Portfolio Mix

I’m just sitting here enjoying my morning coffee, reflecting on how much my share portfolio has changed in the last 12 months (13 actually). I have reduced my direct holdings and consolidated my LIC holdings. I am sitting on more cash than usual in my brokage account, which is the result of selling a large DH. What does everyone else’s LIC portfolio look like? Has it changed much in the last 12mths?

 

Biggest change for us has been reduction in direct share holdings. Less than 4% of the portfolio now and these will also be sold and proceeds invested in LICs overtime. Would do it now if I could but need to manage CGT.

These holdings were / are in the Family Trust. So it's working out well as we are in the process of getting assets out of the Trust into own names / SMSF then shutting down the Family Trust. It serves no purpose for us anymore. Although not the reason for it if Labor get voted in and introduce their proposed Trust changes this would be a disadvantage compared to owning in personal names. Add to that eventual less accounting fees and hassles that go with having a Coy / Trust structure. Simplicity in retirement is our motto.

Other than that we've been diversifying away from the older LICs not by selling but investing part of new cash into other funds.

Raining here today so having a day indoors including browsing on the IPad.

 

Biggest shift in our portfolio is an increase in cash position. Sold out of direct holdings and reinvested into LIC's and an index fund. Cash is currently at 19% and looking to move it up to around 30% to allow for further opportunities when they arise.

 

Recent moves:
Increase TPM
Buy RBL
Buy TAW
Sold half of TAW

 

@austing

Are you having to sell to get them out of the trust?

 

What sort of fund.. ETFs and other managed funds for example MGE? (not saying you're investing in MGE just using that as an example of a fund)

Any particular reason to diversify away from older style LICs? I'm curious to know because as you know, I'm starting my investing life with the older style LICs and its always interesting why someone who has held them so long is diversifying away from them?


-Frank

 

Yes. I could transfer if was happy to keep the direct shares but the proceeds are going into LICs. Different holdings requires selling. So brokerage cost yes. Minimal CGT due to planning though.

Reduced tax through part ownership in SMSF and saving on accounting / ASIC fees over a lifetime compensates. If Labor gets its way with trust changes a further saving there. Simplicity though is priceless.

 

Mostly other LICs. Definately not anything from Magellan such as MGE.

We own a heap of the older LICs and will continue to do so. There comes a point when one is generating substantial income from dividends that risk management may be considered more important. This is where I disagree with the likes of Thornhill.

Risk management would suggest that having a large part of ones wealth tied up in a handful of banks, a couple of miners, a telco and couple retailers is not ideal.

Then again I'm a nervy type. Perhaps if I wasn't nothing but older LICs would be fine. Unfortunately we need to invest in what gives each of us good SANF. I need greater diversification for that!

 

Good comment there to keep in mind for the future, thank you for raising it. I will set a reminder for 2027 for myself

Sounds like you've just summarised the entire Australian share market with that sentence


-Frank

 

I was just reading an article in the AFR which I thought appropriate for those wanting to diversity their portfolio a little.

The article talks about how the AU market is too heavily weighted towards banks and banks are reliant on the property market and the property market could change soon enough and that to diversify we should consider investing in the overseas market.

With all this talk about diversifying and portfolio mixing I thought I would capture and share the article here for some lite Sunday night reading

Article is more for those who are learning, like myself.
How to get global exposure to listed companies and grow your portfolio


-Frank

 

@Frank Manno , I get you may be new at this investing gig and you feel you have a lot to learn. Just bear in mind there is a high probability the market will be there tomorrow and the day after that and so on an so forth. You don't have to rush.

Maybe you could stop reading stuff from the 'purts for a bit, after all it's only their opinion and you don't have to adopt it, sit back, have a coffee or two and think about what YOUR asset allocation is going to be. Doesn't have to be the magic formulae of all time. Nor are you are not obliged to give a rats about the opinion of others on what you do. Your funds and it only has to suit you. Try not to fret about getting it perfect because it is highly likely won't be and certainly not what others have decided.

 

AMEN!

 

Sorry. My typing gets ahead of my brain. Which says a lot about both.

For "Nor are you are not obliged to give a rats about the opinion of others on what you do" read "Nor are you obliged to give a rats about the opinion of others on what you do" and all shall become clear.

 

That's all right young fella, we knew what you meant. I thought it might have been as a result of you trying to restrict coffee intake again.

 

Fail!

On a another aspect, it would be nice in a way if people didn't pretend they are fund managers and relate their shareholdings to the ASX 200 or whatever. Those indices I reckon are developed so "real" fund managers can present them in glossy brochures as an enticement to scavenge money from the herd. Gotta measure something to justify one's existence.

Notice there is always a disclaimer about no guarantee on future performance which would seem to negate the past performance to an index if it may not be valid in the future. Only my view of such things.

 

No use me trying to compare our portfolios to any index as I wouldn't have a clue due to some effort being required to compile the data. I don't even look at the long winded SMSF reports that we receive annually which apparently detail performance. As long as income seems to be increasing over time and comfortably meets our needs then that's all that matters. For that matter what I've been accumulating lately is unlikely to beat the Index but I don't care. I expect it to add nicely to income generation though.

In fact the whole index thing is getting a bit tiresome albeit I have some exposure to the things via a couple of ETFs. We invest in stuff that suits our needs and let's us sleep well at night. Whether that beats the Index or not is meaningless to us.

 

Portfolio for my elderly mother, with a focus on dividend income

Direct, yield stocks 29%
LIC 24%
ETF 22.5%
REIT 20%
Direct, growth 5%