32:50(UTC)
#15

Joined: 03/03/2017(UTC)
Posts: 195

Thanks: 120 times
Was thanked: 117 time(s) in 78 post(s)
Harry Trout;51101 wrote:

KL, thanks for posting your list, really interesting. I have a couple of questions if you don't mind.

I have a similar number of funds in my portfolio, we have a few in common and I am being more active in churning particularly in the last few months.

I have a small holding in Vanguard World ETF (VWRL) which I use as my benchmark and have invested small amounts in VWRL too. My total return target for the whole portfolio is a 10% compound annual growth rate CAGR.

I was interested to know if you have a benchmark or target CAGR and how your churning approach has compared?

I have been really pleased with VWRL and am actually finding it quite a challenge to beat. I have several individual investments that beat VWRL hands down but across the whole portfolio (which includes cash and bonds) it's a closer race.

I remember your quote (I think it was yours?) - "Don't just do something, stand there". This has stuck with me, hence the question.

You are welcome to tell me to mind my own business of course!




Hi Harry,

Your comments about VWRL are interesting.

I've just put together a new portfolio to take my SIPP into retirement which will be any time in the next 5-10 years.

I have a mix of income and growth funds, ca. 40% each with the remaining 20% in bonds and mixed assets, just under 30 funds in total. The portfolio is diversified globally though I've ignored Japan, South America, ME and Eastern Europe completely. I am also underweight in the US.

I've also bought VWRL as a benchmark.

I don't agree with the view that a global tracker will suffice as a single buy and hold fund for several reasons but mainly because you are effectively ignoring the potentially superior growth of small caps and Asia, 2 key areas I believe will out perform in the medium term.
3 users thanked Tyrion Lannister for this post.
Harry Trout on 20/09/2017(UTC), Keith Cobby on 20/09/2017(UTC), dlp6666 on 20/09/2017(UTC)
Harry Trout
Posted: 20 September 2017 06:50:03(UTC)
#36

Joined: 08/06/2014(UTC)
Posts: 28

Thanks: 47 times
Was thanked: 25 time(s) in 18 post(s)
Hi Tyrion

We have similar timescales to retirement and a similar number of funds.

What I have gleaned from this thread is the use of barbell / rebalancing as portfolio management tools.

To borrow from Sara G's post I think I may have too much "core" (Lindsell Train, Woodford, Artemis Global, Old Mutual North American etc) over Small Companies, Europe, Emerging and Asia.

I am further encouraged by Tony Peterson's recent posts elsewhere to continue to build my small portfolio of company shares into a larger share of my portfolio in time. I am eying my first "top slice" ........

The above refinements will be made gradually with the aim of keeping above my long term target of 10% CAGR after all costs across the whole portfolio including defensives and cash. I agree with you that VWRL probably wouldn't do this on it's own and King Lodos' post suggests the same.

As ever, I am grateful to all for the help and advice.








1 user thanked Harry Trout for this post.
Tyrion Lannister on 23/09/2017(UTC)
Tim D
Posted: 20 September 2017 11:41:41(UTC)
#37

Joined: 07/06/2017(UTC)
Posts: 154

Thanks: 572 times
Was thanked: 194 time(s) in 93 post(s)
Just been doing a bit of a "stock take" myself... something last done properly two or three years ago. Been interested to see other folks allocations, so here's mine.

I conceptually divide my holdings into two portfolios: an "Income" and a "TotalReturn" one (currently ~1:2 ratio). In practice they're split across various platforms and wrappers. Currently drawing about half the income generated by the Income one and reinvesting the rest.

Crunching the numbers by various categories (and I've listed the top 3 holdings in each category) gets me:

TotalReturn:

Region
40.7% UK LGBTII,CFAAIB,VVUKEI,...
35.1% Global VVLSRQ,VHYL,VVLFSY,...
14.4% Europe LGEIT,RWAABK,GESOI,...
3.5% Japan JPXG,VIJPST,NEPJSA,...
3.0% Asia LGPTIA,XCX5,CKR1,...
2.5% EM VFEM,XSFR,TEM
0.8% USA IUSA

("Global" is typically 50% or more USA, so virtually all my US exposure is in there; the small IUSA holding will be folded into a LifeStrategy at some point. NB I haven't done any sort of "xray" thing here to spread global holdings around where they're actually allocated).

