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MikeT
Posted: 03 November 2017 17:53:24(UTC)
#1

Joined: 12/02/2017(UTC)
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Hi All,

I've got a couple of months to mull over options before my SIPP is transferred from my DFM. There's no rush to make immediate wholesale changes/purchases as the portfolio as it stands is being transferred in-specie.

At the moment it is just over 70% equities with half of that in 5 or 6 UK Equity Income funds so there is a little bit more concentration than i'd like. Overall the portfolio is a little too on the aggressive side for my liking so i've put together a mix that is lighter on equities but over the last 5 years has beaten the WM portfolio with a marked reduction in volatility.


My situation:

Age: 45
SIPP: Above LTA, no further contributions
Retirement: Age 52-55 (bridge with ISA's to drawdown point)
Drawdown: From age 60




EQUITIES 35%

UK 25% (9% of total)...........FGT , CF Miton Multi Cap, Marlborough UK Micro
US 20% (7%)......................Vanguard US Equity Index
Global 15% (6%).................WITAN, SMT
Europe+EME 10% (4%)......MAN GLG Continental European Growth
Japan 10%......................... HSBC Japan Index
As Pac 10%........................Old Mutual Asia Pacific
Defensive 10%...................PNL



SECTORS 15%

Property 25% (4%)...........TRY
Infrastructure 25%............First State Global Infrastructure
Private Equity 25%..........3i
Healthcare 25%...............L&G Global Health & Pharma


BONDS 30%

UK Gov Bonds 33% (10%).....Vanguard UK Gov Bond Index
£ Corp Bonds 33%.................GAM Star Credit Opps (flex)
Global Bonds 33%................. M&G Optimal Income

OTHER 20%

Henderson UK Absolute Return..... 30% (6%)
OM Global Eq AR...........................20% (4%)
Polar Capital Global Insurance.......15% (3%)
Cash.............................................. .35% (7%)



Thanks!
3 users thanked MikeT for this post.
S Dobbo on 04/11/2017(UTC), Mickey on 05/11/2017(UTC), Guest on 16/11/2017(UTC)
King Lodos
Posted: 03 November 2017 20:09:03(UTC)
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I think it looks good .. Not a million miles from Hawksmoor Vanbrugh – which has performed well, despite the fee and defensive positioning:

http://www.hawksmoorfm.co.uk/wp-content/uploads/2017/10/20170930-Vanbrugh-Factsheet-September-2017.pdf

I'd consider GAM Star Credit Opps *may* fall with the stocks – you can almost consider those perpetual bonds preference shares .. So maybe that gives you closer to 60% in terms of market risk exposure.

Then the Polar Capital fund, and the long exposure in the long/short funds, probably takes you to about 66-68% exposure .. If you may be retiring in 7-10 years, that *might* be higher than I'd go .. I'm neurotic, so I probably really would try to get my long market exposure to no more than 50%.

I'd also wonder about UK Gov Bonds .. Very tricky, as they should be good diversifiers .. But is there any chance of making a positive return from here? I'd perhaps be tempted by a Gold ETF and Short-Duration Inflation-Linked bonds (as a disaster hedge, and in case we do find ourselves in a repeat of the 70s stagflation)
2 users thanked King Lodos for this post.
Guest on 03/11/2017(UTC), S Dobbo on 04/11/2017(UTC)
MikeT
Posted: 03 November 2017 20:59:42(UTC)
#3

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King Lodos;52871 wrote:
I think it looks good .. Not a million miles from Hawksmoor Vanbrugh – which has performed well, despite the fee and defensive positioning:

http://www.hawksmoorfm.co.uk/wp-content/uploads/2017/10/20170930-Vanbrugh-Factsheet-September-2017.pdf

I'd consider GAM Star Credit Opps *may* fall with the stocks – you can almost consider those perpetual bonds preference shares .. So maybe that gives you closer to 60% in terms of market risk exposure.

