The portfolios I copy are based on the expensive and in-depth research that lots of banks and investment houses do. They use their research to choose what they’re going to invest in. Why not let them do all that work and then, for once, turn the tables and use it for free?
This page explains how I’ve gone about doing that and what that translates to (in plain English) for when I want to invest.
I explain what I mean by “mixed bonds”, “global bonds”, “global shares” etc. on Asset Classes Explained.
On this page:
They all disagree over the best investment mix
I’ve calculated an average of what they think
Using their expensive research for free
They all disagree over the best investment mix
If I were to copy the portfolio of a bank or investment company, I would have to choose which bank or investment company to copy and which of their investment portfolios to copy. There are thousands.
If I limit it only to portfolios that are “risk-rated” (i.e., they have low-risk, medium-risk, and high-risk rated portfolios), there’s still hundreds of them.
What’s more, they all have a slightly different opinion about what’s going to happen in the future, when it’s going to happen and how it’s going to affect different investments.
They can’t all be right because they’re all different. However, with the millions they spend each year on research and analysis (thanks to the very high fees that they charge their clients), they’re probably not too far wrong.
I’ve calculated an average of what they think
Therefore, why not average out the investment choices that they make as a group and copy that?
That’s exactly what I’ve done and what I will continue to update. It takes a huge amount of work to do this, so the updates will probably be a few times a year, ideally once every three months.
The section below, “using their expensive research for free” gives an outline on how I’ve done this (as with everything on this site, there’s more detail with cartoons and humour in the book). To see the actual allocations go to the Model Portfolios page.
The most complex allocation (Tier 4) has the most money available to invest and, therefore, the most asset classes (click here to find out what is meant by asset classes). As the amount of money available to invest gets smaller, the costs incurred from buying funds becomes more significant, so I reduce the number of asset classes. This will make more sense as you read on.
Using their expensive research for free
That’s what I’ve done.
I have painstakingly gathered data from over 100 risk-rated funds run by banks and investment companies that managed trillions (not millions, not billions, trillions) of pounds-worth of investments.
I’ve calculated the average allocation for each of:
- Lower-risk investment portfolios
- Medium-risk investment portfolios
- Higher-risk investment portfolios
Rip-off Tip-off – Understanding RiskI’ve explained risk in the section Taking the Right Amount of Risk.
That section includes a risk questionnaire which helps to determine what level of risk might be right for you.
By using these portfolios that I’ve created, I’m able to benefit from the expensive research that the banks and investment houses have conducted…for free! That said, it took sodding ages for me to research and put together.
Click here to see the model portfolio allocation that I aim to match