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  • FIRST POST
    • Rich99
    • By Rich99 7th Jan 18, 6:07 PM
    • 46Posts
    • 12Thanks
    Rich99
    Help deciding which multi-asset fund to invest in
    • #1
    • 7th Jan 18, 6:07 PM
    Help deciding which multi-asset fund to invest in 7th Jan 18 at 6:07 PM
    Hi,

    I'm looking to dip my toes in the investing waters. I started a thread a while back to get my head around various terms, and now am back with some more questions. Basically, I'm 25 years from retirement, and would like to start investing for retirement as an addition to my pension. I don't have the time or expertise to do any active management of portfolios etc, so am looking for a recommendation for a single place to invest, where my money is spread across a range of funds, aiming to leave it alone for ~25 years. I'm tempted by passive trackers, and Blackguard & Vanguard were both mentioned in my previous thread. Reading their websites, both the Vanguard Lifestrategy (probably the 80% equity) and the Blackrock consensus (probably the 85) look good to me, and seem to have reasonable reviews and acceptable costs. Does anyone have any reasons why I shouldn't go with one of them? Have I missed a major player out of my research, or misunderstood anything major that means my plan is bad?

    Thanks!
Page 1
    • bostonerimus
    • By bostonerimus 7th Jan 18, 6:12 PM
    • 1,402 Posts
    • 817 Thanks
    bostonerimus
    • #2
    • 7th Jan 18, 6:12 PM
    • #2
    • 7th Jan 18, 6:12 PM
    Either one is a great place to start. As you get more experience you might add a few funds or change your strategy......then again you might not. You are approaching this sensibly.
    Misanthrope in search of similar for mutual loathing
    • A_T
    • By A_T 7th Jan 18, 6:18 PM
    • 279 Posts
    • 163 Thanks
    A_T
    • #3
    • 7th Jan 18, 6:18 PM
    • #3
    • 7th Jan 18, 6:18 PM
    Vanguard Lifestrategy significantly overweights the FTSE 100 - a very sluggish large cap equity index. It will more likely than not underperform accurate global equity tracking over a long period of time.

    HSBC Global Strategy series gives the UK it's proper allocation according to global capitalisation.
    • Filo25
    • By Filo25 7th Jan 18, 6:26 PM
    • 1,251 Posts
    • 1,870 Thanks
    Filo25
    • #4
    • 7th Jan 18, 6:26 PM
    • #4
    • 7th Jan 18, 6:26 PM
    Vanguard Lifestrategy significantly overweights the FTSE 100 - a very sluggish large cap equity index. It will more likely than not underperform accurate global equity tracking over a long period of time.

    HSBC Global Strategy series gives the UK it's proper allocation according to global capitalisation.
    Originally posted by A_T
    As a noob who leans active more than average on here on a personal level I don't mind being overweight in UK equity, but not large cap.

    My only concern with tracking global markets in line with market cap is how heavily it would leave me exposed to the US market.

    With regards to the original poster though I would say as someone starting out your main decision will be deciding what level of risk you can live with and go ahead with investing at that level, and given that you don't want to spend much time researching, monitoring and rebalancing I would personally say a low cost diversified global passive fund is the way to go.
    Last edited by Filo25; 07-01-2018 at 6:52 PM.
    • ivormonee
    • By ivormonee 7th Jan 18, 7:09 PM
    • 108 Posts
    • 81 Thanks
    ivormonee
    • #5
    • 7th Jan 18, 7:09 PM
    • #5
    • 7th Jan 18, 7:09 PM
    I like the Vanguard funds, not just because of the innovation of their LifeStrategy funds, but just generally that the choices they offer mean they cater, IMHO, for most types of investors and they have a very ethical philosophy. The VLS 80 would probably serve your purposes rather well from what you've described.
    • Rich99
    • By Rich99 7th Jan 18, 7:41 PM
    • 46 Posts
    • 12 Thanks
    Rich99
    • #6
    • 7th Jan 18, 7:41 PM
    • #6
    • 7th Jan 18, 7:41 PM
    Thanks for all the replies so far - it doesn't sound like I'm making any massive mistakes or errors, which is good to know!

