Okay to split large investment between two multi asset funds?

Audaxer

I’ve read previous forum posts advising that if you were to go for a global multi asset fund like say VLS 60 or HSBC Global Strategy Balanced, you should go for one or the other rather than split your portfolio between the two. I think the argument was that it weakens your overall strategy as they both have different strategies - VLS targeting performance by keeping fixed allocations, whereas I understand that the HSBC fund allocations are actively managed to target risk. However I see that both funds had almost exactly the same performance over the last 5 years – VLS 60 was 10.22% annualised and HSBC GS Balanced was 10.25% annualised. So if you had invested say £100k 5 years ago it wouldn’t have really mattered whether you invested the full amount in either fund or split your investment between them.

I think they possibly could have different results in the event of an equity crash, but I’m not sure whether the managed allocations of the HSBC fund would perform better than fixed allocations and the auto rebalancing of the VLS fund. I therefore don’t see a problem in splitting the difference and having large investments in both funds rather than having it all in VLS, but I'd be interested to hear whether others agree.

Alexland

I don't see a problem either - you are also improving your FSCS protection position. If you go for different risk profiles you would need to periodically rebalance but if they are the same risk profiles you might only need to rebalance every 5 to 10 years as the performance would be so similar.

I don't think anyone can say for sure if Blackrock, Vanguard, HSBC or L&G mixed asset funds will give a better risk adjusted return other than looking at the fees. I plan to use them all in different accounts. I wouldn't do multiple funds in the same account but only as I already have too many accounts it's hard to remember what's in each!

enthusiasticsaver

I would have no problem in splitting large amounts between two global funds and in fact we do. We like multi asset global funds and have a large amount in Vanguard LS60 but a significant amount also in Artemis Monthly Distribution and Premier Asset monthly income, both actively managed although still global with similar equity level to VLS60 which of course is a passive fund. They still have similar levels of risk so I see no reason why we should not hold both.

Audaxer

Alexland wrote: »

I don't see a problem either - you are also improving your FSCS protection position. If you go for different risk profiles you would need to periodically rebalance but if they are the same risk profiles you might only need to rebalance every 5 to 10 years as the performance would be so similar.

I don't think anyone can say for sure if Blackrock, Vanguard, HSBC or L&G mixed asset funds will give a better risk adjusted return other than looking at the fees. I plan to use them all in different accounts. I wouldn't do multiple funds in the same account but only as I already have too many accounts it's hard to remember what's in each!

Thanks Alexland, when you say different accounts, do you mean different platforms?

Audaxer

enthusiasticsaver wrote: »

I would have no problem in splitting large amounts between two global funds and in fact we do. We like multi asset global funds and have a large amount in Vanguard LS60 but a significant amount also in Artemis Monthly Distribution and Premier Asset monthly income, both actively managed although still global with similar equity level to VLS60 which of course is a passive fund. They still have similar levels of risk so I see no reason why we should not hold both.

Thanks enthusiasticsaver. Like you I've also got the Artemis Monthly Distribution fund as part of an income portfolio. My moderate growth ISA includes VLS40 and VLS60 at present (but thinking of selling the VLS40 and putting it into the VLS60 as I think I was originally too risk averse) but also thinking of adding to this portfolio with HSBC Global Strategy Balanced, rather than plough more into VLS and have all my eggs in the VLS basket in that portfolio.

bostonerimus

I don't think it really matters much either way.

Prism

Audaxer wrote: »

(but thinking of selling the VLS40 and putting it into the VLS60 as I think I was originally too risk averse) .

I think many people are more cautious than they need to be at the start. I wish someone had told me at the age of 22 that it was ok to go for higher risk at the time. My pension fund would have done a fair bit better and i wouldn't have to be taking higher risks now. But nobody can advise that so it seems that most people play it safe given their initial lack of understanding of investments.

Alexland

Audaxer wrote: »

Thanks Alexland, when you say different accounts, do you mean different platforms?

Well I mean both really. As I manage the investments for my wife and son I end up with multiple accounts with multiple platforms. I try where possible to match the accounts (eg our LISAs and ISAs) but sometimes there are differences to optimise the fees (as the balances in our pensions are quite different) or because of differences in our ages and resulting investment timescales.

Sam_J

It is absolutely fine to split between two or more multi asset funds. Some people here are quite fundamentalist about investing in a single fund - I think it is more for simplicity rather than anything else. I doubt it will make much difference to long term performance.

Audaxer

Alexland wrote: »

Well I mean both really. As I manage the investments for my wife and son I end up with multiple accounts with multiple platforms. I try where possible to match the accounts (eg our LISAs and ISAs) but sometimes there are differences to optimise the fees (as the balances in our pensions are quite different) or because of differences in our ages and resulting investment timescales.

Thanks Alexland, do you ensure you don't have over £50k in any platform or fund due to FSCS? I'm a bit wary of that as well but most people on the forum don't seem to see it as a risk with the big regulated platforms as funds are ring fenced.

Alexland

Well I certainly consider it but on fixed price platforms such as Halifax SD / iWeb or Interactive Investor there are advantages to letting it grow above the limit. Also as our investments grow it becomes a bit impractical to keep within the limit. I already struggle to keep track of our 10 investment accounts of which 3 are currently above the limit. I just try not to be over the limit with the same provider on multiple accounts. I have already split one pension with a partial transfer out to reduce exposure. I also try and keep a good spread of fund managers and asset custodians.

Being over the limit all depends on what proportion of your overall wealth you are risking versus the fee benefit.

Even on little accounts like the LISAs the £4+1k pa will build up over time so I am considering taking out accounts with a different provider next tax year and alternating contributions each year to 50.

It would be a lot easier if the government just revised the limits. The level of protection on DB pensions and insured funds seems disproportionately generous compared to ISAs and DC pensions.