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Pruning an IT portfolio
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Pruning an IT portfolio
My wife has accumulated a quite sizeable and widely spread IT/fund portfolio over the years, and has been quite happy with its income delivery and indeed capital growth.
However as she gets on in years she wonders if she has overdone the "diversification" of the portfolio and would it be better to trim it as she suspects duplication of holdings, and fears becoming a (slightly) high index tracker. She and I would like your views on what to ditch and what to retain, in the quest for simplification.
The objective is to deliver a rising income over the next (hopefully!) 30 years. The whole portfolio is ISA'd, within the HL platform so is fee free apart from the funds.
Here is the current portfolio (£):
Equities
Blackrock Commodities Income Trust 30,000
City of London 26,000
DIverse Income 17,000
F&C Capital and Income 32,000
Invesco Perpetual Global Income 22,000
JPM Claverhouse 15,000
JPM Global Emerging Markets Income 38,000
Mercantile 26,000
Perpetual Income and Growth 26,0000
Schroder Oriential Income 30,000
Seneca Global Income and Growth 28,000
S&P US Dividend Aristocrats 35,000
Temple Bar 17,000
Troy Income and Growth 31,000
Real Estate
F&C Real Estate 6,000
Fixed Interest
ishares USD TIPs 16,000
ishares All Stocks Gilt 1,500
Jupiter Strategic Bond 11,000
M&G Optimal Income 4,000
M&G Strategic COrporate Bond 9,000
Ideally she would like to reduce the equity holdings to five or six, while retaining Global and small/mid cap exposure. Also maybe introduce Infrastructure as an asset, which has so far been resisted, because of the eye watering premia on most ITs. And clearly, if she is to have property exposure, F&C Real Estate with £6K doesn't really tick the box.
Apologies for the lack of formatting. I did try and google how to insert a table in php bulletin boards, but rapidly became confused!
However as she gets on in years she wonders if she has overdone the "diversification" of the portfolio and would it be better to trim it as she suspects duplication of holdings, and fears becoming a (slightly) high index tracker. She and I would like your views on what to ditch and what to retain, in the quest for simplification.
The objective is to deliver a rising income over the next (hopefully!) 30 years. The whole portfolio is ISA'd, within the HL platform so is fee free apart from the funds.
Here is the current portfolio (£):
Equities
Blackrock Commodities Income Trust 30,000
City of London 26,000
DIverse Income 17,000
F&C Capital and Income 32,000
Invesco Perpetual Global Income 22,000
JPM Claverhouse 15,000
JPM Global Emerging Markets Income 38,000
Mercantile 26,000
Perpetual Income and Growth 26,0000
Schroder Oriential Income 30,000
Seneca Global Income and Growth 28,000
S&P US Dividend Aristocrats 35,000
Temple Bar 17,000
Troy Income and Growth 31,000
Real Estate
F&C Real Estate 6,000
Fixed Interest
ishares USD TIPs 16,000
ishares All Stocks Gilt 1,500
Jupiter Strategic Bond 11,000
M&G Optimal Income 4,000
M&G Strategic COrporate Bond 9,000
Ideally she would like to reduce the equity holdings to five or six, while retaining Global and small/mid cap exposure. Also maybe introduce Infrastructure as an asset, which has so far been resisted, because of the eye watering premia on most ITs. And clearly, if she is to have property exposure, F&C Real Estate with £6K doesn't really tick the box.
Apologies for the lack of formatting. I did try and google how to insert a table in php bulletin boards, but rapidly became confused!
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- Lemon Quarter
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Re: Pruning an IT portfolio
Apologies for the lack of formatting. I did try and google how to insert a table in php bulletin boards, but rapidly became confused!
There's not yet a totally satisfactory way of doing this, but there has been some discussion and there are some options and no doubt Stooz will work on it when he's done the other 1,247 things he's working on
--kiloran
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- The full Lemon
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Re: Pruning an IT portfolio
Do the numbers indicate the number of shares held in each position? Since the unit price varies so much, it might be better to express them as percentages of the total portfolio value.
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- Lemon Slice
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- The full Lemon
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Re: Pruning an IT portfolio
toofast2live wrote:Sorry, the numbers are £ value of each holding
Wait, you're not the original poster, but you answered my question to him! I'm confused.
Anyway, if you only want 5-6 holdings, have you considered ETFs? There is no stamp duty to pay if you sell ITs to buy ETFs, and the expense ratios are typically lower than ITs. There are some very broad based ones so you could more easily get away with just half a dozen in total.
Finally they don't experience corporate actions so can be less maintenance to hold
But if you switch everything around, might capital gains tax be an issue?
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Re: Pruning an IT portfolio
Just assumed as per the heading before the list?
Anyway, all in an ISA, as I say so not CGT implications
Anyway, all in an ISA, as I say so not CGT implications
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- The full Lemon
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Re: Pruning an IT portfolio
alarmbells wrote:Anyway, all in an ISA, as I say so not CGT implications
I make that about 425K in an ISA. Nice. Either she's been contributing for a long time, or she's a good investor, or both.
If you want a property IT and an infrastructure IT (which I don't know much about) then that only leaves four ITs to keep to half a dozen in total. To avoid overlap that would imply one income IT, one global IT, one small companies IT and one other, to cover everything you want.
Personally I'd keep City, Mercantile and Seneca, and maybe add in Murray International which has a decent wodge in emerging markets. For the fixed income, Vanguard have some low-fee bond ETFs and I'd choose the broadest of those.