Then the Polar Capital fund, and the long exposure in the long/short funds, probably takes you to about 66-68% exposure .. If you may be retiring in 7-10 years, that *might* be higher than I'd go .. I'm neurotic, so I probably really would try to get my long market exposure to no more than 50%.

I'd also wonder about UK Gov Bonds .. Very tricky, as they should be good diversifiers .. But is there any chance of making a positive return from here? I'd perhaps be tempted by a Gold ETF and Short-Duration Inflation-Linked bonds (as a disaster hedge, and in case we do find ourselves in a repeat of the 70s stagflation)


Thanks KL, it's interesting how the constituent parts of a fund can move it out of the asset 'box' it may appear ostensibly to be in.

I don't want to be up at 70% equities so i'll have a look at re-jigging to move the allocations.
1 user thanked MikeT for this post.
King Lodos on 03/11/2017(UTC)
King Lodos
Posted: 03 November 2017 21:39:05(UTC)
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I think asset allocation is such a tough thing to get right at the moment too – I'd say particularly over 10-15 years, as we're in uncharted territory with valuations, and who knows how long this rally can run? (I'm getting so used to it, I can imagine it running another 15 years.)

Warren Buffett is currently 55% stocks, 35% cash and 10% bonds .. So as a value investor, he's quite high in cash.

Yale and the college endowments tend to have up to 25-30% in go-anywhere Hedge Funds (the kind of thing RIT Capital Partners use to diversify their market exposure) – and not unlike the Henderson and OM Absolute Return funds – so they're letting more active managers react to market events as they happen.

Ray Dalio thinks the gradual unwinding of liquidity from markets (which has lifted everything thus far) is likely to pull the rug out from under asset valuations at *some* point .. I think we all expect that .. But there's also skepticism that we'll be able to unwind it – Japan's been doing this for decades.

My rationale for 50% market exposure is that it's a coin toss .. I'm probably a fair bit over that at the moment, but will draw it back if things sour .. And most of my capital preservation is in cash, just because it's difficult to find much else that's working at the moment .. And there is always a chance inflation comes along and takes us by surprise, in which case we might all be scrambling to buy up gold and inflation-linked bonds (more sensible investors – like Ruffer and Troy Trojan – tend to hold them anyway, but again, it's a hefty bet on a certain outcome .. that maybe is inevitable, but maybe isn't?)
4 users thanked King Lodos for this post.
Tim D on 03/11/2017(UTC), Guest on 03/11/2017(UTC), Harry Trout on 04/11/2017(UTC), dlp6666 on 15/11/2017(UTC)
MartynC
Posted: 12 November 2017 10:42:41(UTC)
#5

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King Lodos;52873 wrote:
I think asset allocation is such a tough thing to get right at the moment too – I'd say particularly over 10-15 years, as we're in uncharted territory with valuations, and who knows how long this rally can run? (I'm getting so used to it, I can imagine it running another 15 years.)

Warren Buffett is currently 55% stocks, 35% cash and 10% bonds .. So as a value investor, he's quite high in cash.


Just a question - How do you know Warren Buffett is currently - 55% stocks, 35% cash and 10% bonds ?

I heard he wants his bequest to his wife to be invested -
- 90% S&P Tracker and 10% short dated US Bonds

This seems very adventurous to me given that I believe his wife is 71 but we don't know what proportion of her total assets this is ?
MartynC
Posted: 13 November 2017 21:04:40(UTC)
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Hi

KL- I just wondered how you know Warren Buffett is currently 55% stocks, 35% cash and 10% bonds. I am sure a couple of years ago Buffet advocated a portfolio that was 90% S&P Tracker and 10% Short Dated Bonds ?

MartynC
Keith Cobby
Posted: 14 November 2017 17:45:09(UTC)
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He advocates the 90/10 for his widow!
1 user thanked Keith Cobby for this post.
Tim D on 14/11/2017(UTC)
King Lodos
Posted: 14 November 2017 18:06:29(UTC)
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MartynC;53237 wrote:
Hi

KL- I just wondered how you know Warren Buffett is currently 55% stocks, 35% cash and 10% bonds. I am sure a couple of years ago Buffet advocated a portfolio that was 90% S&P Tracker and 10% Short Dated Bonds ?