    One other question. I've read pluses & minuses for the consensus vs lifestrategy way of doing things. If I wanted to invest a bit in both, how would I do so? I.e. if I want to invest in Vanguard, I would go to their website & sign up. Presumably I get an Isa with them. If I also wanted to get the blackrock product, would I get a second Isa with blackrock, or can I add blackrock to my vanguard Isa?

    Also, one final question having just gone into the blackrock website in more detail - the consensus 85 has 4 options. Class A, D, I or X. What do they mean?
    Last edited by Rich99; 07-01-2018 at 7:45 PM.
    • TheTracker
    • By TheTracker 7th Jan 18, 8:00 PM
    • 1,174 Posts
    • 1,155 Thanks
    TheTracker
    • #7
    • 7th Jan 18, 8:00 PM
    • #7
    • 7th Jan 18, 8:00 PM
    One other question. I've read pluses & minuses for the consensus vs lifestrategy way of doing things. If I wanted to invest a bit in both, how would I do so? I.e. if I want to invest in Vanguard, I would go to their website & sign up. Presumably I get an Isa with them. If I also wanted to get the blackrock product, would I get a second Isa with blackrock, or can I add blackrock to my vanguard Isa?
    Originally posted by Rich99
    Most people wouldn’t go direct to a fund house like vanguard or blackrock, they’d go to a ‘platform’ like HL, iWeb, II etc. These are like fund supermarkets where you can buy any of a wide range of funds. Platforms also offer access to tax efficient wrappers like ISAs and SIPPs, which fund providers are less likely to. However, companies like Vanguard are beginning their direct to consumer services in the UK and may eventually compete with platforms. You can use different platforms at the same time, though do be careful where you place any one year’s ISA allowance.

    Choosing a platform/broker is a task in itself. Try looking at “Snowman’s spreadsheet” or Monevator’s Low Cost Brokers comparison for a start. Which you choose depends on portfolio size, whether you choose ETFs or funds, how much customer service matters vs price, and so forth.
    Last edited by TheTracker; 07-01-2018 at 8:03 PM.
    • BLB53
    • By BLB53 7th Jan 18, 8:12 PM
    • 1,192 Posts
    • 973 Thanks
    BLB53
    • #8
    • 7th Jan 18, 8:12 PM
    • #8
    • 7th Jan 18, 8:12 PM
    If you are investing for retirement, the best option would be a SIPP rather than an ISA as you will get a 25% uplift on your contributions.

    Lifestrategy would be good but also have a look at their Target Retirement funds which would automatically reduce your exposure to equities as you get closer to retirement. One thing less for you to think about.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • Rich99
    • By Rich99 7th Jan 18, 8:38 PM
    • 46 Posts
    • 12 Thanks
    Rich99
    • #9
    • 7th Jan 18, 8:38 PM
    • #9
    • 7th Jan 18, 8:38 PM
    If you are investing for retirement, the best option would be a SIPP rather than an ISA as you will get a 25% uplift on your contributions.

    Lifestrategy would be good but also have a look at their Target Retirement funds which would automatically reduce your exposure to equities as you get closer to retirement. One thing less for you to think about.
    Originally posted by BLB53
    Thanks for the info, I hadn't paid much attention to SIPPs in my researching. Having read up on them, am I right that the advantage is you get the 25% uplift on contributions, but the money is locked away till 55, correct? Assuming I'm not planning on touching the invested money till retirement whatever happens, and I'd like to invest in the consensus 85/lifestrategy funds, is there any disadvantage to going the SIPP route?
    • bowlhead99
    • By bowlhead99 7th Jan 18, 9:01 PM
    • 7,126 Posts
    • 12,929 Thanks
    bowlhead99
    I.e. if I want to invest in Vanguard, I would go to their website & sign up. Presumably I get an Isa with them. If I also wanted to get the blackrock product, would I get a second Isa with blackrock, or can I add blackrock to my vanguard Isa?
    Originally posted by Rich99
    You can't contribute to more than one ISA in the same tax year, and the ISA platform offered by Vanguard only allows you to invest in their own products. So as TheTracker mentions, if you wanted to contribute to both products within one ISA you'd need to use a more 'independent' fund supermarket that offers a few thousand funds from a wide range of managers instead of just the ones from one particular stable.

