Lifestrategy or.....

firestone

A_T wrote: »

Lifestrategy's equities are very biased towards the UK.


HSBC Global Strategy portfolios allocate equities in a way which more accurately reflects global stock markets.

have been looking at the L&G MI 5 for a pension but looking at the VG lifestrategy 60 on Trustnet it seems to be more biased in American equity by about 10% or am i looking at it wrong?

Audaxer

firestone wrote: »

have been looking at the L&G MI 5 for a pension but looking at the VG lifestrategy 60 on Trustnet it seems to be more biased in American equity by about 10% or am i looking at it wrong?

Yes, VLS60 has more US equity but not sure there is anything wrong with that. L&G MI 5 has a bigger allocation to Greater Asia than VLS60, but I don't think anything wrong with that either, just different allocations.

Alexland

The P/E ratios in the US are high at the moment so L&G are being cautious and limiting their exposure. VLS is 43% US stocks and L&G MI5 is 29% US stocks.

The only remaining doubt I have with the L&G MI series is the performance in Q3 2015 when VLS60 dropped 2.83% and MI5 dropped 4.38% (even VLS80 only dropped 4.33%) so the risk management approach isn't always working.

I am glad my car has airbags but I would prefer to know they work when I need them. As a result of this uncertainty I am going to use both VLS and L&G in equal proportions.

Alex

firestone

Audaxer wrote: »

Yes, VLS60 has more US equity but not sure there is anything wrong with that. L&G MI 5 has a bigger allocation to Greater Asia than VLS60, but I don't think anything wrong with that either, just different allocations.

Thanks-it was not so much that one is wrong as such but just that on other threads & even on another forum i have seen people say VLS favours UK equity and i have not always agreed but thought i was looking at the wrong range.And now i have started to look at the HSBC funds as well thanks to comments on here but guess they & the L&G are more hands on then VLS? Which could be good or bad i guess

A_T

If you ignore the shape of global capitalisation and weight in favour of any region you're effectively saying you know better than the entire world of stock market investors.

Alexland

A_T wrote: »

If you ignore the shape of global capitalisation and weight in favour of any region you're effectively saying you know better than the entire world of stock market investors.

It's just that western economies are more likely to have stock market listed companies and then get overly excited or depressed about them. Just because a country has a small market capitalisation doesn't mean it has less potential for growth and returns. Investing in more stable, less excitable, countries should help reduce volatility without needing to resort to such a high bond allocation.

dunstonh

firestone wrote: »

have been looking at the L&G MI 5 for a pension but looking at the VG lifestrategy 60 on Trustnet it seems to be more biased in American equity by about 10% or am i looking at it wrong?

The high US weighting is the primary reason VLS had a good period (when US equity was doing well). Had it existed 5 years earlier, it would have been a poor performer as US equity had a bad period.

The rigid allocations of VLS are one of its negative points. Its great when one of those rigid allocations with a high weighting does well but not when it doesn't.

L&G still uses underlying passives but makes management decisions on the weightings making it much more fluid to the economic cycle. Also, L&G is risk targetted to fall within a volatility range. Whereas VLS is not risk targetted. VLS has been floating up the risk scale in recent times.

If you insist on having a VLS60 style fund then HSBC are showing better on a consistent basis with a lower charge.

BLB53

L&G still uses underlying passives but makes management decisions on the weightings making it much more fluid to the economic cycle. Also, L&G is risk targetted to fall within a volatility range. Whereas VLS is not risk targetted. VLS has been floating up the risk scale in recent times.

Personally, I really appreciate the auto rebalance feature of my VLS 60 fund...always remains at 60% equities. I think the risk is higher from the L&G fund where managers need to make consistently good calls on the markets to maintain some advantage.

Audaxer

Alexland wrote: »

The only remaining doubt I have with the L&G MI series is the performance in Q3 2015 when VLS60 dropped 2.83% and MI5 dropped 4.38% (even VLS80 only dropped 4.33%) so the risk management approach isn't always working.

I don't think I'd worry too much about one quarter as over the whole of 2015 I see that L&G MI 5 had a slightly better return than VLS60.

I was also looking at actively managed multi asset growth funds and saw that Royal London Sustainable Diversified Trust Class C, which has around 60% equities, seems a good option with a slightly better 5 year average than the VLS60. Also interested to see that Royal London Sustainable World Trust Class C with 84% equities has had a much better 5 year performance than the VLS80. I don't see much discussion on here about active multi asset growth funds, so not sure if long term they would be a good alternative to VLS, L&G MI, HSBC etc. or whether it is better to go for single sector funds if thinking about active growth funds?

A_T

Over last 5 years a 2 fund DIY 60/40 World Index/Bond portfolio has significantly outperformed VLS60. And that's because of the VLS bias to the FTSE All Share Index.


This outperformance is more likely to continue than not.