Multi Asset strategy

KNJ_2

Discussing with my advisor, he thinks I am in too specialised funds, and has suggested moving at least a portion of my investments to Rathbones Strategic Growth Portfolio andGAM MPS Cautious, as he thinks they are a better multi asset strategy in these uncertain times.
Has anyone any opinion on these two?

MPN

You can look on Trustnet, Morningstar or a platform for information on these 2 funds.

From what I've seen so far there is nothing spectacular about these funds over 5 years but that's not to say they are poor! They are also quite expensive for multi-asset funds.

In another thread on multi asset funds recently we discussed the virtues of Vanguard Life Strategy either 80, 60 or 40 depending on your risk, the L&G Multi-Index Funds either 6, 5 or 4 or the HSBC Global Strategy Funds either balanced, cautious or dynamic. Have a look at these multi asset funds and compare them to the 2 funds you mentioned in performance, asset allocation, risk and costs?

StellaN

MPN wrote: »

You can look on Trustnet, Morningstar or a platform for information on these 2 funds.

From what I've seen so far there is nothing spectacular about these funds over 5 years but that's not to say they are poor! They are also quite expensive for multi-asset funds.

In another thread on multi asset funds recently we discussed the virtues of Vanguard Life Strategy either 80, 60 or 40 depending on your risk, the L&G Multi-Index Funds either 6, 5 or 4 or the HSBC Global Strategy Funds either balanced, cautious or dynamic. Have a look at these multi asset funds and compare them to the 2 funds you mentioned in performance, asset allocation, risk and costs?

I must admit I do prefer the L&G MI6 and the HSBC Global Strategic Dynamic for their asset allocation compared to the VLS funds?

bigadaj

KNJ wrote: »

Discussing with my advisor, he thinks I am in too specialised funds, and has suggested moving at least a portion of my investments to Rathbones Strategic Growth Portfolio andGAM MPS Cautious, as he thinks they are a better multi asset strategy in these uncertain times.
Has anyone any opinion on these two?

What are you in currently?

bowlhead99

StellaN wrote: »

I must admit I do prefer the L&G MI6 and the HSBC Global Strategic Dynamic for their asset allocation compared to the VLS funds?

With the VLS funds the allocations are pretty fixed; so if you were building your own portfolio yourself and using that fund as a part of it, it would be relatively easy in your planning to know what was in that particular part of the portfolio at a point in time.

If you want a portfolio targeted at a particular level of risk rather than a particular level of return, something like the MI6 (where you don't know exactly what is in it from month to month unless you pore over the factsheet, but you know they are building it to a particular targeted level of risk or volatility) would be better.

MPN wrote: »

From what I've seen so far there is nothing spectacular about these funds over 5 years but that's not to say they are poor!

You probably wouldn't expect to see something 'spectacular' happen in a cautious fund during a five year period in which all asset classes have risen in value.

The more important thing in a cautious fund is how they manage the uncertain times ; what is their approach and how have they navigated choppy waters in the past (and if they have not been running long term then what is their philosophy and strategy for selecting assets or investee funds).

They are also quite expensive for multi-asset funds.

At a quick glance the Rathbone one didn't seem particularly expensive. OCF of 0.7-0.9% is ballpark for an actively managed fund. They are at 0.88% and deploy your assets across individual securities, funds and investment trusts across the globe. Obviously it is not going to be as cheap as just picking an asset class allocation and holding index funds that fit the allocation.

The GAM one looked more expensive, as multi manager funds often are.

KNJ wrote: »

Discussing with my advisor, he thinks I am in too specialised funds, and has suggested moving at least a portion of my investments to Rathbones Strategic Growth Portfolio andGAM MPS Cautious, as he thinks they are a better multi asset strategy in these uncertain times.

If your advisor is a proper independent financial advisor (rather than a tied agent / advisor who only has those particular cautious multi asset funds available in their repertoire), you would expect they have done a decent amount of research and due diligence to conclude why those particular funds are suitable for you (out of all the other choices), for all or 'at least a portion' of the portfolio.

You mention he thinks you are in too specialised funds. Did you pick them yourself or did he? It is quite possible - likely even - that if you picked them yourself following the fashions you read about on some forums or in media or fund platform editorial / marketing, they will not be a particularly balanced mix. If he has assessed that your existing funds don't match the cautious stance that he believes would suit you better in choppy markets (i.e. assuming you don't have a high risk tolerance or capacity for loss) then it may make a great deal of sense to exchange some of the specialist funds for something with a much broader remit.

Of course, there are a great deal of mixed asset funds on the market which have a focus on capital protection with a moderate exposure to equities (as GAM aims to offer) or has 40-80% equity, 0-20% liquidity, 0-50% diversifiers (as Rathbone Strategic Growth aims to offer). So it would be down to the advisor to explain why he likes to use those, rather than for us to speculate.

