Build a Portfolio
Whilst the award-winning VT Chelsea Managed Funds might suit some investors (those with less time to research funds or those new to investing), we know that many of you like to build your own portfolio. We recognise that each investor is different, so we don’t presume to know how every one of you would like your portfolio to look.
You may wish to choose from our research tables, either the Core Selection or the wider Selection, or you may wish to choose any of the 2,500 plus funds available on one of our platforms. Either way, we thought some guidance on constructing your portfolio might be useful.
Picking a fund
When looking at individual funds, it is important not to simply look at their past performance – a fund may have done well in the past, but that is no guarantee it will do well in the future.
Some other points to consider are:
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How long has the manager been running the fund and do they have experience of managing money in different market conditions?
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What support/resources does the manager have?
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Make sure you know exactly what the fund is investing in – a good rule of thumb is never invest in anything you don’t fully understand.
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What will it cost? The cost of a fund can impact the returns it makes, and so is an important consideration. However, at Chelsea we are firm believers that returns after costs are more important. We would rather pay a little more for a fund that should do better for us over the longer term, rather than pay less for a fund that will underperform.
Furthermore, balance is important; the greater the spread of sectors/asset classes the less your portfolio will be subject to swings in market sentiment. Even if you have a strong personal preference for a particular sector, it is not a good idea to plough all your money into it. It is preferable to give a greater weighting to your preferred sector, whilst maintaining a reduced weighting in other areas.
It is important to remember to monitor your portfolio, preferably on at least an annual basis. There is a huge benefit to taking some time to analyse your portfolio to prevent sector and country biases creeping in. It is possible that occasionally some rebalancing may be required in order to maintain the equilibrium of your fund split and therefore the risk profile of your portfolio. Otherwise when a volatile fund performs well and you retain that holding, the overall risk aspect of the portfolio increases.
How should my portfolio look?
The truth is that it’s really quite subjective – everyone has a different attitude to risk and preferences for one sector/region or another. However, for those of you who would like a rough guide to a sensible split, take a look at our DIY Portfolios below:
The number of funds held within these portfolios will vary depending upon the amount invested. As a rough guide, a reasonable number of holdings would be c. 10 funds in a portfolio of over £30,000 and 15-20 in one of over £100,000. So, see how your portfolio stacks up. Remember, you can switch funds for free via Chelsea.
Still too much choice?
If you are still unsure, we offer further guidance. We’ve done some of the hard work for you and whittled down the universe to around 100 funds on our Selection list and around 40 funds on the Chelsea Core Selection.
You can use these lists as a guide when choosing a fund, with the comfort of knowing that our dedicated research team has interviewed every manager and every fund has undergone a rigorous process to earn its place in our research tables.
Alternatively, you may like to consider one of the award-winning VT Chelsea Managed funds.
Important Information
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Whilst we may draw attention to certain investment products, we cannot know which of them, if any, is best for your circumstances and must leave that judgement to you. If you are unsure about the suitability of any investment you should seek professional advice.
