Balancing Portfolo By Sector - Southbank Investment Research

Participant

Hi Stephen,
I have bought and held my HYP over the past 5 years with about £5k in each of about 30 shares from HYP recommendations over the years. As you would expect, despite a good average dividend of 4-5% (generally drawn as income from my SIPP in flex drawdown), the holdings now range from £2-10k in capital value. I would like to now rebalance. 1) Should I aim to reduce from 30 shares ? 2) If I trim, which ones to quit as they are all buy or hold ? 3) I have some surplus cash from sale of NEX and Sky – where to invest ? 4) What is a recommended asset allocation by sector if I was to start from scratch for diversification ?
Many Thanks
David Burton

Stephen Bland

Moderator

David, your questions are mostly personal to you and any answer would constitute prohibited personal financial advice (PPFA) which I am not permitted by law to to offer individual readers. Others are welcome to comment though.

I can say a few things.

I have never advocated rebalancing which would mean some sales and as you may know, my view is never sell except in very rare technical circumstances. So it’s up to you alone if you wish to do that and I won’t comment.

There is no limit on the number of sectors or shares that should be held, that is up to each investor. My HYPs aim to hold between 15-20 sectors, some of which may be Multiple Choice with more than one share but although 15 is the minimum number of sectors, there is no maximum. Any decision to add to, or otherwise alter one of my HYPs as featured in TDL has to be the investor’s alone.

On my advised sale of NXG, I wrote earlier this month on how I reinvested the cash in HYPs 2 and 3 which held the share. Any other decision you might make falls under PPFA. SKY is a Hold and has never been a sale in TDL so if you have sold, that was your own decision and again PPFA rules on the reinvestment.

If you want to start again, I do not maintain any kind of permanent recommended asset allocation because that changes constantly with market fluctuations and the varying desirability of different shares at the time of selection. All I can suggest here is that you look at my latest portfolio under construction, HYP7. Any further comment would be PPFA.

I’d add if you may not be aware that I’m not trying to be awkward or shirk any responsibility by quoting PPFA at you. The reason is that financial services legislation is very clear that whilst I am both qualified and authorised to write on investments to a group of readers in general via TDL, I am banned from offering personal financial advice to any individual.