What would you suggest?

[elephanthunt11]

Hi all,

Long time lurker, first time poster here, hoping for your opinions and suggestions on where I should be looking. I am not looking for stock tips, more 'maybe take a look at this' type suggestions.

For background:
I'm 30 years old, have been investing for 4-5 years, S&S ISA value currently at just under £70k. Investment horizon is currently indefinite.

My positions are mostly index funds with some direct equities, and cash @8.3% currently. Breakdown as follows.

Funds:
-Legal & General US index - 38.8%
-Legal & General Global Technology index - 8%
-Vanguard FTSE 100 index - 5.8%
-Fundsmith Equity - 6.2%

Stock:
-LVMH - 11.2%
-Barratt Developments 8.2%
-American Express - 7.8%
-Astrazeneca - 5.7%

I'm considering selling out of Fundsmith Equity, regardless of past performance - I cannot reconcile a .95% AUM fee with my investment philosophy of militant-like cost control, and I am looking to take on another direct equity investment which matches my criteria.

My criteria are, in no particular order/mutual exclusivity/or combination
-strong brands
-'aspirational' products or service
-necessary or staple products
-defensive (I use this word loosely) with prospects for growth
-pay a dividend of some description (this is not a sticking point)

Currently on my watchlist are:
-BASF (chemical producer)
-Esteé Lauder (cosmetics and diversified brand portfolio)
-Industria De Seno Textil (parent company of Zara)
-Kering (Parent company of Balenciaga and Gucci)
-VICI properties (a REIT - owner of prime experiential and gaming real estate in the US including the MGM Grand and Caesar's Palace)

I appreciate my screening process is more qualitative than quantitative but I hope the above gives you a rough idea of the direction I am looking to go.

Any suggestions or help would be much appreciated.

[Hariseldon58]

Don’t pick individual stocks would be my advice !

The evidence suggest that most professionals can’t beat the market, your chances are unlikely to be any better.

My own experience was that I would have 5 best ideas ( alongside my regular portfolio) one would do great, three would be ok and one would tank. Overall about the market return, if I was lucky I’d get two winners and unlucky 2 losers. It was interesting but pointless long term.

Asset allocation can be a very useful tool ( your risk profile and tolerance will be different to most other investors)

Market timing is very difficult but at apparent market extremes I have found it effective to tilt my portfolio somewhat.

Passive trackers have proved to be effective and I like to use some investment trusts alongside them, works for me and there are other great approaches.

The OP has done well building a portfolio to 70k by 30, keep saving regularly through thick and thin and hope for a protracted market fall followed by a huge bull market !

[TUK020]

Worth looking at

L&G Global 100 - Index
Foreign & Commonwealth Investment Trust (FCIT) - broad based global IT

[tjh290633]

If you have got to £70k in 5 years, you must be doing something right, unless it has cost you £100k in ISA subscriptions.

You have a wide spread of sectors and funds. Regarding Fundsmith, if it does better than the rest despite the fees it charges, then that is no reason to dump it. If the fees drag it down, then that is.

Looks to me as if you don't need advice, but putting down your reasons for your choices, and the way they have performed, may well stimulate some discussion. I would not have picked some of your selection, but that does not invalidate them.

TJH

[scrumpyjack]

Worth looking at

L&G Global 100 - Index
Foreign & Commonwealth Investment Trust (FCIT) - broad based global IT

The correct name was Foreign & Colonial Investment Trust PLC but it was changed, for obvious reasons, to F & C Investment Trust PLC

https://www.fandc.com/

[1nvest]

Worth looking at

L&G Global 100 - Index
Foreign & Commonwealth Investment Trust (FCIT) - broad based global IT

FCIT's BMO became part of Columbia Threadneedle and when I recently looked at their web pages they were atrocious. Incorrect sizing of frames etc., and worse still my IP is seemingly blocked (Virgin Media subset, so guess that at some point one or more of that IP range were used in a appropriate way such that all VM IP's now get blocked).

