• Log in
• Register free
• Subscribe
• Help
• Tour & Trial IC Advantage

• Share Tips
  • Buys
  • Sells
  • Recommendation changes
  • Tip performance
• Trading
• Companies
• Markets Data
• Columnists
• Funds Data
• Covered Warrants
• Research Tools
• Investment guides
• Q and A
• Blog
• Video

Subscribe today

Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.

Subscribe today and save £150

Ten lazy portfolios

Created:

18 April 2008

Updated:

26 October 2009

Written by:

David Stevenson

We've taken all these simple ideas – plus a few new ones - and worked up five very different Lazy Portfolios that you should be able to start building straightaway. We've deliberately chosen a wide range of portfolios that should just about match every investor style – they range from one which we call 'ultra-cautious' (aimed at income based investors looking to preserve their capital at all costs) through to a very high risk, high potential global growth portfolio that could be ideal for younger investors. All are based on a number of principles:

We've taken all these simple ideas – plus a few new ones - and worked up five very different Lazy Portfolios that you should be able to start building straightaway. We've deliberately chosen a wide range of portfolios that should just about match every investor style – they range from one which we call 'ultra-cautious' (aimed at income based investors looking to preserve their capital at all costs) through to a very high risk, high potential global growth portfolio that could be ideal for younger investors. All are based on a number of principles:

• Where possible we've tried to use the cheapest and most effective index tracking funds available, cutting down on costs and maximising your chance of capturing growth in the underlying index. We've worked out the average, blended TER for the portfolio and not one is above 1 per cent, and four have an average TER of less than 0.5 per cent.

• We've tried to keep it simple (all bar one have less than 10 funds) but not too simple so that it's undiversified.

• We'd also strongly suggest building these portfolios using monthly savings schemes – you should slowly but surely drip feed the portfolios over the long term.

• Where possible we've tried to building on the existing composition of similar Lazy portfolios in the UK and the US and on academic analysis. It's also worth looking at Matthew Vincent's recent series of articles in the FT Money section on model portfolios built by wealth managers for their clients. Dozens of highly experienced managers have so far contributed detailed breakdowns of average portfolios for all styles of investor.

If none of these portfolios takes your fancy, there are more available online at my website at www.investingmadesimple.com. Or try the lifestyling approach - another US import, whereby the investing style changes as you get older.

Be sure to read the caveats applying to lazy portfolios and the selection of their constituents.

High growth and emerging markets investor

This portfolio is unashamedly orientated towards the highest risk, potentially fastest growing sectors of the global economy. In periods of high global growth most of these sectors will do very well but be aware that during a global downturn these sectors could be heavily punished. Still, if held over long term this should produce some huge long term gains but it might be risky and potentially very volatile along the way

Cautious equity income portfolio

This portfolio is heavily biased towards dividend paying equities and high yielding bonds and produces a decent income stream as well as offering the investor a chance to build the capital value of the fund.

Mid-risk cautious portfolio

The key thought here is wealth preservation - thought this does invest in some assets that could be risky, it tries to diversify by investing in many different asset categories. This is not a portfolio to buy into if you believe there's going to be a long 'bear' market i.e shares carry on going down, but nevertheless it should deliver decent growth over the long term at relatively low risk

Low-risk ultra-cautious portfolio

The name of the game here is wealth preservation but with even less risk than our more mainstream cautious fund. The key here is that we're heavily invested in relatively safe government gilts and bonds (55% +)with less than half of the total invested in equity based funds. This portfolio would be ideal for those investors approaching retirement

Income portfolio

This portfolio is designed for the cautious investor who needs to preserve the value of their capital and generate a decent income. The investments might generate a small amount of capital gain but the chances are that this will be minimal but these funds should generate an income at a little over 5% per annum which is particularly useful for older investors.