    That said, if you're happy with just using vanguard for now there's nothing wrong with vanguard's own platform and it's competitively priced.

    You're doing this for 25 years plus. So you could easily put next year's allowance into a different platform and the year after's into yet another platform, and so on, if you were so inclined. You just can't be adding new money into multiple platforms in the same year (without messing around with transfers etc)
    Also, one final question having just gone into the blackrock website in more detail - the consensus 85 has 4 options. Class A, D, I or X. What do they mean?
    ignoring whether it's blackrock or someone else for a moment:

    Different classes allow the same underlying fund to be offered with a range of management fees and running costs to different markets.

    e.g. one might be designed for institutional investors to put in a minimum of £20,000,000 one off contribution or £1000pm. While another more expensive class could be set at minimum £500 one off or £25 monthly contributions. While another might be an old class that they can't offer to new customers under the current regulations, where they have a big management fee and give a kickback to your fund platform so that they can afford to give you a rebate that covers your platform fees. Or another gives you a high management fee as an all in one price so the management company can afford to administer an online account for you and then you don't need a separate platform provider to do your administration and charge you a fee for it.

    What you should do is simply buy the cheapest class that's offered on your investment platform of choice. In some (rare) circumstances you might find it's cheaper to use a more expensive platform to get access to a cheaper class. But that situation night not persist forever and then you could be left facing an exit fee from the expensive platform when you want to move.

    If you are investing for retirement, the best option would be a SIPP rather than an ISA as you will get a 25% uplift on your contributions.
    Originally posted by BLB53
    That's a good point if you are really considering leaving the money alone for a long time and won't need access later (until your late 50s at least)

    Alternatively it can be better to use ISA (or even LISA) to maintain access and flexibility so that if you later become a high rate taxpayer in future years, you can use the money to be able to afford to contribute more to a SIPP or other type of pension at that time - and get even greater income tax relief than you'd get by using a pension today.

    Lifestrategy would be good but also have a look at their Target Retirement funds which would automatically reduce your exposure to equities as you get closer to retirement. One thing less for you to think about.
    It's worth being aware of that product and similar ones - but in reality, it's probably unlikely that the timing of the automated switch of equities to non-equities over time, within that 'target retirement date' fund, would be the exact schedule you'd like to use.

    For example, in ten years time you may still be 25-35 years away from the mid point of your retirement (which might run from age 65 to 105) and so if the fund had automatically dropped your equities component from 80% to 68%, while you still wanted 75-80%, you might then need to buy another fund that adds back some more equities into your portfolio.

    Or it might reduce your equities to 68% and you want 64%. Then you'd have to sell some of the find or add something more equities-light. Basically, it will establish a "shedding equities as you get older" plan but unlikely to track your preferred path without error.

    No solution is going to be properly "hands-off" over the course of ten years plus, because your tastes and preferences and needs and goals and aspirations might easily change. So an overly "automated" solution is probably trying to solve a problem you don't even have. Just buy what you want now, then buy something different when it's no longer fit for purpose after a number of years.
    I like the Vanguard funds, not just because of the innovation of their LifeStrategy funds, but just generally that the choices they offer mean they cater, IMHO, for most types of investors and they have a very ethical philosophy.
    Originally posted by ivormonee
    Don't take that to mean that the investment choices they make are "ethical" in terms of avoiding buying shares in companies which engage in arms dealing or oil drilling or porn or gambling etc. They have to buy whatever's in the index whether they like it or not. And they are certainly happy to earn fees by loaning out their shares for others to borrow them and sell the stocks short - rather than hoping that all shares will be held 'long' assisting the fortunes of those investee companies.