AssetClass
55.0% Equity LGBTII,LGEIT,CFAAIB,...
19.2% Equity Specialist WPCT,LGHPTA,LGGTTA,...
16.7% MultiAsset VVLSRQ,VVLFSY,VVLFST,...
7.4% Property TRY,8TCLEA,LGAAHW,...
1.7% Cash Cash

AssetClass (Detail)
42.1% Equity LGBTII,LGEIT,CFAAIB,...
12.9% Equity (Value) VVUKEI,VHYL,PLXZB,...
8.8% MultiAsset (Balanced) VVLFSY,VVLFST,PCOMMM,...
6.7% MultiAsset (Aggresive) VVLSRQ
6.2% Property TRY,LGAAHW,K8AAAL,...
5.6% Equity Specialist (Private) WPCT,MINI,IPRV,...
4.0% Equity Specialist (Megatrends) XSFR,IEMG,IH2O,...
3.8% Equity Specialist (Tech) LGGTTA,XDWT,RBTX,...
3.8% Equity Specialist (Health) LGHPTA,XDWH,DRDR,...
2.0% Equity Specialist (Commodities) BRWM,SPGP,RDSB,...
1.7% Cash Cash
1.2% Property (Residential) 8TCLEA
1.1% MultiAsset (Cautious) PNL

I don't really have any hard "target allocation"s for things beyond being wary of letting "Equity Specialist" creep up above 20%, and a long-term plan to reduce pure Equity while ramping up MultiAsset. Note no bond holdings beyond what's in the multi-asset! I do have a bit of small-cap focussed stuff lurking in the general "Equity" category but it's not something I've ever tried to seriously overweight.

Value is 65% in funds, 23% ETFs, 13% ITs and management is 62% passive, 36% active.

The mean weighted OCF is ~0.53% (53% of value is OCF <0.33%, 23% 0.66%-1.0% and 8% 0.33%-0.66%, rest above 1%) and the mean weighted yield is 2.1%.

Income:

Region
66.1% UK LGMMII,ADAAFO,FICNRM,...
31.7% Global K1DVCM,PKMONR,MFAABA,...
1.1% EM JEMI
1.0% Asia RSINTG

AssetClass
36.5% MultiAsset K1DVCM,PKMONR,FICNRM,...
24.3% Property K1AAAD,FCPT,BBOX,...
23.0% Bond LGMMII,ADAAFO,IGHY,...
10.6% Equity ADSAAG,RSOMEN,JEMI,...
5.6% Cash Cash

AssetClass (Detail)
27.9% MultiAsset (Balanced) K1DVCM,PKMONR,FICNRM
18.2% Bond LGMMII,ADAAFO
12.3% Property K1AAAD,FCPT
10.6% Equity (Income) ADSAAG,RSOMEN,JEMI,...
9.2% Property (Specialist) BBOX,ESP,HICL,...
8.6% MultiAsset (Cautious) MFAABA - not at all impressed by this so far!
5.6% Cash Cash
4.1% Bond (High Yield) IGHY,BUR2
2.8% Property (Residential) PRSR,RESI
0.8% Bond (Index Linked) T2HI

Value is 70% in funds, 18% in ITs, 2% in ETFs and 90% active management (I have yet to find an ETF or passive fund I'd really consider useful here. Note that I consider things like VHYL, IUKD and VVUKEI more smart-beta value plays than good "equity income" solutions. Might consider a "dividend aristocrat" type ETF with more sophisticated screening at some point in the future... but I'd probably be much happier to dump that cash into good old CTY if it ever goes back on a tasty discount).

The mean weighted OCF is 0.79% and the mean weighted yield is 3.7% (somewhat diluted by the bond funds and cash; take those away and the rest of it yields ~4.1%).

