Current SIPP holding review

[cbehagg242]

Hi all,
I'm fairly new to investing so would appreciate any feedback on my SIPP with regards to what funds I am holding and if there is something else I should be considering.

For info this is my retirement fund which I won't be able to touch for another 30 years at the earliest (yay...), hence the more risky options like the 100% LifeStrategy fund. I've included all the funds as well as current performance below.

iShares Pacific ex Japan Equity Index - Class H - Accumulation (GBP) - up 5.56% - 11% of total SIPP

Legal & General European Index - Class C - Accumulation (GBP) - up 6.04% - 14% of total SIPP

Legal & General UK Index - Class C - Accumulation (GBP) - up 4.05% - 14% of total SIPP

Legal & General US Index - Class C - Accumulation (GBP) - up 10.01% - 24% of total SIPP

Marlborough UK Micro-Cap Growth - Class P - Accumulation (GBP) - down 2.98% (slowly recovering) - 9% of total SIPP

Vanguard LifeStrategy 100% Equity - Accumulation (GBP) - up 3.26% - 28% of total SIPP

Any feedback appreciated

Edited by cbehagg242 on Friday 21st June 11:45

[JulianPH]

It looks like a good selection of low cost funds, which is great, but without knowing what proportion is held in each fund it is difficult to add any more feedback.

Obviously the Vanguard Lifestrategy will be duplicating some of your other holdings and this will impact on the total weightings.

[cbehagg242]

JulianPH said:

It looks like a good selection of low cost funds, which is great, but without knowing what proportion is held in each fund it is difficult to add any more feedback.

Obviously the Vanguard Lifestrategy will be duplicating some of your other holdings and this will impact on the total weightings.

Thanks Julian, yes I added the LS100 not so long ago after creating the SIPP with the individual market indexes.

I've edited my OP with the proportion held of each fund

[putonghua73]

cbehagg242 said:

Hi all,
I'm fairly new to investing so would appreciate any feedback on my SIPP with regards to what funds I am holding and if there is something else I should be considering.
hence the more risky options like the 100% LifeStrategy fund.

Vanguard LifeStrategy 100% Equity - Accumulation (GBP) - up 3.26%

Any feedback appreciated

I would opine that on the face of it - without further deep-diving into the individual fund holdings that comprise the LS100 - the Vanguard LS 100% is one of the least riskiest in terms of equities!

1. Vanguard FTSE U.K. All Share Index Unit Trust GBP Accumulation Shares 19.4%
2. Vanguard FTSE Developed World ex-U.K. Equity Index Fund Accumulation Shares 19.2%
3. Vanguard U.S. Equity Index Fund Accumulation Shares 19.2%
4. Vanguard S&P 500 UCITS ETF (USD) Distributing 13.1%
5. Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund Accumulation Shares 8.3%
6. Vanguard Emerging Markets Stock Index Fund Accumulation Shares 8.0%
7. Vanguard FTSE 100 UCITS ETF (GBP) Distributing 4.8%
8. Vanguard Japan Stock Index Fund Accumulation Shares 4.7%
9. Vanguard Pacific ex-Japan Stock Index Fund Accumulation Shares 2.4%
10. Vanguard FTSE 250 UCITS ETF (GBP) Distributing 0.9%

Couple of observations:
1. You appear to be 100% equities - although you may have diversified across different sectors and regions, it is still 100% equities
2. With the exception of the micro-cap fund, the Vanguard LS100 appears to overlap most of your other funds.
3. Overweight UK - given that Vanguard LS100 is already approx 20.3%, and you have a separate L&G UK index

You also need to define your concept of risk. On the face of it, none of the funds - with the exception of UK micro-caps - looks particuarly risky (although need to understand fund holdings), however the risk on the face of it is 100% in one asset class [equities] i.e. correlation in adverse market conditions.

As Julian states, need to understand your proportions held in each fund to make a proper assessment. I think there's a little bit of overalpped that could be triimmed (reducing fund costs) IMO. If in doubt, KISS.

[JulianPH]

As putonghua73 has said, you are 100% equities and whilst there is nothing wrong with this (given your 30 year investment horizon) it would make sense to consider some other assets for a small proportion of your portfolio.

Bonds and gilts can act as a hedge (as also can gold and property) against equities. Changing Vanguard LifeStrategy 100% to 60% would give you an overall 11% exposure to bonds quite simply, if you wanted to do this.

