I think I’ve finally settled on an asset allocation strategy that I feel comfortable with.
I am going to start with a 80/20 split between equities and bonds.
For the bond component, I might use this fund:
Vanguard Investments Funds ICVC-Vanguard U.K. Long Duration Gilt Index Fund A GBP Gross Accumulation
For the equity portion I’m going to keep things simple by using 4 equal chunks:
25% Vanguard US Equity Index Acc
25% Vanguard FTSE Developed Europe ex UK Equity Index Acc
25% Vanguard FTSE U.K. All Share Index Unit Trust Accumulation
25% Vanguard Global Emerging Markets Fund A GBP Acc
Some initial thoughts:
Yes, 80/20 is a little bit high – but better than the 100% equities I currently have! I need a degree of risk if I’m to stand any chance of growing my portfolio to my target £0.5M+ value within the next 10 years.
Yes, I quite like Vanguard funds 🙂 But I will consider other options.
This design makes it easy for me to change the equity/bond ratio in future, if I want less risk. I would just need to change the overall ratio and then divide the equity portion by 4.
I am not sure when the right time will be to implement this allocation strategy – considering my fund is still down following last week’s panic 🙁
Are bonds the right thing to be buying? I’ve heard a lot of negative press about them lately, which I don’t fully understand. I get the feeling the most I would get from them is to cover inflation each year!