Sensible ratio UK to non-UK trackers

Index tracking funds and ETFs
monstermixer
Posts: 2
Joined: December 9th, 2016, 10:26 pm

Sensible ratio UK to non-UK trackers

Postby monstermixer » December 9th, 2016, 10:35 pm

Hi,

I have a pension which I've currently got invested 82% in an unhedged non-UK tracker and 18% in UK FTSE all share tracker.

However, I want to move some money to a currency hedged tracker as I believe Sterling will rally over the medium-term. The problem is that the only tracker I have available to me through my company auto-allocates money 70:30 non-UK to UK investments.

This sounds way-high to me, unbalanced towards UK - what are your thoughts? I would have thought 80:20 was the appropriate ratio these days, but I was wondering how others have allocated their investments geographically?

I was thinking to actually split the funds 50% in the currency hedged, 5% in the UK tracker and 45% in the unhedged non-UK tracker instead to keep an 80:20 ratio.

Thanks

GeoffF100
Lemon Pip
Posts: 73
Joined: November 14th, 2016, 7:33 pm

Re: Sensible ratio UK to non-UK trackers

Postby GeoffF100 » December 10th, 2016, 11:47 am

We have a recent thread on this topic:

viewtopic.php?f=55&t=380

Hariseldon58
Posts: 26
Joined: November 4th, 2016, 9:42 pm

Re: Sensible ratio UK to non-UK trackers

Postby Hariseldon58 » December 12th, 2016, 11:00 pm

Given currency movements are very hard to predict perhaps you might just go with the flow....The world as a whole is very unbalanced towards the UK, thats a question of geography and hard to argue with. The argument is that your spending is geared toward the UK but a world equity tracker in foreign exchange has a lot going for it, a global bond tracker though tends not to reward the currency risk.

monstermixer
Posts: 2
Joined: December 9th, 2016, 10:26 pm

Re: Sensible ratio UK to non-UK trackers

Postby monstermixer » December 13th, 2016, 11:26 am

Yes agree currency movements are very hard to predict, but I'm basing it on my own reading of Brexit and that I believe we won't really leave the EU (well we'll have something called Brexit, but effectively it will maintain the status quo).

GeoffF100
Lemon Pip
Posts: 73
Joined: November 14th, 2016, 7:33 pm

Re: Sensible ratio UK to non-UK trackers

Postby GeoffF100 » December 13th, 2016, 6:51 pm

I hope you are right, but it is a big gamble. I have a long term plan to increase my overseas equity holdings, but I am not going to not do it all at once.

scrumpyjack
Posts: 14
Joined: November 4th, 2016, 10:15 am

Re: Sensible ratio UK to non-UK trackers

Postby scrumpyjack » December 13th, 2016, 7:27 pm

Most of the big 'UK' companies are in fact global businesses with well over 75% of their business overseas, so to classify them as UK is very overly simplistic. Many of the bigger ones account and declare dividends in Dollars or Euros inspite of being supposedly UK companies.

So the allocation you refer to is not as overweighted to the UK as it may at first sight appear.

Lootman
Lemon Slice
Posts: 527
Joined: November 4th, 2016, 3:58 pm

Re: Sensible ratio UK to non-UK trackers

Postby Lootman » December 13th, 2016, 9:21 pm

scrumpyjack wrote:Most of the big 'UK' companies are in fact global businesses with well over 75% of their business overseas, so to classify them as UK is very overly simplistic. Many of the bigger ones account and declare dividends in Dollars or Euros inspite of being supposedly UK companies.

So the allocation you refer to is not as overweighted to the UK as it may at first sight appear.

There is more to investing overseas than just where the earnings are on a lookthrough basis.

Things like tax risk, regulatory risk and political risk could affect just the UK while not really affecting overseas competitors. A Corbyn government could hurt BP, Glaxo and Barclays, while not affecting Exxon, Merck and Goldman Sachs.

hiriskpaul
Lemon Pip
Posts: 96
Joined: November 4th, 2016, 1:04 pm

Re: Sensible ratio UK to non-UK trackers

Postby hiriskpaul » December 14th, 2016, 10:28 am

Lootman wrote:
scrumpyjack wrote:Most of the big 'UK' companies are in fact global businesses with well over 75% of their business overseas, so to classify them as UK is very overly simplistic. Many of the bigger ones account and declare dividends in Dollars or Euros inspite of being supposedly UK companies.

So the allocation you refer to is not as overweighted to the UK as it may at first sight appear.

There is more to investing overseas than just where the earnings are on a lookthrough basis.

Things like tax risk, regulatory risk and political risk could affect just the UK while not really affecting overseas competitors. A Corbyn government could hurt BP, Glaxo and Barclays, while not affecting Exxon, Merck and Goldman Sachs.


Indeed. I would also add that a significant bounce back of the pound will hurt the pound value of the earnings/assets of UK listed global businesses every bit as much as those listed overseas. When/if that happens, the market prices of those companies will adjust accordingly.


Return to “Passive Investing”

Who is online

Users browsing this forum: a4alan and 1 guest