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Re: Pruning an IT portfolio
Lootman wrote:toofast2live wrote:Sorry, the numbers are £ value of each holding
Wait, you're not the original poster, but you answered my question to him! I'm confused.
toofast2live was not the original poster, but the answer was contained in the original post...
You have been asked before - are you the original Lootman? Are you?
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- Lemon Quarter
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Re: Pruning an IT portfolio
tieresias wrote:You have been asked before - are you the original Lootman? Are you?
They don't have any doubts over on HYP
viewtopic.php?f=15&t=20&start=20#p1681
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Re: Pruning an IT portfolio
tieresias wrote:You have been asked before - are you the original Lootman? Are you?
Yes, I am, sorry for not answering. I did send PM's to a couple of people who asked that.
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- Lemon Quarter
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Re: Pruning an IT portfolio
tieresias wrote: You have been asked before - are you the original Lootman? Are you?
A few years ago I posted off-board to the TMF Lootman and had a reply. So I PM'd the Lemon Lootman, he replied telling me the email address he used back then so, yes this is the real Lootman.
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- Lemon Quarter
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Re: Pruning an IT portfolio
Lootman wrote:tieresias wrote:You have been asked before - are you the original Lootman? Are you?
Yes, I am.
Ah, but you would say that, wouldn't you?
--kiloran
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- Lemon Half
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Re: Pruning an IT portfolio
alarmbells wrote:...as she gets on in years she wonders if she has overdone the "diversification" of the portfolio and would it be better to trim it as she suspects duplication of holdings, and fears becoming a (slightly) high index tracker. She and I would like your views on what to ditch and what to retain, in the quest for simplification.
The objective is to deliver a rising income over the next (hopefully!) 30 years. The whole portfolio is ISA'd, within the HL platform so is fee free apart from the funds.
What are the current yields and covers?
Have you reviewed performance and diversity against Luni's B7 & B8?
V8
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- Lemon Quarter
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Re: Pruning an IT portfolio
This is my first ever posting, having been a "lurker" on TMF for years.
I'm not an expert, but like your wife, have built up a widely diversified ISA/SIPP portfolio over the years. "Experts" would say the portfolio is ridiculously over-diversified and contains many overlaps. However, from experience, when I've sold ITs or shares and looked at them a few years later, they often performed better than their replacements.
From my experience, perhaps by luck more than judgement (and with the help of compound interest) my "ragbag" portfolio has grown more than 8% pa over more than 20 years and has weathered many storms.
My comment (I'm not qualified to give advice) is accept that your wife's portfolio has done reasonably well and not to do too much pruning. I like PYAD's approach of strategic ignorance.
Why not make some gentle adjustments to incorporate areas you think might be beneficial (eg an infrastructure investment)? But not too much selling and buying which will incur trading costs.
And good luck with your decisions!
I'm not an expert, but like your wife, have built up a widely diversified ISA/SIPP portfolio over the years. "Experts" would say the portfolio is ridiculously over-diversified and contains many overlaps. However, from experience, when I've sold ITs or shares and looked at them a few years later, they often performed better than their replacements.
From my experience, perhaps by luck more than judgement (and with the help of compound interest) my "ragbag" portfolio has grown more than 8% pa over more than 20 years and has weathered many storms.
My comment (I'm not qualified to give advice) is accept that your wife's portfolio has done reasonably well and not to do too much pruning. I like PYAD's approach of strategic ignorance.
Why not make some gentle adjustments to incorporate areas you think might be beneficial (eg an infrastructure investment)? But not too much selling and buying which will incur trading costs.
And good luck with your decisions!
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Re: Pruning an IT portfolio
Hi Alarmbells
I actually like the look of the portfolio and wouldn't consider it to be over diversified. In fact it's not too dissimilar from my own in principle. I have about 25 collective investments, mostly in ITs and employer pension funds managed by L&G.
You've got a geographically diverse collection of equity exposure. You have about 10% in fixed income, which some would consider too little (but not me.) Also, I have some infrastructure and a little commodity-exposed ITs for additional diversification.
I can't see any benefit really from too much pruning to be honest. I don't think £400K spread over 20 investments is spreading things too thin.
Good luck
MP
I actually like the look of the portfolio and wouldn't consider it to be over diversified. In fact it's not too dissimilar from my own in principle. I have about 25 collective investments, mostly in ITs and employer pension funds managed by L&G.
You've got a geographically diverse collection of equity exposure. You have about 10% in fixed income, which some would consider too little (but not me.) Also, I have some infrastructure and a little commodity-exposed ITs for additional diversification.
I can't see any benefit really from too much pruning to be honest. I don't think £400K spread over 20 investments is spreading things too thin.
Good luck
MP
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Re: Pruning an IT portfolio
Lootman wrote:tieresias wrote:You have been asked before - are you the original Lootman? Are you?
Yes, I am, sorry for not answering. I did send PM's to a couple of people who asked that.
I see from your posts on the HYP board that you are indeed! Welcome back!
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- Lemon Slice
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Re: Pruning an IT portfolio
90% of the portfolio is probably a closet world equity index tracker. What's wrong with that?
Sitting on one's hands is an extremely good approach in the long run. I have most of my savings in just one trust - Foreign and Colonial Investment Trust, and am more than happy if this trust's performance equals this benchmark.
Obviously, it is necessary to know the underlying portfolio of each trust before making an investment.
Sitting on one's hands is an extremely good approach in the long run. I have most of my savings in just one trust - Foreign and Colonial Investment Trust, and am more than happy if this trust's performance equals this benchmark.
Obviously, it is necessary to know the underlying portfolio of each trust before making an investment.
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