I wouldn't be overly concerned that you are overweight in UK equities though. Others may disagree with me. Moving to LS 60 would reduce some of the crossover in your portfolio though.

I would also question you going ex Japan (I know it is covered in your LS fund) and would consider reducing your European exposure a bit and positioning this in Japan. This is just me though (given, again, your investment horizon and my concerns about European markets).

Having said all this, I think you've done a good job of creating your own portfolio and if your platform allows for it I would set up an automated rebalance to stop anything from running away with itself.

[cbehagg242]

putonghua73 said:

I would opine that on the face of it - without further deep-diving into the individual fund holdings that comprise the LS100 - the Vanguard LS 100% is one of the least riskiest in terms of equities!

1. Vanguard FTSE U.K. All Share Index Unit Trust GBP Accumulation Shares 19.4%
2. Vanguard FTSE Developed World ex-U.K. Equity Index Fund Accumulation Shares 19.2%
3. Vanguard U.S. Equity Index Fund Accumulation Shares 19.2%
4. Vanguard S&P 500 UCITS ETF (USD) Distributing 13.1%
5. Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund Accumulation Shares 8.3%
6. Vanguard Emerging Markets Stock Index Fund Accumulation Shares 8.0%
7. Vanguard FTSE 100 UCITS ETF (GBP) Distributing 4.8%
8. Vanguard Japan Stock Index Fund Accumulation Shares 4.7%
9. Vanguard Pacific ex-Japan Stock Index Fund Accumulation Shares 2.4%
10. Vanguard FTSE 250 UCITS ETF (GBP) Distributing 0.9%

Couple of observations:
1. You appear to be 100% equities - although you may have diversified across different sectors and regions, it is still 100% equities
2. With the exception of the micro-cap fund, the Vanguard LS100 appears to overlap most of your other funds.
3. Overweight UK - given that Vanguard LS100 is already approx 20.3%, and you have a separate L&G UK index

You also need to define your concept of risk. On the face of it, none of the funds - with the exception of UK micro-caps - looks particuarly risky (although need to understand fund holdings), however the risk on the face of it is 100% in one asset class [equities] i.e. correlation in adverse market conditions.

As Julian states, need to understand your proportions held in each fund to make a proper assessment. I think there's a little bit of overalpped that could be triimmed (reducing fund costs) IMO. If in doubt, KISS.

Thanks putonghua73.

Point taken about 100% equities.
On the concept of risk point you raised, right now I am open to more risky investments since I am 28 so have quite some time before I can access any of this. Not sure if you saw after your comment but I added the proportions of each fund for reference.

Edited by cbehagg242 on Thursday 27th June 10:45

[cbehagg242]

JulianPH said:

As putonghua73 has said, you are 100% equities and whilst there is nothing wrong with this (given your 30 year investment horizon) it would make sense to consider some other assets for a small proportion of your portfolio.

Bonds and gilts can act as a hedge (as also can gold and property) against equities. Changing Vanguard LifeStrategy 100% to 60% would give you an overall 11% exposure to bonds quite simply, if you wanted to do this.

I wouldn't be overly concerned that you are overweight in UK equities though. Others may disagree with me. Moving to LS 60 would reduce some of the crossover in your portfolio though.

I would also question you going ex Japan (I know it is covered in your LS fund) and would consider reducing your European exposure a bit and positioning this in Japan. This is just me though (given, again, your investment horizon and my concerns about European markets).

Having said all this, I think you've done a good job of creating your own portfolio and if your platform allows for it I would set up an automated rebalance to stop anything from running away with itself.

Thanks Julian, will definitely look into bonds & gilts. I like the idea of switching to LS60, keeps it simple and still achieves a bit more balance.

As putonghua73 pointed out, my LS100 seems to overlap most of the individual L&G indexes, would it be worth scrapping these and holding only LS60 and LS100 for example or is this a big no-no for you more qualified investment gurus?

[Mr Pointy]

Sell it all & put it into Fundsmith & Lindsell Train.

Some of the above may not be entirely serious

[JulianPH]

cbehagg242 said:

Thanks Julian, will definitely look into bonds & gilts. I like the idea of switching to LS60, keeps it simple and still achieves a bit more balance.

