80-20 Investor asset allocation tool – UPDATE April 2016

Those of you who have been 80-20 Investor members since the Autumn will recall the launch of the 80-20 Investor asset allocation tool.

I always emphasise the importance of being able to benchmark your portfolio in order to judge its performance. You can find out how to do it by reading my piece How to accurately benchmark your own portfolio.

However, in order to accurately benchmark your portfolio you need to be able to accurately work out what assets your portfolio is invested in. Or in other words, calculate your portfolio's asset allocation. The trouble is that funds can hold hundreds of investments within them. Some funds even hold different types of assets (such as equities, bonds and property) while others will invest globally.

For example if you hold the popular Fundsmith Equity fund, then where exactly is your money invested? While it may be in the Global sector that isn't much use when working out the underlying asset allocation of your portfolio. In fact I can tell you that 93% of the fund's assets are invested in US equities. However, fund managers change their asset allocation over time. Back in the Autumn when I published the original asset allocation tool the Fundsmith Fund invested only 53% of its assets in US equities.

So by popular demand I have updated the research behind the tool and you can download the latest version here. Once you've downloaded it it is yours to keep.

Without the 80-20 Investor allocation tool the only other way to find out the level of detail, in terms of calculating your asset allocation, which it provides is to look at the latest fund factsheets for every fund you hold and hope they contain this information. The problem is that most fund factsheets are at least a month out of date and the level of detail they produce is deliberately very limited. That's because they don't want competitors to know exactly what they are doing.

So how else can you drill down into each fund you hold and work out what it's invested in before putting it all together at a portfolio level? Well you need to hope the investment platform you use can provide this information. Again the problem is that most fund platforms don't have a tool that can do this. Even if a platform created one it wouldn't be much good if you have investments on various platforms, as many of us do.

In addition none of the tools I've seen allow you to see how a fund switch might influence your portfolio's asset allocation. Neither do they let you play around with your portfolio quickly and freely.

The 80-20 Investor asset allocation tool

The 80-20 Investor asset allocation tool analyses every unit trust out there (that's around 2,300 of them!) and breaks down exactly where each invests its money.

The tool allows you to enter the funds you hold and the amount you have invested in each of them. It then crunches the numbers on all of the hundreds of holdings within each fund and produces an overall asset allocation for your portfolio.

The tool contains an example portfolio to show you how it works. All you need to do is delete my example and then copy and paste funds from the fund list (on the second tab of the spreadsheet) into the relevant column and then enter how much you have invested in each.

The spreadsheet will do the rest. I pay thousands of pounds a year to be able to access the data on every fund's investments, essentially X-raying them. By creating a process to analyse this information I can make this powerful tool for 80-20 Investor members to use at no extra charge.

As I said last time, I guarantee that when you analyse your portfolio you will be surprised by some of the markets you actually have exposure to. Also you will be surprised by how much your asset allocation has changed even if you haven't altered your funds in recent months.