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Vanilla IT portfolio

A helpful place to also put any annual reports etc, of your own portfolios
terterto
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Vanilla IT portfolio

#434522

Postby terterto » August 13th, 2021, 11:10 am

Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)

richfool
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Re: Vanilla IT portfolio

#434537

Postby richfool » August 13th, 2021, 11:50 am

terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)


You seem to be focussing on growth, with some income, which is entirely reasonable.

F&C is a global growth trust, as is The Scottish Investment Trust.
Scottish American is a global growth & income trust, with more emphasis on the growth.
Dunedin a UK growth and income trust (with an income focus).
Mercantile a UK mid cap trust.

All seem reasonable to me.

Of the above, I hold: DIG and SAIN . I also hold JGGI a global a growth & income trust with a focus on growth stocks. That might be worth considering adding to your holdings.

TUK020
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Re: Vanilla IT portfolio

#434543

Postby TUK020 » August 13th, 2021, 12:07 pm

terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)

Collectives vs Individual company holdings
Makes sense if you want to invest for a long horizon, and not spend too much time and effort on managing the portfolio.
# of holdings
While you would need 15-20 holdings to get adequate diversity for individual stocks, going for collectives means that 5-10 would do.
Yield
As you are accumulating for 15 years, it makes sense not to worry about income level at this stage; you have plenty of time later to rebalance for more yield
'Old' ITs
Very much agree with you that these are likely to be more conservative than flashy, and would take great pains to maintain their track record
Composition
I hold F&C, and have looked closely at DIG & Mercantile. These are all reasonable bets. Haven't looked at Scottish American & Scottish Investment Trust enough to have an opinion.
Other things worth looking at
* In line with the 'old money' approach, I would be tempted to include one of the ITs that represent an old family money investment house. I hold RIT Capital Partners (RCP) which is in effect the Rothschild banking family IT. There are other examples such as Caledonian & Brunner.
* ETFs. You are investing with a long enough horizon, that it is worth trying a couple of things to allow you to fine tune your approach later. Run a low cost world ETF tracker (VWRL?) alongside something like FCIT, and see how they perform.
* I would also be tempted to have at least one of my bets on a potential high risk/reward fund focused on new technology/disruptive businesses. Something like Scottish Mortgage or Monks.

baldchap
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Re: Vanilla IT portfolio

#434573

Postby baldchap » August 13th, 2021, 1:59 pm

Not my personal choices but I totally understand the reasoning.
(I would definitely favour STS/BNKR or similar over SCIN though).

Araya
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Re: Vanilla IT portfolio

#434589

Postby Araya » August 13th, 2021, 3:54 pm

terterto wrote:The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too).

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

The yield is just around 2.7%


Why do you invest for income if you intend to work for another 15 years? Also, much too much UK weighting. With a 15-years time horizon, I'd put most into a world tracker, and the rest into a high growth fund or 2. Then, once you're actually close to retirement and need income, you might move some funds into income focused ITs. With a world tracker plus 1 or 2 growth-focused ITs, you're getting:

- better diversification
- lower costs
- likely better returns
- less decisions to make since world tracker is the only true 'buy and forget' equity investment

My choice would be something like:

75% HSBC FTSE All World Index C Acc
25% MNKS (or, if feeling adventurous, SMT) or perhaps 12.5% each into MNKS/SMT and Fundsmith

terterto
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Re: Vanilla IT portfolio

#434621

Postby terterto » August 13th, 2021, 7:19 pm

* In line with the 'old money' approach, I would be tempted to include one of the ITs that represent an old family money investment house. I hold RIT Capital Partners (RCP) which is in effect the Rothschild banking family IT. There are other examples such as Caledonian & Brunner.


Thanks a lot for your take, really appreciated. That's a good idea. I was considering doing a Team B of a few other ITs and then alternate my monthly contributions between Team A and Team B but haven't quite decided. RIT and Brunner could be part of that.

(I would definitely favour STS/BNKR or similar over SCIN though).


Yes, The Scottish has had a bad few years. I'm holding on with the hope that things will change, especially now that the Directors are looking at switching investment managers (I think that's quite likely, but who knows). The 3% yield keeps me going and they have large revenue reserves. But I may switch if nothing changes.

My choice would be something like:

75% HSBC FTSE All World Index C Acc
25% MNKS (or, if feeling adventurous, SMT) or perhaps 12.5% each into MNKS/SMT and Fundsmith


That's a very good point, and in fact my wife only invests in that HSBC tracker and she's very happy. I personally prefer active management and something a bit more conservative and the fact that I get some dividends keeps me 'motivated' to invest. But I'll definitely have a think about what you mentioned, thanks a lot for your reply.

Dod101
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Re: Vanilla IT portfolio

#434631

Postby Dod101 » August 13th, 2021, 8:13 pm

terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)


The longer a thread continues the less relevant to your question it will become. That seems axiomatic. I think your choices are fine although I would substitute Scottish IT for either Alliance or Scottish Mortgage, the latter being the racier of the two. I hold both. Alliance has the slightly higher dividend, with a hint in the recent Interim Report that they are considering an increased dividend, possibly from capital reserves. Both are long established ITs.

Dod

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Re: Vanilla IT portfolio

#434695

Postby jackdaww » August 14th, 2021, 8:59 am

terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)


==========================

your selections are fine - there are many good low cost IT's about .

why do you have any concern for yield ?

surely the objective is to have the biggest possible pot in 15 years time .

even then its simple enough to sell down when you need money .

