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Is it too late to add a Global ETF to an investment trust ISA portfolio?
Posted: 11 January 2018 13:39:36(UTC)

Joined: 18/12/2013(UTC)
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My wife (65 years) and I (70 years) hold ISA accounts with a flat fee platform valued at £276k and £596k respectively. All dividends are reinvested though not necessarily in the trust generating the dividends. The portfolio is obviously not constructed to maximise the dividend yield, given some of the constituents such as Scottish Mortgage, International Biotechnology or even Finsbury Growth. In addition, my wife, as an active farmer, owns arable land with a value of around £500k which we feel is a useful hedge against the stock market. We have state and generous public sector occupational pensions such that we are able to continue contributing to ISAs for a few more years. Updating of wills and estate planning is imminent but I would specifically appreciate portfolio advice using my own holdings as a basis for feedback (my wife's portfolio is similarly constructed).


Aberdeen Asian Income 7.55
European Assets 2.62
Finsbury Growth & Income 6.78
International Biotechnology 4.78
JP Morgan European IT Income 4.13
JP Morgan Mid Cap IT 5.49
Lowland 9.73
Murray International 7.24
Perpetual Income and Growth 5.85
Schroder Oriental Income 7.35
Scottish Mortgage 9.82
Scottish Oriental Smaller Companies 6.81
Temple Bar 5.30
Bankers 11.74
City of London 4.80

TOTAL 100.00

I appreciate that I have 5 separate trusts in UK Equity Income and 3 in Asia Pacific excluding Japan such that the portfolio is not well balanced from a global perspective with over-investment in the home market and under-investment in America and Japan. I would like to retain a portfolio of ITs in the ISA account and would appreciate feedback on the following:

Should I reduce the number of holdings in UK Equity Income and in Asia Pacific?
If so, which ones should go?

Should I reinvest the proceeds in trusts where there are clear gaps in terms of global coverage/theme or alternatively resist the temptation to expand the portfolio to the point where it becomes a quasi-tracker?

Should I consider an alternative strategy of investing in the Vanguard FTSE All World UCITS ETF using the proceeds of any sale of current holdings and in the purchase of future ISAs, probably by monthly direct debit? I have considered Vanguard Life Strategy Funds (80 or 100% equity holdings) but feel that the ETF has a portfolio more in line with the global market overall.

I appreciate that adding a global ETF to my ISA portfolio does not eliminate the risk should there be a stock market meltdown. Perhaps I have been reading too much on the Monevator site or the thoughts of Lars Kroijer, but I do believe there is a case for combining good ITs with a global tracker in any investment portfolio. Were I starting my investment journey now, I would probably build a solid foundation with a global ETF, then add ITs at a later date.

Overall, should I stick with the current IT ISA portfolio, make minor or significant changes or even add a global ETF at this stage?
3 users thanked FarmerDoc for this post.
Mickey on 16/01/2018(UTC), c brown on 16/01/2018(UTC), Mike L on 17/01/2018(UTC)
Law Man
Posted: 15 January 2018 18:23:29(UTC)

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Peripheral comments:

(1) I assume your choice to go for 100% equities is deliberate on the basis your pension provides income and you wish to leave the investments to heirs. Make sure you give a Memorandum of Wishes to the nominee and guide the heirs on principles of investment and tax.

(2) your shares have the obvious omission of USA. A World index tracker would include about 50% USA.
1 user thanked Law Man for this post.
Mickey on 16/01/2018(UTC)
Posted: 16 January 2018 10:46:55(UTC)

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I cannot offer any opinions on the passive, core/satellite approach other than to say it might appeal to me as I get older and as the best option to 'leave behind' (as my wife has no interest in getting involved).
If you are interested in tidying up your current portfolio before making any decisions (or in any case, actually), it might be worth analysing where you are invested in terms of cap, country, region, stock overlap etc., if you have not done so already.
Just looking at a list of your investments does not give you are very accurate picture, and you might be surprised the first time you do it. In addition to showing how much you have invested in any given area, it also shows you how little - just as important. I can't tell you what the right proportions are, but I know what I am comfortable with myself.
I use a spreadsheet and the information from Morningstar; the details can be a few months out of date and the process is a little time consuming at first, but the results are very useful (and there are probably easier ways to do it).
Posted: 16 January 2018 11:33:19(UTC)

