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Adding Gold and/or Property?

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Newroad
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Re: Adding Gold and/or Property?

#422688

Postby Newroad » June 26th, 2021, 8:22 pm

Hi 1nvest.

Alas, I am not yet retired, which is one of the reasons I can't devote inordinate amounts of time at this point on investing. That said, I don't mind work too much, so its not a major issue for me.

On currencies (and more broadly hedging) I'm not that interested. It seems to me that any interest in currencies is best for people who speculate in them. Otherwise, I'm happy taking the vagaries of their (usually relatively minor, compared to equities at least) movements and not paying to hedge - I almost always prefer to "self-insure" given the option. That said, VAGP is hedged - however I don't believe there is an unhedged equivalent.

Perhaps when we reach drawdown phase, as opposed to the current accumulation one, we may take a different view. However, that is more likely to spread our risks between GBP and AUD assets as they are likely to be, in some combination, where we spend most time during retirement. However, reasonable inheritances are likely to come at some point (not that we're in any hurry for them or need them to live on) weighted more to one than the other - so I wouldn't want to "rebalance", so to speak, too early. Further, in any case, many of these GBP and AUD assets are in effect global anyway, rendering such hedging somewhat moot.

Currently, tax considerations and reporting are not an issue for us - everything is tax sheltered in one form or another - in April I completed the last bit of that for the kids (their grandparental money was outside the JISA - it took a couple of tax years to shift it in alongside the current contributions and keep it under the annual limit).

Finally, as mentioned earlier, though I think it may be a decent idea to put SGLN and/or IWDP or similar in, especially to the ISA's and SIPP's (less so, JISA's) I'm not sure the theoretic marginal risk vs return improvement is worth the effort. Maybe I just need to consider a broader Commodity ETF*, e.g. COMM (though I'd need to do a little more to understand this particular ETF if so) or Commodity Investment Trust, e.g. BRWM - which I thought seriously about doing many months ago, but, alas, didn't have the courage of my convictions - and may now have missed that boat :(

Regards, Newroad

* which would sit better with me than straight gold

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Re: Adding Gold and/or Property?

#422812

Postby richfool » June 27th, 2021, 11:35 am

1nvest wrote:A factor for me with IT's is that they can have great flexibility. PNL for instance can buy into pretty much whatever it likes in whatever amounts it likes and even add in leverage/gearing ..etc. Whilst I respect the managers abilities I however lack total trust. If for instance they deemed a low had occurred and opted to go for 200% long stock exposure in the belief that stocks only had one way to go then that's perfectly within their remit but could be disastrous. To reduce a whoops we got it seriously wrong you have to diversify, which entails overlap/duplication ..etc. Factors I may not want to or be able to manage in my dotage. Simplicity of own a home, a major accumulation index fund and some gold has the simplicity of just sell down either stock or gold each month for income according to whichever is the higher valued that likely will serve as well at sustaining income/spending objectives come what may.

Newroad wrote:I have see others mentioning their 8, 10, 20 ... whatever IT's but seeing your four spiked my interest for its relatively good balance/diversity. That does look well placed as-is to me.

Finally, as mentioned earlier, though I think it may be a decent idea to put SGLN and/or IWDP or similar in, especially to the ISA's and SIPP's (less so, JISA's) I'm not sure the theoretic marginal risk vs return improvement is worth the effort. Maybe I just need to consider a broader Commodity ETF*, e.g. COMM (though I'd need to do a little more to understand this particular ETF if so) or Commodity Investment Trust, e.g. BRWM - which I thought seriously about doing many months ago, but, alas, didn't have the courage of my convictions - and may now have missed that boat

An interesting thread, and nice to read investment matters on Lemon Fool.

Invest, Yes, it's important to note the objective of the IT's one proposes investing in. With particular reference to PNL, its mandate is the protection/preservation of wealth as first priority, and its growth/increase as the second priority. (I quote: "The company aims to protect and increase (in that order) the value per share for the funds of shareholders over the long term."). I would therefore expect the manager to vary its asset allocations, as well as investments to meet that objective and to reflect changing circumstances. That I see as an advantage of holding IT's generally, as opposed to holding individual investments directly, - i.e. that I don't have to worry or make decisions relating to asset allocation or choice of investments.

Newroad, I use BERI (Blackrock Energy & Resources Income trust - formerly called: Blackrock Commodities Income trust), to achieve my main exposure to commodities, though I do also hold: CYN (City Natural Resources) and BRWM (Blackrock World Mining). Note, BERI's holdings include: miners, metals, commodities, energy,- fossil & renewables. All 3 have exposure to gold (as does PNL).

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Re: Adding Gold and/or Property?

#422826

Postby richfool » June 27th, 2021, 12:13 pm

Correction to my post immediately above: CYN (City Natural Resources), should read: CYN - (CQS Natural Resources Growth & Income trust).