MPN

bowlhead99 wrote: »

With the VLS funds the allocations are pretty fixed; so if you were building your own portfolio yourself and using that fund as a part of it, it would be relatively easy in your planning to know what was in that particular part of the portfolio at a point in time.

If you want a portfolio targeted at a particular level of risk rather than a particular level of return, something like the MI6 (where you don't know exactly what is in it from month to month unless you pore over the factsheet, but you know they are building it to a particular targeted level of risk or volatility) would be better.

Thanks bowlhead, but where do you feel the HSBC Global Strategy Dynamic Fund fit with the VLS60/80 & L&GMI6 multi asset funds in terms of asset allocation/diversification?

bowlhead99

MPN wrote: »

Thanks bowlhead, but where do you feel the HSBC Global Strategy Dynamic Fund fit with the VLS60/80 & L&GMI6 multi asset funds in terms of asset allocation/diversification?

I'm not sure I fully understand the question.

The dynamic fund isn't intended to "fit with" i.e. sit alongside, either of the other two funds in a portfolio.

They are each intended to be a complete multi asset solution on their own, to be used as an entire portfolio, or for more advanced investors perhaps as the centre of a core-and-satellite, or hub-and-spoke, portfolio with smaller amounts of specialist funds around the outside. There is no point buying all three of them. They each have differing levels of assets within each asset class and a different geographic split in search of their preferred target.

In terms of risk/volatility, the HSBC Global Strategy Balanced has a targeted annual volatility similar to L&G's Multi Index 5. Their targeted volatility for Global Strategy Dynamic is more on a par with the top end of Multi Index 6 and the bottom end of Multi Index 7, at about 12.5%.

Lifestrategy 60/80 are not volatility targeted they are return focussed, i.e. giving you whatever happens to be the return and volatility from time to time of 60 or 80% global equities (25% UK, 75% ex UK) and either 40 or 20% in a pile of bond trackers.

All three of them allocate your money globally in a pretty diversified way.

TheShape

Feel free to tell me to shove-off if this post looks like it's hijacking the thread.

I'm hoping that the following post fits within this thread though.

I've been reading with interest as I'm looking to transfer my S&S ISA to a new platform and new funds.

I have a new SIPP with monthly payments into VLS100.

I was going to also invest the S&S ISA into VLS100. This thread got me thinking of perhaps investing in the L&G Multi-Index mentioned above (or another multi-asset fund) or perhaps a 50/50 split between the two. I've seen it mentioned that VLS is UK heavy and thought another less UK heavy fund might provide balance.

Now I see mention of a hub-and-spoke approach. I assume this would be a more advanced option. Would I be right in saying this approach would help someone to better target their investments to the satellite funds with most potential at any one time while continuing to hold/fund a core diverse fund.

MPN

bowlhead99 wrote: »

I'm not sure I fully understand the question.

The dynamic fund isn't intended to "fit with" i.e. sit alongside, either of the other two funds in a portfolio.

They are each intended to be a complete multi asset solution on their own, to be used as an entire portfolio, or for more advanced investors perhaps as the centre of a core-and-satellite, or hub-and-spoke, portfolio with smaller amounts of specialist funds around the outside. There is no point buying all three of them. They each have differing levels of assets within each asset class and a different geographic split in search of their preferred target.

In terms of risk/volatility, the HSBC Global Strategy Balanced has a targeted annual volatility similar to L&G's Multi Index 5. Their targeted volatility for Global Strategy Dynamic is more on a par with the top end of Multi Index 6 and the bottom end of Multi Index 7, at about 12.5%.

Lifestrategy 60/80 are not volatility targeted they are return focussed, i.e. giving you whatever happens to be the return and volatility from time to time of 60 or 80% global equities (25% UK, 75% ex UK) and either 40 or 20% in a pile of bond trackers.

All three of them allocate your money globally in a pretty diversified way.

Sorry, I didn't explain myself very well at all.

I wanted to know if the HSBC fund was risk/volatility targeted similar to L&G and not return focused as VLS but anyway you answered my question (thanks)! I also understand with the VLS fund you can add small amounts to more specialist funds to complement the main VLS fund.

Therefore, I suppose you could potentially have a VLS fund together with either a L&G or HSBC fund (whichever of these 2 funds allocation suited your needs/requirements more) - would this have more overall diversification in your multi asset portfolio?

bowlhead99

MPN wrote: »

Therefore, I suppose you could potentially have a VLS fund together with either a L&G or HSBC fund (whichever of these 2 funds allocation suited your needs/requirements more) - would this have more overall diversification in your multi asset portfolio?

As mentioned you do not need to mix the funds.They are trying to do things in different ways. If the L&G fund suits your requirement why mix it with Vanguard. If the HSBC fund suits your requirement why mix it with Vanguard. And why mix either of them with each other.