Or maybe they just don't want the business.

[elephanthunt11]

Don’t pick individual stocks would be my advice !

The evidence suggest that most professionals can’t beat the market, your chances are unlikely to be any better.

My own experience was that I would have 5 best ideas ( alongside my regular portfolio) one would do great, three would be ok and one would tank. Overall about the market return, if I was lucky I’d get two winners and unlucky 2 losers. It was interesting but pointless long term.

Asset allocation can be a very useful tool ( your risk profile and tolerance will be different to most other investors)

Market timing is very difficult but at apparent market extremes I have found it effective to tilt my portfolio somewhat.

Passive trackers have proved to be effective and I like to use some investment trusts alongside them, works for me and there are other great approaches.

The OP has done well building a portfolio to 70k by 30, keep saving regularly through thick and thin and hope for a protracted market fall followed by a huge bull market !

Thanks for the detailed response, however I am familiar with the data and the accompanying literature on the performance of index funds vs active managers. At the core I follow the John Bogle school of investing, but the above was strictly for advice on direct holdings

[elephanthunt11]

If you have got to £70k in 5 years, you must be doing something right, unless it has cost you £100k in ISA subscriptions.

You have a wide spread of sectors and funds. Regarding Fundsmith, if it does better than the rest despite the fees it charges, then that is no reason to dump it. If the fees drag it down, then that is.

Looks to me as if you don't need advice, but putting down your reasons for your choices, and the way they have performed, may well stimulate some discussion. I would not have picked some of your selection, but that does not invalidate them.

TJH

Hi TJH

Thankfully the £70k is in positive territory.

I appreciate your logic and I can't argue with it, my thoughts of dumping Fundsmith Equity are on the basis that I believe I can build a portfolio of diversified common stock (alongside my indexes) independent of fund managers charging 1%.

I'm really intrigued to know why you wouldn't have picked some of my selection (said without any combativeness). Which parts would you not have picked and why?

[richfool]

Don’t pick individual stocks would be my advice !

Mine too.

Moderator Message:
This post has been reported for deletion. For the time being, I'm letting it stand, in the hope that the poster in question will add to it. Simply saying "Mine too", without explaining why, is of little help to the OP, and actually runs counter to his/ her original request. --MDW1954

[richfool]

Don’t pick individual stocks would be my advice !

Mine too.

Moderator Message:
This post has been reported for deletion. For the time being, I'm letting it stand, in the hope that the poster in question will add to it. Simply saying "Mine too", without explaining why, is of little help to the OP, and actually runs counter to his/ her original request. --MDW1954

Sorry, I thought my comment: "mine too", (= my advice too), - was self-explanatory, that I was echoing Hariseldon58's advice to the OP, that he, and thus I, wouldn't buy individual stocks. I would in preference buy investments trusts, or ETF's, which would provide greater diversification and usually for a lesser risk.

H58's full post from which I was quoting:

Don’t pick individual stocks would be my advice !

The evidence suggest that most professionals can’t beat the market, your chances are unlikely to be any better.

My own experience was that I would have 5 best ideas ( alongside my regular portfolio) one would do great, three would be ok and one would tank. Overall about the market return, if I was lucky I’d get two winners and unlucky 2 losers. It was interesting but pointless long term.

Asset allocation can be a very useful tool ( your risk profile and tolerance will be different to most other investors)

Market timing is very difficult but at apparent market extremes I have found it effective to tilt my portfolio somewhat.

Passive trackers have proved to be effective and I like to use some investment trusts alongside them, works for me and there are other great approaches.

The OP has done well building a portfolio to 70k by 30, keep saving regularly through thick and thin and hope for a protracted market fall followed by a huge bull market !

