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GrahamJ
Posted: 18 March 2018 19:22:58(UTC)
#1

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My wife and I are both retired (me 72, she 64) and have had funds in SIPPs/ISAs which have done well enough in recent years, more through buying funds I see mentioned here than my own knowledge.
However time moves on and things are much more challenging now to the point that I would like to seek advice here on the best way to preserve the capital generated in the recent good years.

My current holdings (>2%) are;

BGS BAILLIE GIFFORD SHIN NIPPON ORD GBP0.10 (13%)
SMT Scottish Mortgage Investment Trust (12)
BJSPMJ2 Lindsell Train Global Equity (11)
EWI EDINBURGH WORLDWIDE INVESTMENT TST (10)
BNKR BANKERS INVESTMENT TRUST ( 6)
FJV FIDELITY JAPANESE VALUES ( 6)
B4MR8G8 FUNDSMITH LLP EQUITY (7)
FRCL Foreign & Colonial Investment Trust (4)
B83T7Q4 JPMorgan Europe Smaller Companies (4)
RDSB Royal Dutch Shell Plc B Shares ( 3)
PCT Polar Capital Technology Trust (3)
JAI JPMorgan Asian Investment Trust ( 2)

The total holdings are about 800k. I have a separate cash pot and do not need income immediately as pensions cover day to day costs.

I'm not sure which of the holdings are defensive or risk (but I assume most ITs are risk through gearing) and would appreciate thoughts on any improvement to the pf to make it more resilient during a downturn.
MikeT
Posted: 19 March 2018 17:38:26(UTC)
#2

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To my (admittedly very cautious) eye that seems a quite aggressive asset allocation profile given your age. That said, if you have an income floor provided by a DB pension for example then it could be argued that there is logic to it.

By way of contrast, i'm 45 and have an allocation roughly like this...

Equities 45%
Bonds 25%
Abs Rtn 15%
Money Mkt 10%
Property 5% (plus un-mortgaged home)

Now that is conservative i'll grant you but it depends on your tolerance to risk. If I was in your position (with my mindset) i'd be looking at transitioning to a more income focussed IT profile.
6 users thanked MikeT for this post.
kWIKSAVE on 19/03/2018(UTC), martin hargan on 19/03/2018(UTC), GrahamJ on 19/03/2018(UTC), Jim S on 19/03/2018(UTC), Siete leguas on 20/03/2018(UTC), Guest on 20/03/2018(UTC)
Alan Selwood
Posted: 19 March 2018 18:18:24(UTC)
#3

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You say that your holdings representing over 2% of your portfolio are:

BGS BAILLIE GIFFORD SHIN NIPPON ORD GBP0.10 (13%)
SMT Scottish Mortgage Investment Trust (12)
BJSPMJ2 Lindsell Train Global Equity (11)
EWI EDINBURGH WORLDWIDE INVESTMENT TST (10)
BNKR BANKERS INVESTMENT TRUST ( 6)
FJV FIDELITY JAPANESE VALUES ( 6)
B4MR8G8 FUNDSMITH LLP EQUITY (7)
FRCL Foreign & Colonial Investment Trust (4)
B83T7Q4 JPMorgan Europe Smaller Companies (4)
RDSB Royal Dutch Shell Plc B Shares ( 3)
PCT Polar Capital Technology Trust (3)
JAI JPMorgan Asian Investment Trust ( 2)

Unless you feel that your age is creeping up on you now, I would not rush to go too cautious, since it's regularly the case that those holdings with the greatest volatility rating tend to make the most money over the years!

If you are merely feeling anxious when you see bad days in the market, then there is a case for de-risking simply to feel comfortable in your daily life. At least you are in the fortunate position that your current income and capital give you a good cushion against adversity already, so you can afford to cut down on potential results (aka go for a more pedestrian approach).

If you want to reduce volatility while accepting probable poorer long-term results, I would suggest reducing the following to some extent:

Shin Nippon, which has had a brilliant run but its premium/discount situation leaves you open to big losses if the Japanese market sours (see also the current 'corruption' news about the PM's wife!);
SMT (which has a reputation of being a superb performer in good times and underperforming in downward markets);
JPMorgan Europe Smaller Companies (similar argument to Japan);
Polar Capital Technology.

