Harvey Jones thinks your portfolio is looking a little chubby round the edges.
Is your portfolio feeling bloated? Is it stuffed full of stodgy stocks and funds that give you plenty of bulk but very little flavour? If so, you might need to change your diet.
Too many investors can't resist gobbling up the comfort food offered by the UK All-Companies sector, even though it means ignoring lighter, spicier options elsewhere.
The UK All-Companies remains the most popular sector among investors, attracting more than 20% of stocks and shares ISA money in the last tax year, according to new research from Moneyspider.com.
Nobody expects the UK stock market to be top performer all the time, but too many of us act as though it is. By filling up on homegrown fare, you could be missing out on the more exotic and tastier alternatives found overseas.
Equities begin at home
Home is where the heart is, and it is certainly wise to start building your equity portfolio with UK stocks and funds, including the odd index tracker. For example, you could do a lot worse than laying the iShares FTSE 100 ETF tracker as your initial building block.
But as you become more experienced, you should expand your horizons and roam much further afield. It does mean taking on a bit more currency risk, but should ultimately be more rewarding.
Foreign affairs
The UK All-Companies sector is hardly a basket case. Over the last 12 months, the best performing fund, Investec Special Situations, turned £5,000 into £4,836, according to Moneyspider.com.
Yep, that's not good, but then it was a terrible year. The best-performing North American fund sector, Neptune US Opportunities, did only slightly better, returning £5,080 over the same period.
The leading Asian fund, First State Asia Pacific leaders, reduced £5,000 to £4,787, while Royal London European Growth shrunk it to £4,405.
A nice spread
Over five years, the picture is different. China tops the tree, with First State Greater China Growth turning £5,000 into £13,195.
In descending order, top performers Neptune European Opportunities returned £11,967, Rensburg UK Mid Cap Growth Trust delivered £8,908 and Neptune US Opportunities £8,525.
As you may have noticed, there is no pattern to these figures. Over one year the US tops the charts, over five years it comes bottom, Asia does well over five years, but is disappointing over one year.
And that's my point. Sectors swing in and out of favour, in ways that nobody can predict. That is why you need a good spread of them.
And it explains why cramming your plate with familiar favourites from the UK All-Companies sector, however tempting, can give you indigestion.
Trim the fat
I've just checked my ISA fund portfolio, and I'm a little overweight on the UK All-Companies sector at 23%, plus another 16% in UK equity income and 6% in UK smaller companies.
I'm bullish about Asia Pacific excluding Japan, but have just 9% there, and a mere 2% in North America. I think it might be time for a little rebalancing. Take a look at your own portfolio, to see whether you have made the same mistake.
I bet you have.
Fish and blue-chips
Your share portfolio may also be overweight on UK stocks, perhaps because you lack the confidence to buy overseas direct equities. If so, Malcolm Wheatley can help you Go Global for Greater Gains.
My share portfolio contains a little less fatty Brit fare, probably because I trade it much more actively.
But I have still bulked up with UK biggies such as BT (LSE: BT-A), Barclays (LSE: BARC), Royal Dutch Shell (LSE: RDSB), GlaxoSmithKline (LSE: GSK) and Tesco (LSE: TSCO), plus a few Brit tearaways tipped by Maynard Paton in Champion Shares.
My adventures overseas have been restricted to a trio of investment trusts, Baring Emerging Europe (LSE: BEE), BlackRock Latin American (LSE: BRLA) and Scottish Oriental Smaller Companies (LSE: SST). All have performed blindingly, at times, an exotic counterweight to my diet of homegrown companies. And I might soon be ordering more of them.
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