ISA Investors: How to Rebalance Your Portfolio

Richard Whitehall: As the ISA deadline looms, investors have been bombarded by recommendations to buy top-performing stocks, funds or sectors. I would encourage investors not to be swayed and consider their portfolio holistically. Ensure their portfolio is positioned to achieve their investment goals for the long term. There are two issues that I’d highlight for investors that they may be looking at over the next couple of weeks.

Firstly, the last 12 months have seen stellar returns across asset classes. The FTSE All-Share is up 23%. Broad global indices are up 36% and even investment-grade is up 11%. What that means is that any cash holding that an investor has had has been significantly reduced. Cash is not exciting, but I think it does have a part to play for most investors in their portfolio, not least is a backstop against capital loss. So, now, maybe a prudent time for investors to add to cash.

The second point that I would highlight is that some investors may have had exposure to mining and energy sectors. Well, if so, congratulations, because the mining sector in the U.K., for example, has been up 95%. But that does mean that those investments will now be a much higher proportion of an investor’s portfolio. So, taking money out of those areas or adding into other parts that have underperformed maybe sensible for some investors as the ISA deadline approaches.


Source: Morningstar. Richard Whitehall | 08/03/2017

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