As alluded to on a couple of existing threads (happy to provide the details later, but want to keep this initial post as short as practical - alas, not very) I'm going to, indeed already am, conducting a real-world experiment on portfolio styles. In style of writing, I'm going to say "I" for ease - but in most cases, "I" means "we".
In the red-corner is something which loosely approximates a classic 60-40 portfolio. More specifically, it is 6 sub-portfolios: two SIPPs, two ISAs and two JISAs. They are not strictly targeting 60-40, but rather a linear equity holding between 78% (at birth) and 48% (if we make 100) with the balance being bonds and cash, based on some theoretic ideas derived from Robert Carver's book "Smart Portfolios".
In the blue-corner is something which is somewhat Pyad'ic HYPish (at least as far as I understand it) but also influenced by Carver's book. In short, I will buy one UK stock a month, rotating through the 11 sectors as defined by the GICS classification (11 "industries" in the ICB classication) on a risk (volatility) weighted basis - i.e. each sector will have a different cash weighting. Interestingly (and HYP'ers will be interested in this) Carver advocates using yield to determine picks within a sector, all other things being equal. Until the 11th sector is actually bought, each cycle, this will strictly be unbalanced, but the Sharpe ratio's are actually near enough their peak once you've purchased around 8 sectors (0.116) peaking at 11 sectors (0.117).
Both the red-corner and the blue-corner are not idealogically pure to Pyad, Carver or anyone else - they are both hybrids or interpretations to suit my circumstances. However, from that starting point, I'm going to try and do them in a disciplined manner in context - and in any case, I'm always dubious about zealot-like followers.
I'm going to measure on a total return basis - nothing else makes sense IMO - with unitised measurement. The red-corner is tax-sheltered, the blue-corner is completely non tax-sheltered. In the short term, this won't matter (see later) the should be few if any tax implications for the blue-corner. However, if that later becomes relevant, I'll cater for it appropriately in comparisons. I have no interest in deception, self or otherwise - this is my own money I'm risking! I admit that intellectually I'm currently in the red-corner, but
- 1. I have extra funds which "need" investing which can't be housed in a tax-sheltered way, and
2. I judge now might be a good time to "start" a HYP'ish strategy, if it's going to be right at all
The experiment will nominally run until my planned retirement, in around April 2031, or to such time as I decide to stop it. At that point, it will inform how I handle the remaining portfolios (the JISA's may be under separate control) during retirement.
I have already made the first two purchases for the blue-corner: RIO in March 2022 and BATS in April 2022. I will unitise twice a month as per my existing practise - once at start/end of month, once mid-month after the third Wednesday (the II free dealing day, when the red-corner is topped up). Each unit started at £100, but they won't start the experiment at that level, 01st April 2022, as they started at different times. The starting unit prices are
- Red Corner (Pseudo-Classic): 101.23
Blue Corner (Pseudo-HYP): 103.28
The Red-Corner is an arithmetic mean of the following
- Mrs N ISA: 101.73 - MWY, VWRL, HDIV, VAGP
Mrs N SIPP: 100.73 - ATST, VWRP, BIPS, VAGP
Miss N JISA: 99.97 - FCIT, VWRL, BIPS, VAGP, MNP*
Mstr N JISA: 100.38 - FCIT, VWRL, BIPS, VAGP, MNP*
Mr N ISA: 101.82 - MWY, VWRL, HDIV, VAGP
Mr N SIPP: 100.65 - ATST, VWRP, BIPS, VAGP
For purposes of indicative reporting, I think the mean will be close enough, but I will be capturing all and can dis-aggregate as needed on request down the track. I will probably do a full year report each April and an interim report each October, or thereabouts.
I hope this is of interest - if anyone has any questions arising, please ask - I will answer if practical.
Regards, Newroad
* I should note that MNP is purchased in a fixed amount each month, £50, due to grandparental contribution. This is taken into account in the equity ratio being targeted (as is Mrs N's company defined contribution pension) but only purchase levels for the first four items listed for each of the sub-portfolios varies from month to month to target the combined equity ratio
Moderator Message:
I have moved this topic from the HYP Practical Board to here, as this is a more appropriate place for this discussion.
TJH
I have moved this topic from the HYP Practical Board to here, as this is a more appropriate place for this discussion.
TJH
