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@Finumus
This is really wonderful. I would say I’m similar to yourself with my portfolio, but not quite as advanced (and I don’t like bonds):
40% – Equities (~50/50 between MktCap funds and speculative small /nanocaps
20%* – Precious – (Mostly Gold.. sold most of my Silver the last few days, and put into Gold & Cash)
25% – Alt (Mostly Trend Following + a bit of BH Macro, Equity Mkt Neutral & Long/Short)
15% – Cash-like / Short Term Bond
*this is rising rapidly, and I find it so difficult to sell!
Haven’t quite managed to get my leverage up to 1.3x yet. Getting there with the Winton Trend Equity Enhanced and GDE though.
Can I ask why you don’t have a Cash/Short-term bond allocation ?
Also, are family members OK with you knowing what their net-worth is ?
Fascinating genius level stuff Finimus as ever thank you. I’d echo and expand Algernond’s question please. How does this work at the interpersonal and practical administration levels? My mother still views the 60/40 portfolio I persuaded her into with suspicion many years since leaving her expensive wealth manager! I manage our families wealth, what there is of it, but am never quite sure on the best way to manage other people’s accounts in terms of correspondence emails and phone numbers. I want the direct communication for simplicity but when a platform rings to check my wife really does want to make a withdrawal it seems a bit dodge to have to say sorry she isn’t here on what is supposedly her mobile!
@Algernond – “Can I ask why you don’t have a Cash/Short-term bond allocation ?” – I do, it’s MINUS 30%. :-).
@Algernond, @Metallor – How does this work from an interpersonal level? Yes – everyone is fine with me knowing their net worth. It’s taken, ~ 25 years to get to this level of trust and transparency. The older generation don’t honestly want to be bothered with it any more – they are happy for me to do whatever, but only because I’ve been steadily getting more involved for decades. Admin wise – I don’t handle withdrawals / deposits – I just handle investments – this is one of the (few) good things about Hargreaves Lansdown and AJ Bell, is their “family linkage” stuff, which works quite well. I sometimes have to ask them to log in to sign their W8-BEN or whatever. As for the kids, they (disappointingly, for me) aren’t particularly interested, the process is generally “do you mind if we (the older generation) put £20k in your ISA this year”, and they are like: yeah, sure, whatever.
@Finumus (duplicate of a comment on your CAT bonds post) are you able to share what fees you paid to buy/sell the GAM fund?
Both the ordinary share class and the institutional share class seem to charge ‘up to’ a 5% entry fee and 3% exit fee but don’t seem to disclose whether they always do this or what circumstances they wouldn’t.
A one off 8% fee on top of the ongoing charge and performance fee is really going to hurt returns unless you are confident in holding this specific fund without rebalancing for a very long time.
This is better than brilliant. Thank you @Finumus.
There’s a huge overlap with what I’m aiming for. Also some great ideas I’d missed and will do my own research on now.
A few quick thoughts:
1. Any way to get WisdomTree Efficient Gold Plus Equity Strategy for ISA/SIPP on HL, AJB, ii, CSD or Fidelity? Or is this one for IABkr or T212?
2. With CEFs like REITs and infra ITs the discount does somewhat make up for equity risk IMHO. It’s not like with Corp Bnds, where it really is equity lite/ equity like downside and capped upside, if any.
3. Just thinking out loud here (and with a conventional short duration low coupon gilt redeeming tomorrow in the GIA, so proceeds to reinvest): might long duration conventional gilts and ILGs (ideally lower coupon) be a good place to put a tax efficient hedge against (inside ISA/SIPP) equity risk? No CGT on gilts, long duration government bonds respond best to equity risk and it leaves tax wrappers for more risk on ideas. I’d always thought short duration gilts for GIA, but thinking it through now….
Incidentally, inspired by Wexboy’s annual investment posts, I’d run the ruler over TFG but bottled taking a taster position in it. I did, for my sins, dabble in KR1 (his top position at one point) and, boy, has that one tanked. Fortunately it was a <0.1% position. Kelly Criteria and all that 😉
@M0gjr – “are you able to share what fees you paid to buy/sell the GAM fund” – to buy it – nothing. I’ve not sold any yet…. so I don’t know.