Then consider putting some of the sale proceeds into Capital Gearing Trust, RICA, PNL, Fundsmith, and if you can buy it at a decent discount, JEO.

Of course, you could simply turn some of the portfolio into cash and sit tight until either you can pick up equities at a much lower price than now, or until interest-bearing assets pay a lot more interest than now.

Please treat all my comments as ideas to research, not recommendations.
DYOR!
12 users thanked Alan Selwood for this post.
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Law Man
Posted: 19 March 2018 18:49:45(UTC)
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I am in a similar position, although younger than you with less pension assets.

Since running my own portfolio (from age 61) I have held broadly 50/50 Adventurous/ Cautious assets. In hindsight you have done better with all equities, but could you accept a 50% - 60% fall?

If you have sufficient other income for life, and intend to leave your pension assets to your children, then you can keep to all equities, provided you have the discipline not to sell after a severe fall in prices.

My 'cautious' assets include wealth preservation funds (PNL, CGT. RICA etc) and short duration corporate bonds.

5 users thanked Law Man for this post.
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Jim S
Posted: 19 March 2018 19:24:42(UTC)
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Wow, thats a great portfolio for recent returns, well done!

Some good replies already. Like Alan, I would also not be in a massive rush to move away from equities.

BGS must have done well for you, but as Alan said its a risk at such a premium. I would sell the lot and spend half the proceeds on Legg Mason Japan which is a good alternative.

Lindsell Train, Fundsmith, Edinburgh, F&C I would keep all.

Banker's seems expensive at 5% discount, I would sell mainly for performance reasons.

FJV, I've not paid attention to this IT before, due to its discount I would keep some (it would balance out larger cap LM Japan) but consider selling half as smaller companies can be volatile at the best of times.

SMT, JPM European Small Cos, PCT, I would consider selling half of each to reduce volatility but would probably decide in the end to keep some of each.

Shell I would sell to avoid stock specific risk.

JP Morgan Asia isn't a great performer, I would sell. Hermes and Baillie Gifford both have good AP funds, also there is PHI (although you are very overweight Japan already)

Alan's suggestion of Jupiter European (or JEO if discounted) is a good idea

I would look closely at Alan and Lawman's suggestions of Capital Gearing Trust, RICA, PNL, maybe also Hawksmoor Vanbrugh, or (less defensively) Seneca SIGT, Caledonian CLDN, and New Star NSI.

5% Gold ETF maybe

If you want to avoid hassle, Vanguard LS 40 as large core holding might work.

Above are just opinions, good luck with whatever you decide!
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xcity
Posted: 19 March 2018 20:55:17(UTC)
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Financially, I can't see any reason to go cautious since you are living on your pensions and already have a separate cash pot.
If you foresee needing something more, you should switch that amount to something safe.
If you want to reduce the amount of oversight and time taken, that needs a strategic rethink.