    It's just that vanguard is a mutual organisation that's owned by the customers that invest in its funds - so is a bit like Nationwide a building society, rather than Barclays a bank. However if you buy a Nationwide product today you won't get any cash if they demutualise, because you sign away your rights when becoming a customer. Similarly if you buy a vanguard UK lifestrategy fund, you won't get any kind of payout if the Vanguard company is sold or makes super-profits. That money would go to the owners of Vanguard US, who own Vanguard UK, and not to you.
    Last edited by bowlhead99; 07-01-2018 at 9:22 PM.
    • Rich99
    • By Rich99 7th Jan 18, 9:08 PM
    • 46 Posts
    • 12 Thanks
    Rich99
    That's a good point if you are really considering leaving the money alone for a long time and won't need access later (until your late 50s at least)

    Alternatively it can be better to use ISA (or even LISA) to maintain access and flexibility so that if you later become a high rate taxpayer in future years, you can use the money to be able to afford to contribute more to a SIPP or other type of pension at that time - and get even greater income tax relief than you'd get by using a pension today.
    Originally posted by bowlhead99
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.
    • chucknorris
    • By chucknorris 7th Jan 18, 9:10 PM
    • 9,383 Posts
    • 14,075 Thanks
    chucknorris
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.
    Originally posted by Rich99
    My earlier prudential pension that I started when I was 18, I was only getting 20% tax relief going in, but I'll be paying 40% tax taking it out (although because of the TFLS that reduces to 30%)!
    Last edited by chucknorris; 07-01-2018 at 9:15 PM.
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    • BLB53
    • By BLB53 7th Jan 18, 9:17 PM
    • 1,192 Posts
    • 973 Thanks
    BLB53
    Assuming I'm not planning on touching the invested money till retirement whatever happens, and I'd like to invest in the consensus 85/lifestrategy funds, is there any disadvantage to going the SIPP route?
    If you are happy to lock away until 55 (or 57) you will be better with a sipp - especially as a HR tax payer who may become standard rate after retirement.
    I think I'll go with a platform. Now I just need to go & read up on all of them!!
    Here's an article on the diy invesor site which may help
    http://diyinvestoruk.blogspot.co.uk/2016/08/selecting-your-diy-pension-platform.html
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • AlanP
    • By AlanP 7th Jan 18, 9:17 PM
    • 1,045 Posts
    • 746 Thanks
    AlanP
    Pension route makes sense if it is definitely for post 55/58 due to tax relief especially if you are a HR Taxpayer.

    Other options are L&G Multi asset range or HSBC Global Strategy as mentioned earlier. All are aiming for same broad outcome and investor but all subtle different in their approach.

    No right or wrong answer on which is best until you look back with 25 years hindsight.

    Whichever one you go for, and whichever variant in your chosen range check it occasionally and ask on here about whether it is still appropriate as new products come out and this change.
    • economic
    • By economic 7th Jan 18, 9:18 PM
    • 2,502 Posts
    • 1,338 Thanks
    economic
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.
    Originally posted by Rich99
    you do not pay any income tax on shares held in an ISA. So if you are in a 40% tax bracket its highly beneficial. with a pension you dont either but you do pay income tax when you drawdown. In an ISA there is no concept of a drawdown and taking money out is not counted as income for tax purposes.
    • AlanP
    • By AlanP 7th Jan 18, 9:28 PM
    • 1,045 Posts
    • 746 Thanks
    AlanP
    OK, in regards to your earlier comments, I think I'll go with a platform. Now I just need to go & read up on all of them!!

