I want to thanks OP 'flybytheseat' and those that replied to my proposed ARF portfolio.
Some very constructive replies which have led me back to the drawing board.
I've reduced the funds from six to four and changed the balance of assets.
I know two equity funds may be questionable to many but I'm happy for the moment with my reasoning for including Dividend Growth.
I've read articles regarding the use of dividends in the role of volatility reduction and I see them as a way of potentially reducing bonds and increasing growth.
The extent of correlation between equities and bonds in the recent downturn was an eye opener and even a shock to many. Including institutional investors.
I'm not too happy with the lack if geographical diversification within the Active Fixed Income Fund. All european. Open to ideas on how to address this.
One of the facts I took into consideration a few years ago when transferring out a DB scheme was it's all de-risked strategy of all euro government bonds. Most heavily weighted with France.
So, anyway, here goes.
Zurich ARF Draft. ESMA Volatility Risk 5. 11.47% Volatility 5 Years
Reasons for Portfolio Composition:
Sequence of return risk mitigation: ...Cash Fund (2x Years Distribution Bucket).
Potential Volatility reduction: ……........Dividend Growth. Active Fixed Income Fund.
Growth:……………………………..................…Indexed Global Equity, Div. Growth.
4 funds picked for asset diversification and lower cost due to nil or low ‘Additional AMC’ and ‘Other Ongoing Charges’.
70% Equity. 21.56% Bonds. 8.44% Cash.
Active Fixed Income 22% Allocation
Risk Rating 4. Currently Geographical 95% Euro. Government bonds.
0.00% additional AMC. 0.00% OOC
Dividend Growth Fund 10% Allocation
Risk Rating 6. Geographical 65% North America. 11% Eurozone equities, the rest global.
0.00% Additional AMC. 0.01% OOC.
Indexed Global Equity (Blackrock) 60% Allocation
Risk Rating 6. Geographical 71% USA. The rest global equities.
0.00% Additional AMC. 0.01% OOC.
Cash Fund 8% Initial Allocation.
May need to be adjusted as it will initially be based on projected numerical 2x years distribution. This will have an impact on the other allocations.
Risk Rating 1. Geo 100% Euro. 0.00% Additional AMC. 0.00% OOC.
I intend to use the cash fund for distribution only in negative return years (what extent of negative as yet to be decided) and as Homestore and More used to say, 'when they're gone they're gone'.
I'll then apportion it's allocation percentage to to equities.
After that, it will be on auto re-balance without a cash fund and I hope to then keep my hands in my pockets and do as little as possible damage to it.
The reason I'm not currently planning to use Prisma 4 (ESMA 5) is because it has an OOC of 0.07%.
My cognitive ability is okay (although my wife may disagree
I know that some will question or even attack the use of dividend growth and an element of bucket strategy but always open to constructive opinion.
Thanks again to OP 'Flybytheseat' for opening this discussion and for the information shared by all.
Everyday's a school day.
Some very constructive replies which have led me back to the drawing board.
I've reduced the funds from six to four and changed the balance of assets.
I know two equity funds may be questionable to many but I'm happy for the moment with my reasoning for including Dividend Growth.
I've read articles regarding the use of dividends in the role of volatility reduction and I see them as a way of potentially reducing bonds and increasing growth.
The extent of correlation between equities and bonds in the recent downturn was an eye opener and even a shock to many. Including institutional investors.
I'm not too happy with the lack if geographical diversification within the Active Fixed Income Fund. All european. Open to ideas on how to address this.
One of the facts I took into consideration a few years ago when transferring out a DB scheme was it's all de-risked strategy of all euro government bonds. Most heavily weighted with France.
So, anyway, here goes.
Zurich ARF Draft. ESMA Volatility Risk 5. 11.47% Volatility 5 Years
Reasons for Portfolio Composition:
Sequence of return risk mitigation: ...Cash Fund (2x Years Distribution Bucket).
Potential Volatility reduction: ……........Dividend Growth. Active Fixed Income Fund.
Growth:……………………………..................…Indexed Global Equity, Div. Growth.
4 funds picked for asset diversification and lower cost due to nil or low ‘Additional AMC’ and ‘Other Ongoing Charges’.
70% Equity. 21.56% Bonds. 8.44% Cash.
Active Fixed Income 22% Allocation
Risk Rating 4. Currently Geographical 95% Euro. Government bonds.
0.00% additional AMC. 0.00% OOC
Dividend Growth Fund 10% Allocation
Risk Rating 6. Geographical 65% North America. 11% Eurozone equities, the rest global.
0.00% Additional AMC. 0.01% OOC.
Indexed Global Equity (Blackrock) 60% Allocation
Risk Rating 6. Geographical 71% USA. The rest global equities.
0.00% Additional AMC. 0.01% OOC.
Cash Fund 8% Initial Allocation.
May need to be adjusted as it will initially be based on projected numerical 2x years distribution. This will have an impact on the other allocations.
Risk Rating 1. Geo 100% Euro. 0.00% Additional AMC. 0.00% OOC.
I intend to use the cash fund for distribution only in negative return years (what extent of negative as yet to be decided) and as Homestore and More used to say, 'when they're gone they're gone'.
I'll then apportion it's allocation percentage to to equities.
After that, it will be on auto re-balance without a cash fund and I hope to then keep my hands in my pockets and do as little as possible damage to it.
The reason I'm not currently planning to use Prisma 4 (ESMA 5) is because it has an OOC of 0.07%.
My cognitive ability is okay (although my wife may disagree
I know that some will question or even attack the use of dividend growth and an element of bucket strategy but always open to constructive opinion.
Thanks again to OP 'Flybytheseat' for opening this discussion and for the information shared by all.
Everyday's a school day.