As putonghua73 pointed out, my LS100 seems to overlap most of the individual L&G indexes, would it be worth scrapping these and holding only LS60 and LS100 for example or is this a big no-no for you more qualified investment gurus?

There is no reason why not to do this, it certainly simplifies thing and ensure you are regularly rebalanced.

Interesting to see the breakdown of the Vanguard LS100 also supports my view of reducing European exposure and increasing exposure to Japan.

So making this move could make a great deal of sense.

Who are you using for the platform and SIPP, if you don't mind me asking?

[cbehagg242]

JulianPH said:

There is no reason why not to do this, it certainly simplifies thing and ensure you are regularly rebalanced.

Interesting to see the breakdown of the Vanguard LS100 also supports my view of reducing European exposure and increasing exposure to Japan.

So making this move could make a great deal of sense.

Who are you using for the platform and SIPP, if you don't mind me asking?

Thanks for the advice, I will look into the LS60/100 split a bit more but seems like a reasonable setup. I'm using HL platform for the SIPP.

I have the LS80 with Vanguard for my S&S ISA which has been doing really well for the last 4 years. For some reason it feels odd to stick all of my savings into LS products...

[Derek Chevalier]

Mr Pointy said:

Sell it all & put it into Fundsmith & Lindsell Train.

Some of the above may not be entirely serious

[JulianPH]

cbehagg242 said:

Thanks for the advice, I will look into the LS60/100 split a bit more but seems like a reasonable setup. I'm using HL platform for the SIPP.

I have the LS80 with Vanguard for my S&S ISA which has been doing really well for the last 4 years. For some reason it feels odd to stick all of my savings into LS products...

Using HL for the SIPP adds another 0.45% a year to the costs, bringing you up to a total of 0.75% to 0.78% a year.

At this price point you may (or may not!) wish to consider adding 0.1% to access Intelligent Money for a fully managed portfolio with you own named account manager (0.87% inclusive).

This additional cost could be more than saved by moving your ISA directly to Vanguard and I only raise it as it would mean you were not sticking everything with Vanguard (not that there is really anything wrong with this).

You can find out more on the sticky at the top of this section. I must disclose that this is my investment management company.

[JulianPH]

Mr Pointy said:

Sell it all & put it into Fundsmith & Lindsell Train.

Some of the above may not be entirely serious

I missed this mate, excellent!!!

[Cardinal Hips]

Mr Pointy said:

Sell it all & put it into Fundsmith & Lindsell Train.
Some of the above may not be entirely serious

Works for me. Or just get a pet monkey and let him pick.

"The average monkey outperformed the index by an average of 1.7 percent per year since 1964."

https://www.forbes.com/sites/rickferri/2012/12/20/...

"Someone who put 20% of their money in a federally insured bank savings account, and the other 80% in a random collection of stocks from around the world, picked by monkeys, would be up about 6.2% so far this year. (And that’s assuming for the sake of simplicity that you earned 0% interest on the savings. In reality, you could have done slightly better) In other words, they would still have earned more than twice the returns of the average hedge fund."

https://www.marketwatch.com/story/how-hedge-fund-g...

Why put your money in a trough surrounded by snouts?

[Derek Chevalier]

Cardinal Hips said:

Works for me. Or just get a pet monkey and let him pick.

"The average monkey outperformed the index by an average of 1.7 percent per year since 1964."

https://www.forbes.com/sites/rickferri/2012/12/20/...

As the article says, tilting towards small cap/value stocks may bring better returns, but you have to accept (potentially) greater risk and drawdowns, and periods of underperformance. Unfortunately not a free lunch.

[cbehagg242]

JulianPH said:

Using HL for the SIPP adds another 0.45% a year to the costs, bringing you up to a total of 0.75% to 0.78% a year.

At this price point you may (or may not!) wish to consider adding 0.1% to access Intelligent Money for a fully managed portfolio with you own named account manager (0.87% inclusive).

This additional cost could be more than saved by moving your ISA directly to Vanguard and I only raise it as it would mean you were not sticking everything with Vanguard (not that there is really anything wrong with this).

You can find out more on the sticky at the top of this section. I must disclose that this is my investment management company.

Certainly worth thinking about although my ISA is already with Vanguard directly so would just be a matter of switching my HL SIPP to IM.