[monabri]

I would be wary of picking individual 'stocks' especially in view of the long timeframe. Too much can happen in the next 30 minutes nevermind the next 30 years (political, environmental, social, technogical). I would thus go for collective investments. Then I would tilt towards either ETFs (cost) or Investment Trusts. In the end I'd probably plump for a Global ETF fund held with a reputable broker (or two) such as ii or iWeb (Lloyds licence).

[Hariseldon58]

Don’t pick individual stocks would be my advice !

The evidence suggest that most professionals can’t beat the market, your chances are unlikely to be any better.

My own experience was that I would have 5 best ideas ( alongside my regular portfolio) one would do great, three would be ok and one would tank. Overall about the market return, if I was lucky I’d get two winners and unlucky 2 losers. It was interesting but pointless long term.

Asset allocation can be a very useful tool ( your risk profile and tolerance will be different to most other investors)

Market timing is very difficult but at apparent market extremes I have found it effective to tilt my portfolio somewhat.

Passive trackers have proved to be effective and I like to use some investment trusts alongside them, works for me and there are other great approaches.

The OP has done well building a portfolio to 70k by 30, keep saving regularly through thick and thin and hope for a protracted market fall followed by a huge bull market !

Thanks for the detailed response, however I am familiar with the data and the accompanying literature on the performance of index funds vs active managers. At the core I follow the John Bogle school of investing, but the above was strictly for advice on direct holdings

@elephunt11 I wasn't trying to suggest you aren't aware of the individual stocks and the active/passive arguments, I recognise the desire to save the 1% management charge (and in roundabout fashion I am doing something similar in part of my portfolio..)

I would suggest you try and develop an investment strategy and a plan to implement that strategy, I am sure you record the details of your transactions, monitor progress but I have found it very helpful to record the decisions, the reasons why and I go back over prior decisions and learn from them and the environment that surrounded those choices. My plan has expanded to 40,000+ words now but its more in the form of a personal finance articles ( for my benefit and potentially successors in the event of ...) followed by an ongoing record of what I have done, the circumstances surrounding decisions and reflections on how it turned out.

It would be interesting to hear the logic behind your portfolio and why you have bought what you did and perhaps we could comment in a more helpful fashion.

As an aside I would add that Investment Trusts often earn their management charge, not necessarily by superior stock picking but by their gearing, you can play the discount game when you purchase.

I run two main portfolios, a global market passive equity portfolio ( I may play with the weightings) and a stability fund ( presently dominated by long TIPS), I have optional portfolios of smart beta factor ETFs and an Income/Alternatives Portfolio. ( There is a naughty play fund where I may trade short term market movements when the opportunities arise, it bought me a new MacBook 14 on the weekend but represents around 1% of the whole portfolio)

My alternatives portfolio was nearly empty at the beginning of the year and now has 40 or so holdings, I don't record the admin details of dividends individually to save hassle and the purchase costs are around .1% I look at it more as a sector tracker fund, its there as a diversifier, I'll review in year or two but as a whole, I'll ignore the contents until then.

My argument would be to default to the passive, at least in part, but if you are adding active choices/funds, know why you are doing so and how it fits in overall with your plans, if you write about it in a journal/plan or on a forum it can guide your decisions.

[Adamski]

Welcome to the forum. Seems US and UK heavy. Could add Asia-Pacific fund like PHI if have a long investment horizon. Far east has had a correction this year but did very well over 5 year period.

Like many here had fingers burnt on individual stock picking.

[tjh290633]

I appreciate your logic and I can't argue with it, my thoughts of dumping Fundsmith Equity are on the basis that I believe I can build a portfolio of diversified common stock (alongside my indexes) independent of fund managers charging 1%.

I'm really intrigued to know why you wouldn't have picked some of my selection (said without any combativeness). Which parts would you not have picked and why?

From your OP:

-Legal & General US index - 38.8%
-Legal & General Global Technology index - 8%
-Vanguard FTSE 100 index - 5.8%
-Fundsmith Equity - 6.2%

I am not a fan of tracker funds, nor of funds run by insurers. They always seemed to be sluggards in my experience. As someone has suggested above, FCIT has been a very good performer and I have been investing in it for one of my grandchildren for 19 years now. That has given an IRR of 13.42% over that period, with all income reinvested. On price alone it has shown 8.57%, compared with the FTSE100's 3.06%. Fundsmith will probably do better than most.

