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Criticize my SIPP portfolio

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
tgboswell
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Criticize my SIPP portfolio

#431025

Postby tgboswell » July 28th, 2021, 6:46 pm

Hello

I'm 28 years old and new to investing. I'm looking for some criticism of my SIPP portfolio...

I currently hold:

Vanguard Target Retirement 2055 (Core holding)
BMO Global Smaller Companies
JPMorgan Emerging Markets Investment Trust
Scottish Mortgage Investment Trust
Worldwide Healthcare Trust

I'm wondering if these are suitable satellites to supplement my core holding of Vanguard Target Retirement 2055. Do they offer diversification with minimal duplication? What percentages would you allocate to each holding? What further satellites of what sectors could I hold which will offer further diversification?

Any thoughts including criticism is welcome.

Thank you

Dod101
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Re: Criticize my SIPP portfolio

#431044

Postby Dod101 » July 28th, 2021, 8:45 pm

tgboswell wrote:Hello

I'm 28 years old and new to investing. I'm looking for some criticism of my SIPP portfolio...

I currently hold:

Vanguard Target Retirement 2055 (Core holding)
BMO Global Smaller Companies
JPMorgan Emerging Markets Investment Trust
Scottish Mortgage Investment Trust
Worldwide Healthcare Trust

I'm wondering if these are suitable satellites to supplement my core holding of Vanguard Target Retirement 2055. Do they offer diversification with minimal duplication? What percentages would you allocate to each holding? What further satellites of what sectors could I hold which will offer further diversification?

Any thoughts including criticism is welcome.

Thank you


I have no idea what the Vanguard Target Retirement 2055 contains but I would add a generalist IT just to give you some comparison. There are a number you could chose from, say Alliance Trust, F & C IT, Bankers and so on. Scottish Mortgage is one I suppose but to me has quite a different angle from those I have mentioned. If the Vanguard fund is to be a core holding then I suppose you need to have at least 30% or more in it and simply take the other 4 or 5 trusts and spread the balance equally between them. accumulate any dividends for a year or so and add them to the trust that has done least well in the previous twelve months. leave the mix well alone if you can for say five years and then assess how they have done. You have time on your side so do not fret year by year.

Dod

tjh290633
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Re: Criticize my SIPP portfolio

#431067

Postby tjh290633 » July 28th, 2021, 10:52 pm

tgboswell wrote:I'm 28 years old and new to investing.

Vanguard Target Retirement 2055 (Core holding)
BMO Global Smaller Companies
JPMorgan Emerging Markets Investment Trust
Scottish Mortgage Investment Trust
Worldwide Healthcare Trust

I'm wondering if these are suitable satellites to supplement my core holding of Vanguard Target Retirement 2055. Do they offer diversification with minimal duplication? What percentages would you allocate to each holding? What further satellites of what sectors could I hold which will offer further diversification?

I am not very enamoured of the idea of a "Core holding". I would far rather have roughly equal amounts of a number of diversified ITs, including one or more of the global ITs already mentioned. Possibly one commodity oriented and another Property REIT or two.

If you start out equally weighted, before long the odds are that some will outpace others and you may have the odd laggard. At your age you can rebalance if needed through your regular subscriptions.

TJH

Urbandreamer
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Re: Criticize my SIPP portfolio

#431113

Postby Urbandreamer » July 29th, 2021, 8:28 am

tgboswell wrote:I'm wondering if these are suitable satellites to supplement my core holding of Vanguard Target Retirement 2055. Do they offer diversification with minimal duplication? What percentages would you allocate to each holding? What further satellites of what sectors could I hold which will offer further diversification?

Any thoughts including criticism is welcome.

Thank you


Others have commented upon your core holding so I'll limit myself to the issue of duplication and diversification.
I see very little possibility for significant duplication, though there will be a small amount. For example it's likely that the core holding will have investments that SMT also hold. Likewise the core holding and WWH. I would believe that the amounts will be small enough to be ignored.

Diversification is more of a contentious issue. What do you actually mean by it and why do you want satellite holdings rather than just holding the Vanguard fund?

By adding these satellites you have effectively reduced your holding in that and by doing so increased your equity exposre while reducing your bond exposure. Most who have commented would regard that as no bad thing at your age, but it reduces asset diversification. I would agree with them and argue to increase equity exposure, but others might argue to introduce exposure to alternative investments like gold, property or even Bitcoin hence increasing asset diversification. There are "capital preservation" funds that will do this for you like Ruffer or Capital Gearing. However the returns are low, which is no great surprise.

FWIW I would be happy to hold each or all of your satellite choices. I tend to run my portfolio more as TJH has suggested.

mc2fool
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Re: Criticize my SIPP portfolio

#431177

Postby mc2fool » July 29th, 2021, 11:26 am

tgboswell wrote:I'm wondering if these are suitable satellites to supplement my core holding of Vanguard Target Retirement 2055. Do they offer diversification with minimal duplication? What percentages would you allocate to each holding? What further satellites of what sectors could I hold which will offer further diversification?

I doubt that most offer diversification with minimal duplication 'cos the Vanguard fund is a collection of funds that will have between them several thousand holdings, so good chance that a lot of what the ITs hold is already in the Vanguard fund, so it's then just a matter of percentages (mostly tiny). Smaller companies may be an exception to that, and I'll leave you to research the Vanguard fund's holdings in that.

I suggest that, with such an all-encompassing core holding which has so many holdings itself, rather than thinking in terms of diversification with minimal duplication (which is fine if you can find it) you think in terms of tilts.

E.g. the Vanguard fund has 7.1% in emerging markets, so by adding an emerging markets IT/ETF/fund you are adding a tilt of the portfolio towards emerging markets (assuming you think that's a good thing of course).


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