    Regarding these comments about ISA or SIPP, I don't quite follow - why does an ISA win if I become a higher rate tax payer later? I'm just into the 40% bracket now, but there's no way I'll end up in the 45% bracket before retirement.
    Originally posted by Rich99
    Ignore 45% rate. If you a BR taxpayer now but will be a HR taxpayer in a few years then saving in a SIPP now will only get you 20% relief, so put it in an ISA for a few years and then when into HR bracket put it into a SIPP as a lump sum and get 40% relief.

    As you are just into HR your pension contributions may only be at BR at the moment.
    • Audaxer
    • By Audaxer 7th Jan 18, 9:45 PM
    • 777 Posts
    • 384 Thanks
    Audaxer
    Pension route makes sense if it is definitely for post 55/58 due to tax relief especially if you are a HR Taxpayer.

    Other options are L&G Multi asset range or HSBC Global Strategy as mentioned earlier. All are aiming for same broad outcome and investor but all subtle different in their approach.

    No right or wrong answer on which is best until you look back with 25 years hindsight.

    Whichever one you go for, and whichever variant in your chosen range check it occasionally and ask on here about whether it is still appropriate as new products come out and this change.
    Originally posted by AlanP
    And as your investment grows no reason to just stick to the one multi asset fund. VLS60 and HSBC Global Strategy Balanced both have a similar percentage of equities, but the HSBC fund has much less UK equity than VLS and includes some property, whereas VLS doesn't.
    • ValiantSon
    • By ValiantSon 7th Jan 18, 10:33 PM
    • 173 Posts
    • 172 Thanks
    ValiantSon
    Most people wouldn’t go direct to a fund house like vanguard or blackrock, they’d go to a ‘platform’ like HL, iWeb, II etc. These are like fund supermarkets where you can buy any of a wide range of funds. Platforms also offer access to tax efficient wrappers like ISAs and SIPPs, which fund providers are less likely to. However, companies like Vanguard are beginning their direct to consumer services in the UK and may eventually compete with platforms. You can use different platforms at the same time, though do be careful where you place any one year’s ISA allowance.
    Originally posted by TheTracker
    If only investing in Vanguard funds then their platform actually offers very good costs at 0.15% platform fee. So someone buying VLS80 would generally be best served using the Vanguard platform unless they had a fairly hefty investment, in which case a fixed fee platform may well be better.

    However, the OP is considering using both Vanguard and BlackRock so they would need to use an alternative.

    Choosing a platform/broker is a task in itself. Try looking at “Snowman’s spreadsheet” or Monevator’s Low Cost Brokers comparison for a start. Which you choose depends on portfolio size, whether you choose ETFs or funds, how much customer service matters vs price, and so forth.
    Originally posted by TheTracker
    OP, the link for Monevator's comparison table is http://monevator.com/compare-uk-cheapest-online-brokers/
    • Eco Miser
    • By Eco Miser 8th Jan 18, 2:07 AM
    • 3,312 Posts
    • 3,080 Thanks
    Eco Miser
    Choosing a platform/broker is a task in itself. Try looking at “Snowman’s spreadsheet” or Monevator’s Low Cost Brokers comparison for a start.
    Originally posted by TheTracker
    SnowMan's spreadsheet is at http://forums.moneysavingexpert.com/showthread.php?t=5583030

    The Monevator site has lots more useful info and opinion on investing.
    Eco Miser
    Saving money for well over half a century
    • Rich99
    • By Rich99 8th Jan 18, 9:14 AM
    • 46 Posts
    • 12 Thanks
    Rich99
    Thanks all for the helpful comments so far. Just trying to get my head around SIPP vs ISA. From what you've all said, SIPP gives me tax relief when I deposit, so I get 'free' money added to my investment. However when I withdraw from the SIPP, I'll be taxed. With ISA, there's no initial uplift, but anything I withdraw is tax free?

    So which actually works out better in the long run?
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