Income portfolio has ~40 holdings; the TotalReturn one... more. Partly down to my own undisciplined chasing after this and that (look! a shiny thing!), partly down to inheriting some bits and bobs shortly before the post-brexit-referendum surge (and those gains imposed some CGT constraints).
6 users thanked Tim D for this post.
Harry Trout on 20/09/2017(UTC), Sara G on 22/09/2017(UTC), Mr Helpful on 22/09/2017(UTC), Vince. on 28/09/2017(UTC), Guest on 28/09/2017(UTC), Guest on 19/10/2017(UTC)
Sara G
Posted: 22 September 2017 10:04:36(UTC)
#38

Joined: 07/05/2015(UTC)
Posts: 454

Thanks: 677 times
Was thanked: 706 time(s) in 290 post(s)
Tim D

Thanks for sharing your pf breakdown. I'm curious as to why you have split your holdings into separate Income and Total Return pf's? I know others do this too, but to me it feels easier to treat everything as a single pf, regardless of style or wrapper etc.

Also, I think if it were me I'd be wanting to simplify things somewhat so that sectors and individual holdings comprised a greater percentage of the total. Otherwise there is the risk that a sector or holding could do really well, but it wouldn't make much overall difference to your bottom line - and you end up with a total market tracker.

As regards sector weightings, I don't believe it is necessary to invest in every sector or region. John Baron's Thematic Portfolio was interesting in that regard (it is now behind a paywall unfortunately).

NB I said in my earlier post that the number of holdings is immaterial, but perhaps I should qualify this as each of my 25 holdings constitutes at least 3% of my total pf. I read somewhere that 3% is the appropriate level for a typical holding, with 5% or more for core / high conviction holdings, so in practice I would be unlikely to hold more than 35 funds at any one time.

These are my full current holdings (excluding cash, metals, cryptocurrencies)

1. Core Global - MYI, MNKS, Artemis Global Growth
2. Core UK - TMPL, LWI, Threadneedle UK Equity Income
3. Asia / Pacific (including Japan) - IJPH, FAS, FCSS, JAI
4. Emerging / Frontier - IShares Emerging Markets Index, BRFI, BRLA, VOF
5. Smaller Companies - EWI, Vanguard Global Small Cap Index, ASL, SLS
6. Themes - Tech - WPCT, RBTX
7. Themes - Resources - BRWM, BP Ordinary
8. Private Equity - PIN, BTEM
9. Multi Asset - PNL/Troy Trojan (treated as one holding - latter used for small top-ups while I build a position - aim is to increase this to around 10% over time)

Of these, the largest are IJPH (hedged Japan etf), EWI, BRWM, PNL, LWI and the Threadneedle and Artemis funds.


8 users thanked Sara G for this post.
Mr Helpful on 22/09/2017(UTC), Keith Hilton on 22/09/2017(UTC), Jeff Liddiard on 22/09/2017(UTC), Guest on 22/09/2017(UTC), Freddy4Skin on 22/09/2017(UTC), Tim D on 25/09/2017(UTC), Mickey on 28/09/2017(UTC), Vince. on 28/09/2017(UTC)
Tim D
Posted: 28 September 2017 11:44:15(UTC)
#39

Joined: 07/06/2017(UTC)
Posts: 154

Thanks: 572 times
Was thanked: 194 time(s) in 93 post(s)
Sara G;51320 wrote:
I'm curious as to why you have split your holdings into separate Income and Total Return pf's? I know others do this too, but to me it feels easier to treat everything as a single pf, regardless of style or wrapper etc.


I just find it focusses my attention better on what I'm trying to do with any given holding if I know whether I'm wearing my income hat or my total return hat when I'm making decisions about it. However, the homebrewed system I use for cranking out these numbers does let me see the overall combined portfolio numbers too (e.g that's telling me 50% UK, 34% Global, 9% Europe, 2% Asia, 2% Japan, 2% EM, or sliced by asset class 39% Equity, 24% MultiAsset, 14% Property, 12% Equity Specialist, 9% Bond, 3% Cash) and I do find those high level numbers interesting for steering purposes too.

Sara G;51320 wrote:
Also, I think if it were me I'd be wanting to simplify things somewhat so that sectors and individual holdings comprised a greater percentage of the total. Otherwise there is the risk that a sector or holding could do really well, but it wouldn't make much overall difference to your bottom line - and you end up with a total market tracker.