@DeltaHedge – “Any way to get WisdomTree Efficient Gold Plus Equity Strategy for ISA/SIPP on HL, AJB, ii, CSD or Fidelity? Or is this one for IABkr or T212?” – not that I’ve found – all mine is in my IBKR SIPP. I occasionally canvas Wisdomtree Europe to launch one, doubtless it’ll mark the top for gold when they finally get round to it.
@Finumus – OK, but seriously, you don’t see a smallish allocation to Cash/STB as useful dry powder for unexpected opportunities ?
How is the ‘perpetual’ bit going to play out in terms of handing over the reins as and when required? Is there an equally fiendish financial mastermind waiting in the wings (sounds like there isn’t) or is there going to be a ‘Buffet switch’ to a 90% tracker, 10% cash at some point down the line?
Given the complexity, the constraints, the differing incentives – I can’t really imagine just how time-consuming and difficult this must be to manage? You’re a brave man taking it on!
Ok…. so….. “why not spreadbets?”
@Rhino – Yeah, I’m hoping one of them will start to show an interest when they get a bit older.
@Algernond – Financing costs.
Really interesting article – interesting to see inside the sausage factory, so to speak.
I’ve enjoyed a few of the picks, especially the Cat Bonds, and the portfolio overall is an interesting one, definitely not your standard setup.
What’s the thinking behind KR1?
@Finumus
Great article, and good timing for me as I’m consolidating a lot of family stuff over the next few months. Lots to think about…especially on the tax planning side!
Thank you for another great article Finumus, is ii still the place to buy the AQR funds? I know they’re pretty hard to buy.
Also I’m curious on what fund availability is like generally on IBK – I’ve heard that it’s not very good / they try and enforce the minimums that other brokers don’t.
Have you done away with all the direct stocks in the FIC and just replaced them with the JPM fund?
@SkinnyJames Trying to buy the AQR funds is like playing wack-a-mole. We did a massive ISA transfer to be able to buy them, and by the time the money got there, we couldn’t any more.
Weirdly Iweb (Scottish Widows share dealing ISA) works – which is insanely random given how conservative they are. Hold them in ii but they won’t let me buy more. You really do have to try it and see.
On ibkr funds, yes they are weirdly restrictive.
This is exactly the sort of nonsense to that makes rebalancing hard – sometimes we know if we sell something we won’t be able to buy it again.
@Finumus – thank you! That is rather frustrating re the ISA transfer, and I’m surprised that IWeb lets you buy them when so many other places don’t!
@Finumus / Skinny James – All of my ISA with iWeb is AQR Alternative Trends.
But IBKR seem now to be getting better with funds. I also have the above AQR fund with them, and they have several different of units of it to choose from (though not the same one iWeb offer)!
Great article! How do you track your portfolio and returns?
Agree with the de minimis weighting (<0.5%) to Burford and Tetragon combined.
I've just come across this excellent write up (from last year) on the latter:
https://open.substack.com/pub/lowkeycapital/p/deep-dive-1-tetragon-financial-group
Can’t see what actually unlocks the value here for TFG. It’s been on a massive discount to NAV for many years now.
Always the same problem with these ‘special situations’ (i.e., ‘what’s the ‘realistic’ *near term* catalyst’) in my experience.
@Finumus – could you tell us more about how you use S&P call options in the portfolio?
Thank you for a great and thought provoking article (as always!).
I’m currently restructuring my portfolio away from 100% equity, as I approach FIRE my attitude is changing. I’m adding bonds/gilts, trend and also looking at BHMG.
So BHMG – It’s expensive… Do we think it’s worth it for the crisis alpha? If so then how much do you need to make it impactful instead of a shiny line item?
@Finumus your 2.5% feels too small to have much impact either way. How do you and others think about how much is enough to justify the effort? Why not 0%,5%,10%?
Really interesting thank you. Can you explain:
1. The logic behind holding JEGP in the FIC and whether this is preferable to a vanilla tracker?
2. The advantage to using a FIC margin loan rather than leveraged ETFS in the FIC?