For more info on trusts mentioned above:

https://www.hl.co.uk/shares/shares-sear ... income-25p

https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.01

https://www.hl.co.uk/shares/shares-sear ... rdinary-5p

https://www.hl.co.uk/shares/shares-sear ... p12.50-ord

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Re: Adding Gold and/or Property?

#422876

Postby Newroad » June 27th, 2021, 3:43 pm

Thanks, Richfool.

I vaguely remember looking at BERI before - I think it may have had high ongoing charges, which would have put me off somewhat.

My guess is that I'll remain with my simple, yet broad, four-holding portfolios, for some time at least - as I'm not convinced I'm prepared to put in the effort which would be needed to step-change them to a more diverse set of holdings at a new equilibrium.

Whether each of those four holdings might change is a different matter ...

Regards, Newroad

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Re: Adding Gold and/or Property?

#422896

Postby 1nvest » June 27th, 2021, 4:39 pm

richfool wrote:Invest, Yes, it's important to note the objective of the IT's one proposes investing in. With particular reference to PNL, its mandate is the protection/preservation of wealth as first priority, and its growth/increase as the second priority. (I quote: "The company aims to protect and increase (in that order) the value per share for the funds of shareholders over the long term."). I would therefore expect the manager to vary its asset allocations, as well as investments to meet that objective and to reflect changing circumstances. That I see as an advantage of holding IT's generally, as opposed to holding individual investments directly, - i.e. that I don't have to worry or make decisions relating to asset allocation or choice of investments.

Blending a few other 'protective' IT's as a form of 'bond' set, four in total (RICA,RCP,PNL,CGT) and combining those with Berkshire Hathaway (which also holds varying cash/stock) along with 2x FT250 ... and a quick scan indicates ... (mostly yahoo adjusted close based data, so worth as much as a pinch of salt)

Image

I would consider that as a form of 50/50 stock/bond type holding.

50/50 2x stock/bonds might broadly compare to 100% 1x

so pair 2MCL (2x FT250) with one of the defensive "bond like" IT's combines to as though (as 1/6th = 17% weighting to each) 34% long stock, that partnered with BRK makes 50% overall stock.

And hopefully if the defensive IT's collectively do a reasonable job of downside prevention, along with BRK also tending to have lower downside in general, that might be quite a nice portfolio/set.

Interesting to see just how far US stocks have run ahead since Jan 2014 (limit of data due to 2MCL history).

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Re: Adding Gold and/or Property?

#422950

Postby Newroad » June 27th, 2021, 7:57 pm

I think, 1nvest.

That in the short to medium term (and maybe longer) your final point alludes to the big question ...

    "How much of the US's recent outperformance is due to structural vs cyclical factors?"

A lot of the need for risk mitigation and the means of achieving it depends on this question.

Regards, Newroad

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Re: Adding Gold and/or Property?

#422969

Postby richfool » June 27th, 2021, 9:18 pm

Some relevant reading (in relation to protection from inflation):

https://www.fidelity.com/learning-cente ... -inflation

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Re: Adding Gold and/or Property?

#422996

Postby 1nvest » June 28th, 2021, 1:33 am

Real losses can arise out of flat/down years when also drawing a income, its not always inflation that drives such losses. US Wall St Crash years saw deflation. Interestingly if a US investor had 50/50 US/UK stocks then the 1929 4% SWR failure case was totally blown out of the water, the early 1930's just saw a hiccup.

Japan's lost decade - vanishes if a Japanese investor opted to hold a third each in J/US/UK stocks viewtopic.php?p=422938#p422938 and instead saw great gains. Only if a J investor invested in J stocks - that had a fantastic pre-cursor up-run (age of Yamaha, Sony ...etc. boom).

The US recent up-run since the mid 2010's could be considered as a compensatory run for both the US and UK lost noughties (2000's) decade of relatively low rewards. Click the Inflation Adjusted tickbox in this chart and 2000 to 2009 was pretty concerning for a US investor in US stock using a 4% SWR. 60/40 was still unpleasant - but far less so

A UK investor into US stocks and UK midcaps (small cap in US scale) during the 1970's high/rising inflation did see flat real rewards, not great, but far far better than seeing large real value declines whilst also drawing a income.

I guess that concentration into a single stock/market is a risk factor. Only takes a idiot at the helm to impose conditions such as 130% retrospective taxation (Labour 1968) and otherwise high 1960's taxation that has the likes of the Stones opting for self tax-exile to France as 2p on the Pound was a insult and the domestic stock market is likely going to reflect such stupidity. Printing money is in effect a partial default, a micro-taxation that benefits those that can print/spend at the cost of devaluing all other notes in circulation. When pushed to the extremes ??? Feels like sooner or later something will have to give.

Another option is to scale up cost-averaging. For accumulators price declines see new money buying more shares. For a lump summer liquidating down to perhaps 20/80 and over time directing that to 80/20 over perhaps 10 years averages 50/50, time averaged. Generally comparable in the broad sense to a constant 50/50. However if prices just rise then its better to have been more heavily weighted (constant 50/50), if prices instead drop and rebound the cost averaging tends to do better (20/80 that transitions to 80/20). Buffett is up at around 33% cash levels, very high levels by his standards. -2%/year on cash can look trivial when that cash might buy back twice as many shares (100% increase in stock purchase power).

