The key to my investment philosophy is having a target asset allocation. Ideally, this allocation hardly changes – perhaps a slight shift towards bonds and away from equities every year as the Grim Reaper approaches, but aside from that nothing significant. In practice, it’s time for a quick update to the allocation.
The main trigger for my allocation update, to coin Harold Wilson’s phrase, is: events, dear boy, events. The portfolio I let a private bank manage for me was restructured last year, and left me with significantly more US exposure and less UK exposure than before. And almost every asset class gained a lot last year, measured in pounds, so being levered proved to be a significant boon. While I could rebalance, I want to consider whether my target allocation is still right.
My old allocation had UK equities and US equities equally weighted. This left, when you factored in my bonds allocation, the UK at a target weight of 35%, and the US only slightly higher at 40%. And my old allocation had bonds:equity at 29%:71% – an equity-friendly mix, to be sure, but with a very significant minority of bonds.
Looking at my old allocation from current perspectives, I want to make some changes.
FIRE v London 