Guilty as charged! I do have a plan to sweep up some of the smaller chaff over the next few years. Once I've bought something I find it's very easy to find reasons to hang onto it though (and yet not good enough that I'd add to it!)

Sara G;51320 wrote:
As regards sector weightings, I don't believe it is necessary to invest in every sector or region. John Baron's Thematic Portfolio was interesting in that regard (it is now behind a paywall unfortunately).


I agree, and I don't think I do that. The "specialists" I do hold are long held overweights - to the baseline broad market exposure I can get cheap via trackers - targeting certain things based on a fairly optimistic view of future prospects for the world (OK the SPGP holding excepted; but that's just for fun really). The specific Japan exposure (in addition to what was already held via global funds) was taken as a deliberate bet on Abenomics and some personal experience with Japan. Similarly I do also have some overweight bets on EM and Asia (via e.g VFEM and LGPTIA) but you're certainly not going to see me thinking I also need to chase after Eastern Europe and South America beyond the basic exposure I'm getting via VFEM and whatever's in the Global stuff.

Sara G;51320 wrote:
NB I said in my earlier post that the number of holdings is immaterial, but perhaps I should qualify this as each of my 25 holdings constitutes at least 3% of my total pf. I read somewhere that 3% is the appropriate level for a typical holding, with 5% or more for core / high conviction holdings, so in practice I would be unlikely to hold more than 35 funds at any one time.


I applaud your discipline!

Sara G;51320 wrote:

These are my full current holdings (excluding cash, metals, cryptocurrencies)

1. Core Global - MYI, MNKS, Artemis Global Growth
2. Core UK - TMPL, LWI, Threadneedle UK Equity Income
3. Asia / Pacific (including Japan) - IJPH, FAS, FCSS, JAI
4. Emerging / Frontier - IShares Emerging Markets Index, BRFI, BRLA, VOF
5. Smaller Companies - EWI, Vanguard Global Small Cap Index, ASL, SLS
6. Themes - Tech - WPCT, RBTX
7. Themes - Resources - BRWM, BP Ordinary
8. Private Equity - PIN, BTEM
9. Multi Asset - PNL/Troy Trojan (treated as one holding - latter used for small top-ups while I build a position - aim is to increase this to around 10% over time)

Of these, the largest are IJPH (hedged Japan etf), EWI, BRWM, PNL, LWI and the Threadneedle and Artemis funds.


Thanks, interesting.

I have a small IJPH holding too, bought several years ago when I seem to remember a lot of pundits pronouncing that *obviously* the Yen was going to devalue (due to Japan's extreme levels of QE). In the end it turned out to be the decline of the pound which rather hobbled IJPH's performance vs. my other unhedged Japanese exposure. I don't think I'd buy any currency hedged equity instruments again: subsequent events like the Swiss Franc "unpegging" and the Brexit referendum have been compelling demonstrations of how markets can react positively to currency devaluation (so effectively come with hedging "built in"). I find arguments for hedging foreign fixed interest more compelling though.

BTW interesting piece on Japan ETFs the other day: https://www.fundstrategy...pular-index-downgraded/

2 users thanked Tim D for this post.
Sara G on 28/09/2017(UTC), Harry Trout on 29/09/2017(UTC)
Sara G
Posted: 28 September 2017 17:51:49(UTC)
#40

Joined: 07/05/2015(UTC)
Posts: 454

Thanks: 677 times
Was thanked: 706 time(s) in 290 post(s)
Thanks for the very comprehensive reply, Tim.

That article about Japan trackers has really got me thinking... I must admit I tend to just think 'active or passive' and don't really pay attention to which index is being tracked, but will look into this further.

As regards hedging Japanese exposure, I've been both hedged and unhedged over the years and have been fortunate enough to time the transitions well (more luck than judgement - I went unhedged accidentally once when ii switched me into the wrong fund!). I'm hedged at the moment because post-Brexit I felt that sterling was likely to recover strongly at some point, while the yen might fall due to Abenomics (and more recently N Korea)... but with the prospect of a Labour government being somewhat more likely than it was, and the Yen's safe haven status seemingly unassailable, I'm not so sure!

3 PagesPrevious page123Next page
+ Reply to discussion

Markets

Other markets