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Re: Adding Gold and/or Property?

#423230

Postby Newroad » June 28th, 2021, 8:13 pm

Hi 1nvest.

I'm not convinced 1/3rd UK equities was even potentially on the radar for the 90's era Japanese investor, but your broader point is well made - a 90's equivalent of VWRL would likely have done fine.

The lump sum vs cost averaging consideration and its close cousin, rebalancing, is also interesting. In so far as it affects me/us, during accumulation phase, I rebalance as far as practical once per month (the ii free investment day - third Wednesday of the month). My "North Star" on this is the equity percentage within the portfolio (as calculated by the X-Ray tool). If above target, I buy (more) bonds, if below target, I buy (more) equities. Within those two categories, I buy (more of) either the active or the passive holding - whichever is lower.

Further (and this goes to your related point on directionality) - if equities go largely in one direction, I probably lose out marginally with this approach. Conversely, if equities bob up and down a bit*, even if generally up over time, I probably gain marginally with this approach. The above has so far gone smoothly - everything was almost bang on target. More recently, the replacement of MYI with MNP in the JISA's temporarily pushed the equities component above target by about 3%. No panic - I had previously set +/-5% as an intra-month forced rebalance threshold - so will try and manage it down over a number of months.

However, during drawdown in the future, I suspect it should be different. My gut instinct is to draw down somewhere between once a quarter and once a year - perhaps closer to the latter. I would propose to rebalance less frequently - namely, at the time of each drawdown.

Regards, Newroad

* which I judge is close to what happens in practise more often

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Re: Adding Gold and/or Property?

#431269

Postby Newroad » July 29th, 2021, 4:44 pm

Afternoon 1nvest, Richfool etc al.

Well, this chapter of my investing has reached its denouement.

Didn't add any ETF's for gold or REITS.

In the beauty parade to replace WTAN in the ISA's and with the Olympics spirit in focus - early favourite MNKS only took bronze, mid-race leader BNKR took silver, but the gold medal winner, trades executed late today, was MWY. WTAN is no more in the portfolio.

Regards, Newroad

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Re: Adding Gold and/or Property?

#438737

Postby richfool » August 31st, 2021, 7:01 pm

Newroad wrote:Afternoon 1nvest, Richfool etc al.

Well, this chapter of my investing has reached its denouement.

Didn't add any ETF's for gold or REITS.

In the beauty parade to replace WTAN in the ISA's and with the Olympics spirit in focus - early favourite MNKS only took bronze, mid-race leader BNKR took silver, but the gold medal winner, trades executed late today, was MWY. WTAN is no more in the portfolio.

Regards, Newroad

I've just been wading through this thread (again). I'd forgotten I'd even posted on it. In view of your last para above, you maybe interested in this very recent update on Mid Wynd:

viewtopic.php?p=438564#p438564

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Re: Adding Gold and/or Property?

#438739

Postby Newroad » August 31st, 2021, 7:18 pm

Thanks, RichFool.

Yes, saw that earlier - didn't have anything to add - hence no additional comment. I'm actually fairly content now with the long term portfolios, in one of which MWY is doing just fine in the ISA's. I don't imagine much action from me - other than rebalancing if and as needed.

The exception, as mentioned elsewhere, is in the active bond category. Due to the merger between CMHY and IPE into BIPS I now hold that in two portfolios. What I'd like to do in this category, I think, is get to

ISA: NBMI
SIPP: HDIV
JISA: BIPS

from the current

ISA: HDIV
SIPP: BIPS
JISA: BIPS

But there are two issues

(1) Transaction costs - see here where I'm trying to figure a path to mitigate some of this: https://lemonfool.co.uk/viewtopic.php?f=26&t=30998, and

(2) It's not quite the right time to do a BIPS -> NBMI switch according to one of the key technical indicators which has served me well this year on other timing choices, RRG: NBLS = NBMI vs BIPS - source Stockcharts

Image

I'm patient though (you saw how long I waited to get out of WTAN and MYI) so watch this space - another entry point will come :)

Regards, Newroad

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Re: Adding Gold and/or Property?

#439171

Postby Hariseldon58 » September 2nd, 2021, 10:12 am

The usefulness of a small holding , say 5% is a good question and on the face of it is not relevant to the overall mix, however I like the approach of the Sky Sport Cycling team’s marginal improvements, make a number of small changes with apparently marginal improvements, such that the cumulative effect becomes noticeable.

The difficulty of say IWDP is that it’s quite expensive (.59%) and REITs have been volatile over the last 15 years, in bad times they tend to high correlations to poor equity returns. Perhaps consider Brookfield ? It provides an interesting spin on property, infrastructure, private investments.


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