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Rookie Investor
Posted: 07 January 2025 19:27:49(UTC)
#1

Joined: 09/12/2020(UTC)
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I have two nephews who have been gifted a low 6-figure amounts each to be invested for the long term. They are both under 5. A set amount (25%) put into bonds as defensives that might be used to spend on school fees before 18.

For the risky allocation (comprising about 75% of the pot each), I have been tasked to allocate this appropriately. I am curious of other investors thoughts on my proposed allocation. Particularly those in a similar situation. I need to be mindful not to invest like I have for myself, because there is quite a bit of pressure (that I put on myself) to invest "correctly", as any mistakes I will obviously feel quite guilty about. VERY different to allocating for myself, as any mistakes I make only impact me and I take it on the chin.

The investments need to be shares and not funds given the platform costs.

So my proposed allocation for each nephew is as follows:

60% - VWRL
20% - SMT
10% - EWI (this is one I am 50-50 on given the SABA activism so not sure if there is a suitable well managed fund to replace it with)
10% - HVPE

Wondering what others would do, if the above seems reasonable and if there is anything to consider.

Thanks!
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Luca Brasi
Posted: 07 January 2025 19:57:15(UTC)
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Opened a JISA for my 3 year old grandson a couple of months ago, 5K in FCIT.
It's one of the few IT's that I feel can be just left to do it's thing, also hold it in my draw down SIPP and my wife's ISA, performance has not disappointed .
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Rookie Investor on 08/01/2025(UTC)
Cm258
Posted: 07 January 2025 20:14:12(UTC)
#3

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My daughter, who is 2, has 100% of her JISA in Vanguard FTSE Global All Cap. 10% emerging markets, 5% small caps. Should be good over 16 years.

Appreciate you're not looking for funds, but why not put the 75% simply into VWRP, SSAC or ACWI and be done with it? The average of the market over 13 years should be more than fine, surely?
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Rookie Investor on 08/01/2025(UTC)
ben ski
Posted: 07 January 2025 20:22:53(UTC)
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Rookie Investor;330336 wrote:
60% - VWRL
20% - SMT
10% - EWI (this is one I am 50-50 on given the SABA activism so not sure if there is a suitable well managed fund to replace it with)
10% - HVPE


If these investments have to stand the best part of 20 years, you don't want anything that's going to need monitoring – because that means trading these portfolios for 20 years .. and I wouldn't trust many on here to go to a shop a buy me a Mars bar, without likely losing me several thousand pounds.

So it should be 100% VWRP (as you want accumulating, not distributing)

If I was going to add anything to that, on a 15-20 year view, it might be 5% gold and 1% Bitcoin. But the chances of SMT and EWI even being on the radar in 10-20 years – who knows? They'll have different management, we'll be in a different market cycle. HVPE I'd almost justify, but I don't think you'd want more than 10-15% in 'special ops', and probably no more than 5% in a single trust. 40% in crapshoots could look like a big mistake by then.
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Cm258 on 07/01/2025(UTC), Chris1986 on 08/01/2025(UTC), Sheerman on 08/01/2025(UTC), Rookie Investor on 08/01/2025(UTC), Janey187 on 08/01/2025(UTC)
Newbie
Posted: 07 January 2025 20:24:36(UTC)
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L&G Global 100 - OEIC
HSBC Islamic - OEIC
IPRV - ETF
FCIT - IT
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Rookie Investor on 08/01/2025(UTC)
ben ski
Posted: 07 January 2025 20:29:23(UTC)
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Newbie;330342 wrote:
L&G Global 100 - OEIC


I do think there's a lot of recency bias in that choice, and this has to be a decision you can stick with.

We've got a century in which small-cap value, equal weight, etc. far outpaced large-caps. We've only got a few years of this current trend – and the higher it goes, the more opportunity there should be anywhere else.
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Newbie on 07/01/2025(UTC), Sheerman on 08/01/2025(UTC), Rookie Investor on 08/01/2025(UTC)
Cm258
Posted: 07 January 2025 20:40:59(UTC)
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ben ski;330343 wrote:
Newbie;330342 wrote:
L&G Global 100 - OEIC


I do think there's a lot of recency bias in that choice, and this has to be a decision you can stick with.

We've got a century in which small-cap value, equal weight, etc. far outpaced large-caps. We've only got a few years of this current trend – and the higher it goes, the more opportunity there should be anywhere else.




Small cap value and equal weight has outpaced large caps over the last 25 years?!
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Rookie Investor on 08/01/2025(UTC)
Newbie
Posted: 07 January 2025 21:26:04(UTC)
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ben ski;330343 wrote:
Newbie;330342 wrote:
L&G Global 100 - OEIC


I do think there's a lot of recency bias in that choice, and this has to be a decision you can stick with.

We've got a century in which small-cap value, equal weight, etc. far outpaced large-caps. We've only got a few years of this current trend – and the higher it goes, the more opportunity there should be anywhere else.



Do you have a "simple" small-cap fund that shows this ?
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Rookie Investor on 08/01/2025(UTC)
ben ski
Posted: 07 January 2025 21:27:52(UTC)
#12

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Cm258;330345 wrote:
ben ski;330343 wrote:
Newbie;330342 wrote:
L&G Global 100 - OEIC


I do think there's a lot of recency bias in that choice, and this has to be a decision you can stick with.

We've got a century in which small-cap value, equal weight, etc. far outpaced large-caps. We've only got a few years of this current trend – and the higher it goes, the more opportunity there should be anywhere else.




Small cap value and equal weight has outpaced large caps over the last 25 years?!


A century is typically 100 years. But yes, small-cap value has outpaced large caps over 25 years. And I'm not sure with EW, because Portfolio Visualizer's virtually unusable now.
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Rookie Investor on 08/01/2025(UTC)
ben ski
Posted: 07 January 2025 21:29:47(UTC)
#8

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Newbie;330348 wrote:
ben ski;330343 wrote:
Newbie;330342 wrote:
L&G Global 100 - OEIC


I do think there's a lot of recency bias in that choice, and this has to be a decision you can stick with.

We've got a century in which small-cap value, equal weight, etc. far outpaced large-caps. We've only got a few years of this current trend – and the higher it goes, the more opportunity there should be anywhere else.



Do you have a "simple" small-cap fund that shows this ?


https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6BuaELL5JCljT46oZsj57r
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2 users thanked ben ski for this post.
Newbie on 07/01/2025(UTC), Rookie Investor on 08/01/2025(UTC)
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