Hi Katfish,

Personally, I like all my trust positions to be meaningful so I try to avoid building up a long tail of smaller holdings as I find it hard to keep track of everything. I think my smallest holding at the moment is around 2%. So I like the general idea of concentrating on what you think are your best ideas.

Seraphim does look interesting on a very long-term view (I did a fund profile on it recently for Money Makers) but I think all its investments are still unprofitable and I reckon there’s a significant possibility it may need to put through some major NAV reductions over the next year.

Hi Wildfire,

I use my actual portfolio values to calculate my returns so the figures are after taking off any platform fees, management and performance fees that I have to pay in real life. Similarily, these numbers include all the trading costs I have to pay if I sell something to buy something else, as I’m using the actual numbers.

For the Global All-Cap fund I use the accumulation unit prices so it’s calculated on a similar basis in that it includes the management fee that Vanguard charges. The one difference is I don’t take any estimated platform fees off the Global All-Cap calculation so that puts my portfolio numbers at a very slight disadvantage. I could take off a notional amount for platform fees but I decided against that to keep things simple.

Some of my portfolio is held outside ISAs and SIPPs, so in real life I sometimes have to pay some tax on dividends received. But I would also have to pay tax on any dividends received on the Global All-Cap fund if I held it in taxable accounts so I decided to ignore that as well, again for simplicity. The yield on my taxable holdings is about the same as the Global All-Cap fund so I suspect adjusting for this wouldn’t make much difference anyway.

As for why take this approach, I guess I would say it’s for a few reasons. I think it’s possible (although certainly not at all easy) to do better than a global tracker over the long term and the difference compounded over many years can make a meaningful difference. I’m happy to accept the risk that I could underperform. And I also enjoy the process and the challenge of investing this way. It’s certainly not for everyone though and it does take extra time and effort.

Lastly, on a practical note, I suspect the fact that I have pursued an active approach for the last 25 years or so has meant that I have been motivated to put more money into the markets than I would have done had I just gone down the passive route – difficult to know that for sure of course.

How do your performance figures stand up after removing all platform, management and performance fees? That could easily give you an additional 1% headwind into your 2 – 3% target of beating the market?

Whilst all the IT’s you are in are very interesting in their own right, I love Fundsmith/Smithson, SMT, RIT etc, but why try to manage 18 – 20 IT’s when you could just own the one all weather fund which is currently your bellmark… Vanguard FTSE Global All Cap… and chill?

Sure, you won’t be shooting the lights out any year but despite many times i’ve been tempted to dip into a few IT’s and perhaps adopt a core and satellite strategy (80/20) I can never quite find a better long term, all weather, transparent and low cost solution than Vanguard FTSE Global All Cap.

Would really appreciate hearing your insights and motivations?