Investment Portfolio
Proposal for a UK Investor

A comprehensive strategy to invest £750,000 for sustainable income and growth, targeting £40,000 annual retirement income with medium-risk tolerance.

July 2025 Medium Risk £750,000

Executive Summary

Investment Objective

Generate £40,000 annual income from age 60 (11-year horizon) while maintaining capital growth potential.

£750K
Initial Investment
5.33%
Initial Withdrawal Rate

Key Strategy Components

  • • Diversified multi-asset allocation across mature markets
  • • Total costs maintained below 0.75%
  • • Tax-efficient wrappers (ISA/SIPP)
  • • Quarterly rebalancing

Client Profile & Objectives

Personal Circumstances

Age & Status

49-year-old married UK citizen with 11-year investment horizon until retirement at age 60

Financial Starting Point

No existing investments or pensions - clean slate for portfolio construction

Tax Considerations

UK citizenship central to tax-efficiency planning and investment wrapper selection

Financial Situation

£750,000
Available for Investment
Current Status: Cash
Investment Horizon: 11 years
Retirement Age: 60

Investment Goals & Preferences

Primary Objectives

  • £40,000 annual income from age 60
  • Continued capital growth post-retirement
  • Investment in mature markets (US, UK, Europe, Japan, China)

Investment Vehicle Preferences

Prefers diversified vehicles over single stocks:

Unit Trusts Funds Investment Trusts Model Portfolios

Risk Profile & Constraints

Risk Tolerance & Volatility

Risk Level: Medium

With emphasis on minimizing volatility through diversification

Cost Constraint
Total fund costs
< 0.75%
Platform
Management
Single Platform
Tax Efficiency
UK-focused
Critical

Proposed Investment Strategy

Core Principles

Diversification

Spread across asset classes and geographies to mitigate risk and reduce volatility

Balanced Risk-Return

Align with medium-risk tolerance while cushioning against market downturns

Cost-Efficiency

Relentless focus on remaining within the 0.75% total cost cap

Tax Efficiency

Utilize UK tax wrappers and select tax-efficient funds for UK residents

Simplicity

Single platform management for ease of monitoring and rebalancing

Growth Focus

Maintain growth potential while generating sustainable retirement income

Asset Allocation Framework

Based on P1 Retirement Income Cautious-Moderate model portfolio, targeting CPI + 3% with quarterly rebalancing.

Proposed Asset Allocation

Income & Growth Targets

Target Income Yield 3-4%
Required Income 5.33%
Model Volatility 7.07%

Asset Class Details

Overseas Equity (40%): Global income funds (US, Europe, Japan, China)
Fixed Interest (32%): Global bonds (GBP hedged), UK Gilts
Alternatives (15%): Multi-asset strategies
UK Equity (11%): UK-focused income funds
Cash (2%): Liquidity & preservation

Income Generation Strategy

Income Gap Analysis

The P1 model targets 3-4% yield (£26,850-£30,000), falling short of the £40,000 target (5.33% withdrawal rate).

Enhancement Strategies:
  • • Higher-yielding equity income funds
  • • Multi-asset income funds (e.g., Newton strategy at 4.18%)
  • • Systematic capital withdrawals if needed

Tax Efficiency Considerations

Tax Wrappers

ISA
£20,000 annual allowance
SIPP
Tax relief on contributions

Fund Selection Criteria

  • UK-domiciled OEICs and unit trusts preferred
  • UCITS funds with "Reporting Fund" status for offshore exposure
  • Avoid non-reporting offshore funds
  • Generally avoid US-domiciled funds without UK Reporting status

Recommended Portfolio Construction

Strategic Allocation Components

Core Equity Allocation (51%)

Primary engine for long-term capital growth and income generation across preferred mature markets.

Global Equity Income (40%)
Vanguard Global Equity Income, Artemis Global Income
UK Equity (11%)
Marlborough Multi Cap Income, UK-focused ETFs

Multi-Asset Income Allocation

Enhances portfolio yield through diversified income-generating assets.

Recommended Options:

Fixed Income Allocation (32%)

Provides stability, reduces volatility, and generates predictable income.

Components:

Supporting Allocations

Alternatives (15%)

Diversified multi-asset exposure through TM P1 Ethical World Fund.

Equity allocation: 50-80%
Fixed interest: 10-40%

Cash (2%)

£15,000 for liquidity, volatility buffer, and opportunistic investments.