:)

terterto
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Re: Vanilla IT portfolio

#434723

Postby terterto » August 14th, 2021, 11:40 am

why do you have any concern for yield ?

surely the objective is to have the biggest possible pot in 15 years time


Thanks a lot for your reply - you're absolutely right. I think I just sometimes get the Rockefeller attitude watching the dividends coming in... :) But I should be perhaps a bit more adventurous in terms if growth.

tjh290633
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Re: Vanilla IT portfolio

#434724

Postby tjh290633 » August 14th, 2021, 11:42 am

terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)

It looks a very sensible approach to me. I wouldn't worry about the yield at this stage. You may well find by the time it comes to retirement that you have more than enough anyway. I found that I had enough from pensions without drawing from investments except for special events or paying for cruises, but it depends on your lifestyle.

I think that there is enough variety in ITs without going into ETFs, and they are preferable to OEICs in any case. If you need more income, a switch into higher yielding ITs may be the best route to follow, unless you wish to start dabbling in individual equities. More risk, of course, but possibly higher rewards (or losses).

Keep on the route you are following.

TJH

JohnW
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Re: Vanilla IT portfolio

#435012

Postby JohnW » August 16th, 2021, 2:03 am

Annual funds management cost as a percentage of funds?

AWOL
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Re: Vanilla IT portfolio

#435018

Postby AWOL » August 16th, 2021, 4:23 am

Dod101 wrote:
terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)


The longer a thread continues the less relevant to your question it will become. That seems axiomatic. I think your choices are fine although I would substitute Scottish IT for either Alliance or Scottish Mortgage, the latter being the racier of the two. I hold both. Alliance has the slightly higher dividend, with a hint in the recent Interim Report that they are considering an increased dividend, possibly from capital reserves. Both are long established ITs.

Dod


Sorry to be contrary but... I personally think Alliance does a lot of work to perform like a global tracker, for a long time worse than a global tracker, occasionally better. I'd hold some SWDA or VWRL instead of Scottish IT at least they have low tracking error.

I don't think his style of investing (taking comfort from longevity, tradition and dividends) is suited to racy SMT. However a global tracker would fit nicely although I'd push things and go for an accumulation ETF.

ADrunkenMarcus
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Re: Vanilla IT portfolio

#435162

Postby ADrunkenMarcus » August 16th, 2021, 3:42 pm

terterto wrote:20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

Any opinions will be welcome :)


Looks good. Maybe consider Bankers or Brunner? I'm not sure the Scottish Investment Trust has a great record but I'd need to check the stats.

Best wishes

Mark.

terterto
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Re: Vanilla IT portfolio

#435483

Postby terterto » August 17th, 2021, 7:11 pm

AWOL wrote:
Dod101 wrote:
terterto wrote:Hello, first time here, I was hoping to get your opinion about my portfolio of investment trusts.

I invest the same amount every month. The idea is to contribute to it for 15 years and use the income to supplement by DB pension and to retire early (I have a rental property too). I'm in my early 40s. Ideally the capital will be inherited by my kids and I'd prefer not to touch it. I've tried not to chase yield.

20% F&C
20% Mercantile
20% Dunedin Income Growth
20% Scottish American
20% The Scottish Investment Trust

I prefer old investment trusts, the older the better. Perhaps it's irrational but I take comfort in their long track records.

The yield is just around 2.7%, although it was a bit higher when I started it a year ago. I wonder sometimes if that's a bit too low and should switch any holdings or add the odd ETF. I'm a bit OCD when it comes to keeping things tidy, though.

I've seen that most people have a larger number of holdings, and a mix of IT, trackers and so on.

Any opinions will be welcome :)


The longer a thread continues the less relevant to your question it will become. That seems axiomatic. I think your choices are fine although I would substitute Scottish IT for either Alliance or Scottish Mortgage, the latter being the racier of the two. I hold both. Alliance has the slightly higher dividend, with a hint in the recent Interim Report that they are considering an increased dividend, possibly from capital reserves. Both are long established ITs.

Dod


Sorry to be contrary but... I personally think Alliance does a lot of work to perform like a global tracker, for a long time worse than a global tracker, occasionally better. I'd hold some SWDA or VWRL instead of Scottish IT at least they have low tracking error.

I don't think his style of investing (taking comfort from longevity, tradition and dividends) is suited to racy SMT. However a global tracker would fit nicely although I'd push things and go for an accumulation ETF.


You make a good point. I think one of the reasons I chose The Scottish was that it was a 'value contrarian' global trust which would be different from the 'mainstream' growth of F&C. Sadly The Scottish has been the worst performing by quite a bit. I'm a bit wary of switching away from it now because the board may change the investment manager, but now I wish (hindsight 20/20) that I had chosen Brunner, Bankers or other mentioned here. Thanks for your reply btw.

Dod101
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Re: Vanilla IT portfolio

#435488

Postby Dod101 » August 17th, 2021, 7:42 pm

I begin to wonder about self managed ITs. Not many of them seem to do too well and frankly Scottish has been poor for a long while. Others, for instance RIT, I like although I doubt that it could be called 'value contrarian'. It certainly invests in stuff that few of us could reach ourselves and it has done well over the years. It would to me at least qualify as part of a vanilla IT portfolio, but I am not sure what is meant by that.

Dod

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Re: Vanilla IT portfolio

#435607

Postby Dod101 » August 18th, 2021, 10:29 am

I might have said that there may be a case for leaving Scottish for the moment until matters become clearer re its management mandate. Readers will know that it is currently looking at alternatives to independent management.

Dod


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