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It may be worth you taking a look at the JohnBaron IT portfolios at

You can sign up for a week's free access, after that the charge is £170 per year for updates. At your ages, you may be inclined to look at the Autumn portfolio although in your financial position perhaps the Summer or Spring portfolios would appeal also. He basically offers an investment journey across the four seasons, this is supplemented by Thematic, Dividend and a couple of other scenarios.
Jim S
Posted: 16 January 2018 13:38:41(UTC)

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Hi FarmerDoc

That's an interesting portfolio, you have some nice investments there. It sounds like you have a couple of goals, one being to make your portfolio better represent global equity weightings, another to get good performance.
I have only had a cursory look at your some of your funds. Its hard to take an objective view about what you shd do, but I'm happy to tell you what I would do (for what its worth).

First I would sell these 4, mainly because their perfomance has been poor, but also you're a bit overweight in AP and UK as you acknowledge, so to me these look like the low hanging fruit

- Aberdeen Asian Income (7.55)
- Scottish Oriental Smaller Companies (6.81) - I hold some too, but I'm slowly losing patience
- Murray International (7.24)
- Perpetual Income and Growth (5.85) - (not just a poor performer in a sector you are overweight, but arguably the UK income sector has become quite overvalued)

This would free up around 27.5%

Re US, if you look at your remaining holdings, you may have more in US equities than you realise (eg IBT, SMT) but you are still underweight. Its often said that the US market is very suitable to cover via ETF because its so highly reseearched, so that is certainly a good option. If looking for OEICs that cover US, you could try using trustnet to check out the top performers over 5 years.
If you prefer buying ITs for the US, you could do worse than JP Morgan American IT (6% disc), plus some North Atlantic Smaller Companies IT (18% disc)

If you want something in Japan, Legg Mason Japan OEIC recommended on another thread seems a good choice, or PHI would give you AP plus Japan

If it was me, I might go for JP Morgan American IT (12%), NASC (9%), Legg Mason Japan or PHI (6.5%), something along those lines. After that, I would leave things alone for a year or so and then review everything.

Checking out John Barron's portfolio as Mickey suggested is a good idea.

Good luck whatever you decide!
3 users thanked Jim S for this post.
Mickey on 16/01/2018(UTC), c brown on 16/01/2018(UTC), Mike L on 24/01/2018(UTC)
Keith Cobby
Posted: 16 January 2018 13:46:03(UTC)

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I looked at the IC on Saturday. Bit surprised to see EAT and HFEL in both John Baron's growth and income portfolios.
Posted: 23 January 2018 10:58:28(UTC)

Joined: 18/12/2013(UTC)
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Thanks to all for the helpful feedback. As well as growing the ISA portfolios, I wish to make things simpler for the future so that my wife can manage the investments after an in-species transfer should she survive me. Although she will get half my occupational pension, she can enhance her income by taking dividends from the ISA portfolio. A further aim is to ensure there is sufficient funds to pay for continuing care in our home (in preference to nursing home care) should this be needed without drawing too much on capital.

Law Man - thanks for the comment on Memorandum of Wishes etc

TJL - I do carry out research on the current portfolios, hence my comment on being overweight in some areas and underweight elsewhere. Making changes by reducing certain holdings and reinvesting in different active trusts is one option, but I was keen to receive comments on the alternative of building a substantial core portfolio in a global tracker fund with a peripheral portfolio of quality ITs, some of which my wife and I already have in our ISAs. So far, there has not been a warning against building up a significant holding in a Vanguard Global ETF.

Mickey - I have followed John Baron in IC and read his book. His insights are useful but for a number of reasons, we remain in Spring or Summer! Also, his articles and book focus more on the relative merits of Investment Trusts and Unit Trusts though I may have missed his thinking on tracker funds.

Jim S - I deliberately did not mention the three specific trusts I felt were weakest in my portfolio but you have spotted them all! You also identified Murray International which has had its ups and downs. However, I have a lot of time for Bruce Stout who states when he gets it wrong, is not too keen on the macro-economical strategies of recent years though he does come across a bit like a Premier League Football Manager who doesn't appear to get much fun out of his job. I will hold for the meantime and come back to apologise if I should have taken your advice in 2018.

Thanks again for all your helpful comments.
1 user thanked FarmerDoc for this post.
Mickey on 23/01/2018(UTC)
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