Views on portfolio

[Srd11]

Hi

Would appreciate views on my Aviva portfolio. I'm around 10-15 years out from semi/retirement with reasonable risk appetite.

I've already a reasonable amount from prior jobs aggregated and sitting in a vanguard lifestrategy 60 which I plan to leave as is.

My current employer uses Aviva and I salary sacrifice. I was planning on a roughly 30/70 bond equity mix and am using the following:

65% Aviva BlackRock world ex UK equity index S6
5% Aviva BlackRock UK equity index S6
30% Aviva BlackRock consensus s6

So similar to lifestrategy but with slightly less UK bias.


Thoughts appreciated!

[tjh290633]

Hi

Would appreciate views on my Aviva portfolio. I'm around 10-15 years out from semi/retirement with reasonable risk appetite.

I've already a reasonable amount from prior jobs aggregated and sitting in a vanguard lifestrategy 60 which I plan to leave as is.

My current employer uses Aviva and I salary sacrifice. I was planning on a roughly 30/70 bond equity mix and am using the following:

65% Aviva BlackRock world ex UK equity index S6
5% Aviva BlackRock UK equity index S6
30% Aviva BlackRock consensus s6

So similar to lifestrategy but with slightly less UK bias.


Thoughts appreciated!

At 10-15 years to go my feeling is that lifestyling is probably a mistake. You are likely to do better in 100% equities over that long a period. Inflation proofing is more likely to come from the dividends generated. At times of high inflation, fixed interest does not help. Index linked effectively only protects the capital, assuming that they were bought when first issued.

TJH

[1nvest]

Isn't there a global stock fund choice, rather than opting for two funds (global exc. UK and a UK). I'd personally prefer that alongside separately held gold instead of bonds (67/33 global stock/gold proportions). Which could blend well (more diversify) a existing 67/33 stock/bond portfolio.

You are likely to do better in 100% equities over that long a period.

All stock tends to be better on average, but within that average there are individual cases/subsets with high variations/volatility. The worst cases of individual samples of say 30 year subset periods historically were worse than alternative asset allocations to 100% stock. That stock-heavy/all-stock has performed relatively well over the last 30 years does not make it likely that the same will follow over the next 30 years, if anything the risk of it not doing so is increased. That said, since 1987 (your HYP 'inception' date) and a third home value, remainder split 67/33 global stock/gold, with imputed rent and dividends included, has yielded the same total return as TJH HYP i.e. both up by around a 34 gain factor, but with considerably less volatility. 1990 was a exception where high volatility aligned with start/end of year such that a 10% down year occurred, other than that and other years had very few down years, and only mild declines when they did occur. TJH HYP in contrast has endured some years of very deep declines. OK if you can ride through that, many however might struggle to do so and be at risk of capitulating at the worst possible time. It's far easier to assume you can ride through such volatility, some/many however may find that when it actually comes to it they haven't the stomach. Which can result in outcomes where they'd have been better off had they simply held cash-deposits. Not a risk that should be too lightly brushed aside.

[Newroad]

Hi Srd11.

Given your apparent preferences and constraints, your suggestion seems entirely reasonable.

Noting the suggestion re 100% equities, some theoretic work I have seen suggests you don't get any benefit from equities above around 77% (same return, higher volatility {"risk"} above that holding). If you can get hold of a copy, have a look at Carver's "Smart Portfolios" from about p90.

So, I would start by having a look at whether Aviva have an equivalent to Vanguard's LifeStrategy80 and go from there (considering risk, return, cost, maintenance effort etc). If it hits the mark or close to it for you, then run with it, otherwise, calibrate it along the lines you suggest (but then, remember, you will need to ensure the rebalancing etc if needed).

If you want 70/30 specifically, then the equivalent of 50% Vanguard LifeStrategy80 and 50% Vanguard LifeStrategy60 from Aviva, if possible, would do it for you (including the rebalancing!).

I hope this helps!

Regards, Newroad

[Srd11]

Many thanks all - good food for thought and will dig more into

[dealtn]

Index linked effectively only protects the capital, assuming that they were bought when first issued.

TJH

Index linked effectively only protects the capital, assuming that they were bought at a price of par. Whether they were bought when first issued is irrelevant. Dozens of index linked bonds were first issued with a price considerably above par guaranteeing a real loss of capital from primary issuance.