I'll have a look at your thread at the top of the page. Either way I appreciate your advice

[JulianPH]

cbehagg242 said:

Certainly worth thinking about although my ISA is already with Vanguard directly so would just be a matter of switching my HL SIPP to IM.

I'll have a look at your thread at the top of the page. Either way I appreciate your advice

No worries. It may be for you or it may be not!

The SIPP price point was so close I felt I had to mention this. Your ISA price point is very low though. I don't think you are doing anything wrong, I'm just trying to add something.

Of course, you could go in the other direction and look to reduce platform/SIPP costs (below those of HL).

For what it's worth, I don't think you will go wrong on either route. It basically comes down to preference and what you consider to be valuable.

If we can help then give us a shout. If not, then give us a shout anyway if you want to explore other options or just to have a sounding board.

Cheers

Julian


Edited to make more sense!

Edited by JulianPH on Friday 28th June 10:40

[95JO]

Sorry OP for attempting to derail your thread a little bit... But this made me think about my current S&S LISA holdings. I've maxed my LISA contributions for 2 and a bit years now and will have another 2-3 years so £5k x 4/5 = £20k/£25k.

I'm only investing into two funds currently and have been from the outset a couple of years ago:

L&G Global Technology Index I Acc - 17.65% / ~30% of total
Vanguard FTSE Dev Wld ex UK Eq Idx Inc - 12.16% / ~70% of total



I plan on purchasing a house in the next 2-3 years as mentioned and to be honest I'm willing to potentially lose at least the 25% LISA bonus.

I made these choices after reading PH's critically acclaimed "How to Own the World", assessing appetite for risk and picking low cost funds. However after neglecting the reallocation for some time I'm now questioning the weighting on Technology... But at the same time the results speak for themselves.

I guess I'm asking:

Just how risky is my current portfolio in your opinion taking into account my 2-3 horizon and a risk appetite?
Any recommendations at what value you would split into a more diversified portfolio? Is it worth it for the next 2-3 years?

Apologies for the subjectiveness of the question

Edited by 95JO on Friday 28th June 22:48

Edited by 95JO on Friday 28th June 22:49

[JulianPH]

95JO said:

I guess I'm asking:

Just how risky is my current portfolio in your opinion taking into account my 2-3 horizon and a risk appetite?
Any recommendations at what value you would split into a more diversified portfolio? Is it worth it for the next 2-3 years?

I would say that this is a very aggressive portfolio for a 2 to 3 year investment horizon. 100% equities and huge tech exposure does not sit with conventional wisdom for this investment window (particularly if this money is going towards a deposit on your first home).

There is nothing to say it won't work for you (and you have said you are happy to accept a 25% fall in value) but if you are relying upon this to secure your first home I would consider de-risking with bonds and gilts and other hedging assets.

With regard to splits into more diversified portfolios take a look at the comparison section at the bottom of this page:

https://www.intelligentmoney.com/private-clients/o...

Of course there are other options open to you.

Cheers

[95JO]

JulianPH said:

I would say that this is a very aggressive portfolio for a 2 to 3 year investment horizon. 100% equities and huge tech exposure does not sit with conventional wisdom for this investment window (particularly if this money is going towards a deposit on your first home).

There is nothing to say it won't work for you (and you have said you are happy to accept a 25% fall in value) but if you are relying upon this to secure your first home I would consider de-risking with bonds and gilts and other hedging assets.

With regard to splits into more diversified portfolios take a look at the comparison section at the bottom of this page:

https://www.intelligentmoney.com/private-clients/o...

Of course there are other options open to you.

Cheers

Thanks for the response Julian - I agree with your point regarding my heavy exposure to tech going against conventional wisdom... However, I'm guessing most 2-3 year investments for a house deposit are not willing to lose ~25%... Or be invested in the stock market at all!

I'll likely "cash out" once I have a house in sight. But until then, I'll keep lumping my £416pm in one or the other and hope for the best

All jokes aside, I'm quite happy with the risk I have... However, less exposure to tech is appealing as I naively didn't pay too much thought to the fact that both my funds have large holdings in Apple, Facebook and Microsoft in particular... And I have come out of the other-side so to speak with Apple recently so I know how it feels to lose 5%+ overnight and I don't particularly want that the day before my "cash out"

I'll take a look at the link, thanks again