Do you think when making the L&G MI 5 or 6 fund to target a particular outcome, they thought to themselves:

"hmm, I know how to really mess up our customers: let's make a fund that is not really fit for purpose or properly diversified and then the customers have to buy a rival multi asset fund which is similarly incomplete but in a different area, so that only by buying both and squishing them together haphazardly, and wrecking the delicate mix that we spent millions of pounds researching and defining, will they get a complete fund that *really* has the mix of characteristics that a typical newbie investor really needs"

No of course they didn't.

Do you follow football? Say you have Chelsea and Man City and Arsenal and Spurs and Liverpool and Man Utd They have all got a foreign manager and an owner who is trying to deliver a result by combining the skills and fitness levels of a diversified group of players - defenders, forwards, midfielders, goalies, to finish in the top few places in the league. They'll all probably be in the top ten by the end and maybe even they'll all be in the top six.

Now, you might be able to assemble a dream team from all that lot, imagine having Sanchez and De Bruyne and Firminho and Alli and Hazard and Pogba across the middle. What a great team, if you could only keep the good bits and drop the naff guys who shouldn't be in the squad and name your own "first eleven" world beaters. But you can't drop anyone because you are not picking and choosing your components at that granular level. Actually instead of an 11 man squad of your favourites, you now have a 66 man squad with 6 managers and you have to field 6 teams and still have to get the top six places in the league and not have any team be caught by the other challenger teams.

So after you mash the squads together haphazardly, maybe instead of having 45% midfielders and 35% defenders it's 47% midfielders and 33% defenders. Midfield is now more diversified with higher weighting but defence is relatively smaller.

When you own Chelsea and add City you get an averagely more reliable forward line because Aguero is not threatening to quit to move to China in the same way Costa was. But you get an averagely worse defence because you add John Stones into the previously excellent back line.

What most people want is to just support Chelsea or just support City and be done. It's just a different shade of blue after all. Over the next decade they both have a fair chance to win the league, spend millions of pounds on new players etc. They are both generally going to get into the top six or seven. It is not really any more diversified to have both and have to get both teams into the top six or seven.

So that's like adding a perfectly suitable fund to a perfectly suitable other fund. If you want risk targeted get a risk targeted fund like L&G. If you want performance focused, get one that doesn't have an active risk-targetting overlay but keeps it static like Vanguard with fixed equities vs bonds. If you don't know what the heck you want, then either pick at random or support all the teams and take all the failures with all the successes, I don't really care.

I have tried to explain on so many different threads that you don't need to duplicate effort and buy every multi asset fund to be diversified. Each of them has investment professionals spending millions on research and saying, right, this here is diversified enough. But sure, if you know better, keep buying more funds until you've had your fill.

bowlhead99

TheShape wrote: »

I'm hoping that the following post fits within this thread though.

Seems to, but maybe some of my posts above cover it in terms of the wisdom or otherwise of trying to combine two or more multi asset funds which each have different approaches to a similar job

I've seen it mentioned that VLS is UK heavy and thought another less UK heavy fund might provide balance.

It's not massively heavy really. It has a quarter of its equities in the country where you live. Is that so bad?

Perhaps the problem is not the magnitude of the UK exposure but the way it does it, ie by having most of its exposure come from the giants of the FTSE100 which are not particularly uk focussed business and are concentrated into relatively few sectors.

However, that is what you get when you decide to use a fund focussed on avoiding the fees of more active management, and instead try to do everything dirt cheap with simple indexes.

The whole point of buying a fund for 0.3% or less per year is accepting the drawbacks or compromises of index tracking compared to the opportunities you could get by employing more complex or active techniques (but also avoiding the associated costs of that which may or may not actually get better results in the long term).

If you think L&G 7 is better for your needs than Vanguard, why not have all L&G - instead of compromise by diluting L&G with Vanguard ?

Don't say "well Vanguard is a bit cheaper" because there is no point saving 0.05-0.1% by buying something that is worse at meeting your needs. The average difference in returns will be well over 0.1% a year, for better or worse.

If the pot is very small, exact mix matters less anyway in the grand scheme of things.

Now I see mention of a hub-and-spoke approach. I assume this would be a more advanced option. Would I be right in saying this approach would help someone to better target their investments to the satellite funds with most potential at any one time while continuing to hold/fund a core diverse fund.

A core and satellite approach could suit an advanced investor looking to achieve a specific goal.

If you have to ask someone what things you should add in what specific proportions to the core fund and how to carry out your due diligence on each potential specialist fund from the investment universe, and how to determine the right ratios to "make it better"than what the professionals at L&G or HSBC or Vanguard or Axa or Rathbone came up with....

...then you are probably not the sort of person who would benefit overall from constructing a core and satellite portfolio. Unless you have an advisor, in which case leave it to your advisor who you are paying for the research and guidance.