If you just want to restructure your holdings, I'm sure others here can give useful comments on what you should and shouldn't hold.
3 users thanked xcity for this post.
GrahamJ on 19/03/2018(UTC), raybd on 20/03/2018(UTC), Keith Cobby on 20/03/2018(UTC)
raybd
Posted: 20 March 2018 08:59:09(UTC)
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There are lots of questions you should ask yourself, if you haven't already. Objectives, timescale, risk attitude (incl your wife's), knowledge, benchmark, time you wish to spend, beneficiaries ...
Seems like you've done well, last year at least. Seems like you're in the perfect position to take a bit of risk (my attitude to 'risk attitude' is to train oneself be more adventurous). Try to improve your knowledge and increase your involvement. Find an easy way to follow your portfolio.
Don't change anything fast. Think 'core' and 'satellites' - article in Shares mag ca Nov/Dec. Postion yourself gradually for older age/ widow.
2 users thanked raybd for this post.
Jim S on 20/03/2018(UTC), GrahamJ on 20/03/2018(UTC)
stephen hill
Posted: 20 March 2018 13:31:24(UTC)
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19%Japan and probable over 50% overseas (on a see though bases) Puts you at a risk if Sterling should strengthen. Would think about lightening your Japan exposure (even though I am an ex Japanese fund manager) add to Asia (non Japan).
U.K. income funds on discounts should reduce risk factor as long as UK dividends are secure.
Prefer Asia to Europe just on a work ethic basis, and lower GDP per cap (Ex Japan of Course)
Not unhappy with Equities, why buy fixed income when rates will rise over the next few years and with your size of portfolio a little volatility will not be too painful. Longer term growth in Mid Cap sector I'm sure, as adjustment times to difficult periods can be quicker. Also try for a more balanced portfolio with holdings in 4-8% range.
4 users thanked stephen hill for this post.
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stephen hill
Posted: 20 March 2018 13:35:45(UTC)
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p.s Do not worry re gearing risk of Investment trusts, the fund manager will do that for you, And if I'm correct on interest rates, it will be just what the doctor ordered.
1 user thanked stephen hill for this post.
GrahamJ on 20/03/2018(UTC)
Freddy4Skin
Posted: 20 March 2018 14:07:15(UTC)
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stephen hill;59027 wrote:
19%Japan .


Cue for KL to yet again and interminably cut and paste a chart of the Japanese stock market from 40 years ago.

Respect to GrahamJ on his SIPP pf. Sir, I wish to have your fortitude when I reach your age.

My opinion would be to increase exposure to Asia at the expense of Oils, Shell and Bankers, soon to be extinct dinosaurs of the 20th century which, lets be honest, describes many of the posters on this forum.

FRCL, whilst a seemingly popular choice here, at 400 to 500 holdings, tracker?, the best of which are minuscule holdings which you already hold in larger concentration elsewhere in your pf.
1 user thanked Freddy4Skin for this post.
GrahamJ on 20/03/2018(UTC)
King Lodos
Posted: 20 March 2018 15:34:36(UTC)
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Freddy4Skin;59033 wrote:
Respect to GrahamJ on his SIPP pf. Sir, I wish to have your fortitude when I reach your age.


Well you better start working on it now.


Here's the Nikkei 225

https://www.binaryoptions.net/wp-content/uploads/2012/06/nikkei225.jpg

I don't use it to tell people not to invest in Japan. That's probably the silliest interpretation of a point I make yet – and there are quite a few contenders
2 users thanked King Lodos for this post.
GrahamJ on 20/03/2018(UTC), Tim D on 20/03/2018(UTC)
GrahamJ
Posted: 21 March 2018 09:36:33(UTC)
#12

Joined: 22/01/2012(UTC)
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Thanks to you all for your time and your thoughts, they are much appreciated. I will now cogitate, hopefully not for too long though.
Alan Selwood
Posted: 21 March 2018 11:53:09(UTC)
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Looking again at this thread, I too would get rid of Shell because oil is a volatile commodity, and best traded in and out of by someone who is experienced in the oil market, and you don't need it for its iffy dividend.

I would also get rid of Bankers Trust, because it's now at a slight premium, when it is normally at a bit of a discount. The plus point with Bankers is that some of their returns come from their administration rather than only coming from the results of the share portfolio they run. I'd rather have Fundsmith or Lindsell Train Global than Bankers.

Stephen's comment about the Far East ex-Japan chime with my own relative to Europe. Apart from the greater volatility baked into it, I would be thinking more about one of the Vietnam ITs currently rather than smaller European companies, or for a broader brush Far East adventurous approach, PHI. But if you want to de-risk,you may find that one of the pan-Asian ITs is a better fit with your ideas. Henderson Far Eastern inside a SIPP or ISA may be worthy looking at further, since it has an income bias.
4 users thanked Alan Selwood for this post.
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stephen hill
Posted: 21 March 2018 12:01:26(UTC)
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"Look before you leap" or "He who hesitates is lost" - not sure which applies
Good luck
2 users thanked stephen hill for this post.
GrahamJ on 21/03/2018(UTC), Tim D on 21/03/2018(UTC)
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