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 - another US import, whereby the investing style changes as you get older.
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
Fund | % of portfolio | TER of fund % | Ticker, EPIC or identifier |
Indian Shares - Deutsche DBX S&P CNX NIFTY ETF | 12.5 | 0.65 | XNIF |
Chinese shares - Lyxor ETF China Enterprise (HSCEI) GBP | 12.5 | 0.65 | LCHN |
Brazilian shares - Lyxor ETF Brazil (Ibovespa) GBP` | 12.5 | 0.65 | LBRZ |
Russian megacaps - Lyxor ETF Russia (DJ Rusindex Titans 10) GBP | 12.5 | 0.65 | LRUS |
Asian stocks generally outside of Japan - Lyxor ETF MSCI AC Asia-Pacific ex Japan GBP | 10 | 0.65 | LASP |
South African stocks - Lyxor ETF FTSE JSE TOP 40 South Africa GBP | 5 | 0.65 | LSAF |
Turkish stocks - iShares MSCI Turkey | 5 | 0.74 | ITKY |
Global listed private equity funds - iShares Listed Private Equity | 5 | 0.75 | IPRV |
Euroland fast growth large caps - iShares DJ EuroStoxx Growth | 10 | 0.4 | IDJG |
Middle East, East European and North African shares - Deutsche DBX MSCI EM EMEA | 10 | 0.65 | XMEA |
Close Techmark | 5 | 1.15 | CS24 |
blended average | 0.65 |
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.
Fund | % of portfolio | TER of fund % | Ticker, EPIC or identifier |
FTSE All Share index - Fidelity Moneybuilder UK Index | 25 | 0.1 | F190 |
Global developed markets - Deutsche DBX MSCI WORLD TRN INDEX ETF | 15 | 0.45 | XMWO |
FTSE 250 stocks - Lyxor ETF UK FTSE 250 | 15 | 0.35 | L250 |
Government securities (long and short) -iShares FTSE UK All Stocks Gilt | 10 | 0.2 | IGLT |
Global Emerging Markets - Deutsche DBX MSCI EMERGING MARKETS TRN INDEX ETF | 5 | 0.65 | XMEM |
Global property funds - iShares FTSE EPRA/NAREIT Global Property Yield Fund | 7.5 | 0.59 | IWDP |
Global, high yielding large caps - DJ STOXX GLOBAL SELECT DIVIDEND 100 ETF | 15 | 0.5 | XGSD |
Global large cap utilities and infrastructure companies - iShares FTSE/Macquarie Global Infrastructure 100 | 7.5 | 0.65 | INFR |
Blended average | 100 | 0.3655 |
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
Fund | % of portfolio | TER of fund % | Ticker, EPIC or identifier |
FTSE All Share Index- Fidelity Moneybuilder UK Index | 20 | 0.1 | F190 |
Global developed markets - Deutsche DBX MSCI WORLD TRN INDEX ETF | 25 | 0.45 | XMWO |
FTSE 250 stocks - Lyxor ETF UK FTSE 250 | 3 | 0.35 | L250 |
Global large cap utilities and infrastructure companies - iShares FTSE/Macquarie Global Infrastructure 100 | 5 | 0.65 | INFR |
Global Commodities - Lyxor ETF CRB GBP All Commodities | 5 | 0.35 | LCTY |
Government securities (long and short) -iShares FTSE UK All Stocks Gilt | 35 | 0.2 | IGLT |
Global emerging markets stocks - Deutsche DBX MSCI EMERGING MARKETS TRN INDEX ETF | 2 | 0.65 | XMEM |
Global property funds - iShares FTSE EPRA/NAREIT Global Property Yield Fund | 5 | 0.59 | IWDP |
UK Government index linked stock - iShares £ Index-Linked Gilts | 5 | 0.25 | INXG |
Blended average | 0.305 |
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
Fund | % of portfolio | TER of fund % | Ticker, EPIC, or identifier |
FTSE All Share index - Fidelity Moneybuilder UK Index | 15 | 0.1 | F190 |
Global developed world markets - Deutsche DBX MSCI WORLD TRN INDEX ETF | 10 | 0.45 | XMWO |
FTSE 250 stocks - Lyxor ETF UK FTSE 250 | 5 | 0.35 | L250 |
Global large cap utilities and infrastructure companies - iShares FTSE/Macquarie Global Infrastructure 100 | 5 | 0.65 | INFR |
Global commodities - Lyxor ETF CRB GBP All Commodities | 5 | 0.35 | LCTY |
UK Gilts - iShares FTSE UK All Stocks Gilt | 35 | 0.2 | IGLT |
UK corporate bond funds - iShares £ Corporate Bond | 10 | 0.2 | SLXX |
Global Property funds - iShares FTSE EPRA/NAREIT Global Property Yield Fund | 5 | 0.59 | IWDP |
UK Government index linked stock - iShares £ Index-Linked Gilts | 10 | 0.25 | INXG |
Blended average | x | 0.272 |
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.
Fund | % of portfolio | TER of fund % | Yield % | Ticker, EPIC or identifier |
UK FTSE All share - Fidelity Moneybuilder UK Index | 15 | 0.1 | 2.89 | F190 |
UK mid and large cap high yield stocks - iShares FTSE UK Dividend Plus | 7.5 | 0.4 | 3.98 | IUKD |
Global developed markets high yield large caps - Deutsche DBX DJ STOXX GLOBAL SELECT DIVIDEND 100 ETF | 7.5 | 0.5 | 2.9 | XGSD |
UK Gilts - iShares FTSE UK All Stocks Gilt | 35 | 0.2 | 4.9 | IGLT |
UK corporate bonds - iShares £ Corporate Bond | 20 | 0.2 | 5.87 | SLXX |
UK Government index linked stock iShares £ Index-Linked Gilts | 10 | 0.25 | 1.58 | INXG |
Global developed world markets - iShares FTSE/Macquarie Global Infrastructure 100 | 5 | 0.65 | 1.8 | INFR |
blended average | 100 | 0.25 | 5.097 |