Covers several months of target income and facilitates rebalancing

Platform Considerations

Hargreaves Lansdown: ~0.32%
Fidelity International: ~0.35%
Fund Costs: < 0.40%

Specific Fund Recommendations

Recommended Fund Portfolio

Curated selection based on P1 Cautious-Moderate model with enhanced income focus

Asset Class / Fund Type Recommended Fund(s) Allocation Key Rationale
Global Equity Income Vanguard Global Equity Income Fund
Artemis Global Income Fund 		40% Diversified global exposure, income focus, mature market preference
UK Equity Income Marlborough Multi Cap Income Fund
(OCF 0.80% needs review) 		11% UK dividend exposure, cost considerations important
Multi-Asset Income BNY Mellon Multi-Asset Income Fund
(Newton strategy, 4.18% yield, 0.5% AMC) 		15-20% Enhances portfolio yield, good cost-yield balance
Ethical Multi-Asset TM P1 Ethical World Fund A Inc 15% Diversified multi-asset exposure, aligns with P1 model
Fixed Income Vanguard Global Bond Index Fund
Fidelity Index UK Gilt Fund 		32% Portfolio stability, income generation, low-cost options
Cash Platform interest-bearing cash account 2% Liquidity, capital preservation, volatility buffer

Cost Analysis

Total Cost Breakdown

Weighted Average Fund Costs ~0.55%
Platform Fees ~0.20%
Total Estimated Cost ~0.75%
Cost Constraint: Individual fund selection must be optimized to maintain total costs below 0.75%

Yield Enhancement Strategy

High-Yield Options Comparison

Newton Multi-Asset Income
Balanced approach
4.18%
0.5% AMC
Wellington Multi-Asset High Income
Higher yield
7.7%
0.89% OCF

Income Projection

Base P1 Model Yield (3-4%): £26,850 - £30,000
Enhanced Yield Target: £40,000
Gap to be Filled: £10,000 - £13,150

Portfolio Performance & Monitoring

Expected Outcomes & Risk Management

Dual Objectives Framework

Income Generation
£40,000

Annual income target from age 60

Initial withdrawal rate: 5.33%
Natural yield target: 3-4%
Capital Growth
Continued growth post-retirement
Global equity exposure (51%)
Quarterly rebalancing
Inflation protection

Risk & Volatility Management

Diversification Strategy
  • Cross-asset class diversification
  • Geographic allocation across mature markets
  • Fund-level diversification over single stocks
Risk Controls
  • 32% fixed income for stability
  • Quarterly rebalancing discipline
  • Cost control below 0.75%

Performance Benchmarks

Primary Benchmark

IA Mixed Investment
20%-60% Shares sector
Standard benchmark for medium-risk multi-asset funds

Secondary Benchmark

CPI + 3%
Real returns target
Focus on maintaining purchasing power and growth

Model Characteristics

Target Volatility: 7.07%
Rebalancing: Quarterly
Time Horizon: 5+ years

Ongoing Review & Rebalancing Process

Quarterly Review Schedule

Q1
January Review
Post-year-end assessment
Q2
April Review
Q1 performance analysis
Q3
July Review
Mid-year rebalancing
Q4
October Review
Year-end positioning

Review Components

Performance Tracking
Against benchmarks and income objectives
Fund Performance
Individual fund vs. peers and benchmarks
Client Circumstances
Changes in situation, risk tolerance, objectives
Market Conditions
Economic outlook, interest rates, inflation
Cost Monitoring
Ensure total costs remain below 0.75%

Key Assumptions & Risks

Primary Risks

Market Risk

Inherent possibility of portfolio value decrease due to economic recessions, political instability, interest rate changes, and investor sentiment.

Mitigation: Diversification across asset classes and geographies reduces but cannot eliminate market risk.

Income Sustainability Risk

The 5.33% initial withdrawal rate exceeds typical 3-4% sustainable rates, potentially requiring capital withdrawals that could impact long-term portfolio longevity.

Factors: Portfolio growth rate, inflation, sequence of returns, client lifespan

Secondary Risks

Tax Regulation Changes

Future changes in UK tax legislation regarding ISAs, SIPPs, dividend taxation, or offshore fund treatment could impact portfolio efficiency.

Response: Regular portfolio reviews to adapt to new legislation

Inflation Risk

Purchasing power of £40,000 annual income could decrease over time. At 2-3% inflation, real value halves in 24-36 years.

Mitigation: Growth assets, dividend-growing equities, CPI + 3% target

Risk Management Framework

Prevention

  • • Diversified asset allocation
  • • Quality fund selection
  • • Cost control
  • • Tax efficiency

Monitoring

  • • Quarterly rebalancing
  • • Performance tracking
  • • Market condition analysis
  • • Cost surveillance

Response

  • • Strategic reallocation
  • • Fund replacement
  • • Withdrawal adjustments
  • • Tax strategy updates