Equity Portfolio Allocation

P

propertyman

Registered User
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Hi There
I have an equity portfolio for the past 20 years that now looks as follows in terms of weighting;

Kingspan - 50%
GlaxoSmithKline - 15%
Lloyds - 10%
Vodafone - 15%
Bank of Ireland - 5%
Prothena - 5%

Up to now, I haven't invested on a regular basis. I just buy when prices dip.

The portfolio started with an investment in Kingspan 20 years ago. Kingspan has done particularly well over the past 3 years and as a result now has a 50% weighting in the portfolio by value. I believe in the business and ownership case for Kingspan but from a good portfolio management point of view, should I start selling and rebalancing my portfolio?
Should my portfolio comprise more individual shares to diversify?
I am also interested in making more regular investments to grow the portfolio over the long term.

I have a private pension invested in mostly equities via Zurich.

Interested to hear peoples view, comments or suggestions.

Many thanks
 
Hi PM,
Here's my own thread on the same topic: https://www.askaboutmoney.com/threads/what-am-i-missing-in-my-equity-investments.194765/
Have a read through. As always, the typical questions would be the timeline for your investments, your tolerance for volatility/risk and what your ultimate goals are. I doubt anyone would say that holding 50% of your savings in one stock is a good idea though - either you support their business model and are happy with it (and believe it to be a better than average business plan) or you want to achieve a 'typical' equity investment return, which means diversifying - there's a few topics on here about what even that means!
 
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You need to break it down by sector, currency and geographic region to get a good over view.

By my reckoning you have at least 55% of your portfolio invested in micro caps and therefore your portfolio would be considered extremely risky from my point of view. In my book micro caps have no place in most peoples portfolio, you need to have the skill and the time to monitor those things very carefully in order to reduce the risk.
 

So just to be clear you are saying companies with market capitalisation of say $350M+

"sector, currency and geographic region"............difficult to without resorting to ETF/Funds?
 
monagt said:
So just to be clear you are saying companies with market capitalisation of say $350M+
Click to expand...

Yes, but you can't just one factor, revenue, cash flow etc are all too small.

monagt said:
"sector, currency and geographic region"............difficult to without resorting to ETF/Funds?
Click to expand...

It is more time consuming that is for sure. Which is another reason for not going there unless
you have the time to do it.

For instance micro caps that are partial drive by UK sales or exports would need to have the
FX bounce factored out to get a feel for how they are really doing etc...

You also need to look at how growth was financed and future capital needs...
 
Hi All, thanks you for your replies and perspective.

A separate but related point. I hold some uk shares in a Hargreaves lansdowne account. I am thinking of buying some units in a Neil Woodford fund - equity and income fund - accumulation units.
The fund is not domiciled in Ireland.
Are there any tax implications of doing this that would be different from holding U.K. Shares and their tax treatment?
 

I'm pretty sure that's a UK-domiciled UCITS fund and, as such, would be subject to the same exit tax regime as an Irish-domiciled UCITS fund.

Have you considered buying shares in an investment trust? They would be subject to income tax/CGT.

Here's a link to the industry website:-
http://www.theaic.co.uk/
 
Thanks Sarenco.
Just as a matter of interest, Why would you opt for an investment trust over a fund ?
Are there certain benefits of one over the other?
Or is a listed trust just a simpler instrument?
I like the idea of an accumulation fund as it mirrors dividend reinvestment with equities - but less risk due to number of holdings in the fund
 
Hi propertyman

By way of clarification, my suggestion was entirely based on my (perhaps incorrect) assumption that you are looking for a diversified equity investment that will be subject to the same tax treatment as a directly held share portfolio.

Investment trusts are generally (modestly) leveraged and are obviously actively managed vehicles, neither attribute of which particularly appeals to me. But f you really want to continue holding/picking individual stocks, then I think you will eventually be glad of the ability to harvest your losses.

Incidentally, dividend reinvestment doesn't reduce or even diversify equity risk - all you are doing is buying more of the same stocks.
 
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