Multi-asset fund vs own allocation

bigadaj

StellaN wrote: »

You mentioned the HSBC Global Strategy Portfolio in an earlier thread and I have been looking at the Dynamic fund in this portfolio. It seems to tick all the boxes for me because unlike the VLS & L&G funds this only has about 5% UK Equities but also holds 39% US, 14% Europe, 8.70 EM, 7.90 Pacific ex Japan and balances this with property and corporate bonds. Sounds a pretty good asset cl;!!! breakdown to me?

So basically overall it is roughly about 80/20 in Equities - any thoughts on this fund anybody compared to VLS80 & L&G Multi-Index 6 or 7?

Increasing the non sterling assets makes it more risky from an exchange rate perspective, particularly as the pound is currently weak.

It may of course perform better than the other funds you've suggested, or possibly worse.

MPN

bigadaj wrote: »

Increasing the non sterling assets makes it more risky from an exchange rate perspective, particularly as the pound is currently weak.QUOTE]

It does make it more of a balanced global fund though with some bonds and property included?

bigadaj

MPN wrote: »

bigadaj wrote: »

Increasing the non sterling assets makes it more risky from an exchange rate perspective, particularly as the pound is currently weak.QUOTE]

It does make it more of a balanced global fund though with some bonds and property included?

Yes, it's not too far from a passive fund allocation in terms of equity weight globally. Apparently no Japan which is odd and would typically be the second or third biggest single country allocation.

Of course if you wanted to be even more passive and reflect true values then the bond allocation would be much, much bigger, and property could potentially take up a larger chunk, however this Mitch translate as equity then only constituting 10-15% of the investment and probably wouldn't perform very well.

MonroeM

As this is a Multi-Asset thread for example with a £90K pension pot what about if you spread this over three fund of funds instead of one?

If your risk appetite is 80/20 then you could split £30K each in VLS80, L&G Multi Index 6 & HSBC Global Strategy Dynamic therefore you would have different asset allocations with each of these funds so spreading the risk and diversifying even further?

bowlhead99

MonroeM wrote: »

As this is a Multi-Asset thread for example with a £90K pension pot what about if you spread this over three fund of funds instead of one?

I'm not sure that blending together lots of multi asset funds to get a blend of blends, is really the way to go. One and some satellites maybe. Or two which are achieving different things and you like bits of what each of them do. Or to minimise exposure to any one investment manager.

But picking one with, eg, low home bias just so you can mix it with another with high home bias because you're not sure how much home bias to have, is a bit of a cop out, surely!

If your risk appetite is 80/20 then you could split £30K each in VLS80, L&G Multi Index 6 & HSBC Global Strategy Dynamic therefore you would have different asset allocations with each of these funds so spreading the risk and diversifying even further?

L&G MI6 is generally risk targeted at 6 on Distribution Technology's Dynamic Planner scale - which they use to build and market it. HSBC Global Strategy Dynamic, is at 7. So is the purpose of the two together because you have only a vague idea what level of risk you really want? And is the inclusion of VLS because it's always got 80% equities and therefore when the other funds' holdings later become more slightly less equities-heavy to keep volatility lower , it doesn't...

I am all for blending things together in order to achieve an objective. If the objective is just "I don't know what I want so would like a lazy way of mashing together cheap funds to get some kind of outcome which I might be OK with" then I guess you could say a 3-way split would not be far off the objective.

But it's hardly a sophisticated or targeted solution to the goal because there isn't a goal really, it's just acknowledging that "something with long term return potential from a big brand name" is good enough for a casual investor who's accepting of a 10-20% annualised volatility and the occasional 30%+ drop.

MPN

bowlhead99 wrote: »

I'm not sure that blending together lots of multi asset funds to get a blend of blends, is really the way to go. One and some satellites maybe. Or two which are achieving different things and you like bits of what each of them do. Or to minimise exposure to any one investment manager.

But picking one with, eg, low home bias just so you can mix it with another with high home bias because you're not sure how much home bias to have, is a bit of a cop out, surely!

L&G MI6 is generally risk targeted at 6 on Distribution Technology's Dynamic Planner scale - which they use to build and market it. HSBC Global Strategy Dynamic, is at 7. So is the purpose of the two together because you have only a vague idea what level of risk you really want? And is the inclusion of VLS because it's always got 80% equities and therefore when the other funds' holdings later become more slightly less equites-heavy to keep volatility lower , it doesn't...

But surely as MonroeM said it would spread the risk and diversify through the different asset allocations rather than use just a VLS/ L&G or HSBC as a stand alone fund?

bigadaj

MPN wrote: »

But surely as MonroeM said it would spread the risk and diversify through the different asset allocations rather than use just a VLS/ L&G or HSBC as a stand alone fund?

The problem is you're not diversifying. Probably not a massive issue but when you consider historic problems like the split cap scandal in the early noughties and more significantly the whole issues around cdo and cds that provided a big part of the gfc in the us it's often not a good idea to have a load of cross holdings unnecessarily when they are often similar.

So using the providers all will have large amounts of Apple, Microsoft, Google, etc

It's a lot more straight forward to hold one of these funds and add discrete funds to cover areas that aren't included, when the total value becomes significant.