MartynC


You can track it here:
https://www.gurufocus.com/profile/Warren+Buffett

What Buffett says and what he does have always been two different things.

I think the point with 90% in an S&P 500 tracker is that he trusts the US economy, and Vanguard, more than letting someone else manage his money when he's not around to keep an eye on them .. I think I'd feel exactly the same .. But also the amount he's leaving his wife, she'll never need more than the dividend income – so there's no point paying someone 2 & 20 fees to hedge and do smart things with the capital.
1 user thanked King Lodos for this post.
dlp6666 on 15/11/2017(UTC)
Tony Peterson
Posted: 14 November 2017 18:31:31(UTC)
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What a lot of palaver to wonder what happens when an old American dies. Who cares? (apart from his widow).
1 user thanked Tony Peterson for this post.
Keith Cobby on 15/11/2017(UTC)
Keith Cobby
Posted: 16 November 2017 17:34:11(UTC)
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I wonder if Warren Buffett ever reflects on his professional life compared to say Bill Gates or Elon Musk. They have contributed to human advancement (and made fortunes as a result) when all he has done is accumulate money. What will his obituary headline read...the second (or whatever) richest man in the world dies.
1 user thanked Keith Cobby for this post.
Micawber on 16/11/2017(UTC)
Micawber
Posted: 16 November 2017 17:36:05(UTC)
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Valid points: but like Lewis Hamilton (who has raced round in circles), Buffet has been a leader in his field......
King Lodos
Posted: 17 November 2017 01:13:54(UTC)
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Warren Buffett donated $3.17bn to the Bill & Melinda Gates Foundation just this July, and he'd already given about $30bn.

That's where his fortune's going – plus the Foundation itself is largely invested in Berkshire Hathaway .. So you could say Buffett's supplied and grown most the resources Bill Gates has.

When it comes to human progress, charity is a controversial topic .. The huge fall in global poverty over the past century has been down to free trade and productivity growth in Asia .. It's the Buffetts and Jack Mas of the world who've taken a billion people out of poverty through trade .. Africa on the other hand received £billions in aid – most of which wound up in the pockets of dictators, funding civil wars – didn't become a great manufacturing hub, and now has 10s of millions jumping ship and flooding Europe .. I used to say she was the embodiment of sociopathy, but I do think Ayn Rand's been proven right

6 users thanked King Lodos for this post.
Captain Slugwash on 17/11/2017(UTC), Tim D on 17/11/2017(UTC), Luca Brasi on 17/11/2017(UTC), Freddy4Skin on 17/11/2017(UTC), jvl on 17/11/2017(UTC), alan thompson on 17/11/2017(UTC)
Tom Mozy
Posted: 17 November 2017 12:46:58(UTC)
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Buffet employs directly 400,000 people globally. Indirectly will be many time more. The man through his own drive and ambition has increased living standards of many people, and hes giving 95% of it away. We should admire the rich not beat them down.

Cant agree more with KL - its capitalism and free trade that has seen the living standards of the average man globally increase.

Only less government, lower taxes and less regulation on capital and freedom is the only system that has ever worked in history.

Buffett is a God in my book. How much has Commi Corbyn or any lefty done to help the poor? Sweet FA!



11 users thanked Tom Mozy for this post.
Guest on 17/11/2017(UTC), Freddy4Skin on 17/11/2017(UTC), Captain Slugwash on 17/11/2017(UTC), King Lodos on 17/11/2017(UTC), Mr Helpful on 17/11/2017(UTC), Luca Brasi on 17/11/2017(UTC), Guest on 17/11/2017(UTC), jvl on 17/11/2017(UTC), alan thompson on 17/11/2017(UTC), Harry Trout on 18/11/2017(UTC), Pensioner on 18/11/2017(UTC)
chubby bunny
Posted: 17 November 2017 14:07:13(UTC)
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There are plenty of rich people not worthy of admiration. Buffett's alright though.
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