Regarding equities, I've no particular quarrel with your choices. Some of mine date back to 1970, when I was a bit older than you are now.

TJH

[Pastcaring]

Hi all,

Long time lurker, first time poster here, hoping for your opinions and suggestions on where I should be looking. I am not looking for stock tips, more 'maybe take a look at this' type suggestions.

For background:
I'm 30 years old, have been investing for 4-5 years, S&S ISA value currently at just under £70k. Investment horizon is currently indefinite.

My positions are mostly index funds with some direct equities, and cash @8.3% currently. Breakdown as follows.

Funds:
-Legal & General US index - 38.8%
-Legal & General Global Technology index - 8%
-Vanguard FTSE 100 index - 5.8%
-Fundsmith Equity - 6.2%

Stock:
-LVMH - 11.2%
-Barratt Developments 8.2%
-American Express - 7.8%
-Astrazeneca - 5.7%

I'm considering selling out of Fundsmith Equity, regardless of past performance - I cannot reconcile a .95% AUM fee with my investment philosophy of militant-like cost control, and I am looking to take on another direct equity investment which matches my criteria.

My criteria are, in no particular order/mutual exclusivity/or combination
-strong brands
-'aspirational' products or service
-necessary or staple products
-defensive (I use this word loosely) with prospects for growth
-pay a dividend of some description (this is not a sticking point)

Currently on my watchlist are:
-BASF (chemical producer)
-Esteé Lauder (cosmetics and diversified brand portfolio)
-Industria De Seno Textil (parent company of Zara)
-Kering (Parent company of Balenciaga and Gucci)
-VICI properties (a REIT - owner of prime experiential and gaming real estate in the US including the MGM Grand and Caesar's Palace)

I appreciate my screening process is more qualitative than quantitative but I hope the above gives you a rough idea of the direction I am looking to go.

Any suggestions or help would be much appreciated.

Pick individual companies if you are confident Compounding takes time so do nothing and reinvest the dividends.
The company I have held the longest is Westpac Bank ( WBC ASX.) .Disappointing ,but time is money.Time horizons run to 12 or 13 years for banks in Australia.Double the price over 12 to 13 years,and double the shareholding over the same period.
Discipline is the key.You can't pick bottom so when prices fall 20% take an interest in buying more..
Westpac is 40 years at the end of this year,it's looking like I was bang on.Get it roughly right.They were bought for $2.50,round it to $3 if you like.The next dividend is in December this year,The end of that one.The doubling would take it from say $ 3 then to 6,12,and then $24 by the end of this year.The $3000 spent then to buy them may be $24 by the end of this year.The shareholding would obviously double 3 times so start at 1 ,then 2,4,8.

8,000 shares at whatever the share price is on 31/12/22.If they are $24 then $3000 compounds to $192,000,or $2,500 compounds to $192K.As I've bought more shares in it that complicates it.I've bought more shares when they have had capital raisings and always applied for the full.amount.Without issuing a prospectus they can only offer a $30,000 maximum raising.Those limits have been raised over the years The maximum was $3,000 in the 1980s 90s.I can only recall buying once on market,around 1999.Roughly $9 a share,I think they had dropped from a top of around $11.50 or $12.I spend very little time looking at share prices so I may have bought somewhere around bottom

Investing is an easy game,wash,rinse,repeat,and compound Don't follow the herd and don't pay any attention to daily noise or knee jerk reactions.Don't ask anybody else what THEY think YOU should do.Think for yourself.

Moderator Message:
Pastcaring, there's a suggestion that this post is on the wrong thread, although I'm not so sure, myself. If it is, let us know, and I can move it. --MDW1954