Lifestrategy or.....

A_T

JustAnotherSaver wrote: »

I've seen it mentioned here about VLS being biased towards UK equities. So since VLS60 is a popular fund i took a look...

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-60-equity-accumulation/fund-analysis

International Equities: 43.62%
UK Equities: 13.68%.

Now 13.68% when you've got one that's 3-times as much is (to me at least) not what i would call a heavy bias.

Even when you look at their VLS100

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-100-equity-accumulation/fund-analysis

International Eq: 73.03%
UK Eq: 23.10%

So if i'm reading here that these have a heavy UK bias then what would be considered not heavy? Virtually zero for UK?

UK share of global equity market is roughly 7%.

Audaxer

Linton wrote: »

The asset allocation is far from what you can get from any general fund, in particular >50% small and midcap companies, and only about 33% US overall. There ise one fund to cover a significant part of the large cap. The portfolio holds 12 funds, and probably needs 10 as a minimum, to provide what I want.

Thanks Linton. It seems strange as to why an active multi asset fund hasn't been created that covers all these categories of equities in similar proportions to yours if it gives such good returns. Any idea why such funds haven't been created?

Linton

Audaxer wrote: »

Thanks Linton. It seems strange as to why an active multi asset fund hasn't been created that covers all these categories of equities in similar proportions to yours if it gives such good returns. Any idea why such funds haven't been created?

I will take that as a non-rhetorical question. Some possible answers...

1) Large funds have a problem with small companies - they cant buy shares in a wide range of individual companies in sufficient quantities to make it worth the effort.
2) There are very few fund managers who have the reputation not to follow the herd.
3) The purpose of multi asset funds is to provide a one-stop solution. My portfolio is 100% focussed on high return whilst minimising risks from local failures. I have little idea how it would behave in a global failure such as the great crash and wouldnt dare use it if I didnt also have my other portfolios.
4) I believe successful small company investment benefits greatly from specialist local knowledge. To cover the world is a big ask. Much easier just to follow the index investing predominantly in large companies.

TheShape

Alexland wrote: »

There are actually 5 but they are not listed on all platforms:

http://www.assetmanagement.hsbc.com/uk/advisers/fund-range/global_strategy_funds.html

"HSBC Global Strategy Cautious Portfolio
HSBC Global Strategy Conservative Portfolio
HSBC Global Strategy Balanced Portfolio
HSBC Global Strategy Dynamic Portfolio
HSBC Global Strategy Adventurous Portfolio

Alex

I hadn't noticed there was a HSBC Global Strategy Adventurous Portfolio. I know why, it's because it's new and not listed widely.

I have the Dynamic Portfolio as one of the funds in my S&S ISA.

I was interested to see the differences and am not surprised to see a higher proportion of equities in the Adventurous Fund due to dropping the proportion of Bonds.

I do see that the Dynamic Portfolio made up most of its UK equity component with the HSBC FTSE All-Share holding but the Adventurous Portfolio UK component is the HSBC FTSE 100 Index holding. Why the difference there?

bostonerimus

Audaxer wrote: »

Thanks Linton. It seems strange as to why an active multi asset fund hasn't been created that covers all these categories of equities in similar proportions to yours if it gives such good returns. Any idea why such funds haven't been created?

There is a firm in the US called Dimensional Fund Advisors that uses a modified indexing approach that overweights small cap and value funds in an effort to beat a straight cap weighted index without taking on too much additional risk. You might be interested to Google them and the likes of "Fama and French".

Audaxer

Linton wrote: »

I will take that as a non-rhetorical question. Some possible answers...

1) Large funds have a problem with small companies - they cant buy shares in a wide range of individual companies in sufficient quantities to make it worth the effort.
2) There are very few fund managers who have the reputation not to follow the herd.
3) The purpose of multi asset funds is to provide a one-stop solution. My portfolio is 100% focussed on high return whilst minimising risks from local failures. I have little idea how it would behave in a global failure such as the great crash and wouldnt dare use it if I didnt also have my other portfolios.
4) I believe successful small company investment benefits greatly from specialist local knowledge. To cover the world is a big ask. Much easier just to follow the index investing predominantly in large companies.

It wasn't a rhetorical question. I am interested, so thanks for the answers.

I would have thought that there would be one of these fund of funds that held funds for all these equity categories as a one stop solution, but maybe there isn't.

I had been thinking because your growth portfolio was well diversified with different asset classes that are not correlated, that you wouldn't have as big a loss as others in a big equity crash like that of 2007/2008, so I'm surprised you say you have little idea how the portfolio would behave in these circumstances.

Under the bucket approach do you have about a third of your investment total in each of your 3 portfolios, and top up the income and wealth preservation portfolios from the growth one every year to keep each portfolio around a third of the total?

Linton

Audaxer wrote: »

It wasn't a rhetorical question. I am interested, so thanks for the answers.

I would have thought that there would be one of these fund of funds that held funds for all these equity categories as a one stop solution, but maybe there isn't.

I had been thinking because your growth portfolio was well diversified with different asset classes that are not correlated, that you wouldn't have as big a loss as others in a big equity crash like that of 2007/2008, so I'm surprised you say you have little idea how the portfolio would behave in these circumstances.

On the one hand small companies in different geographies tend to be less correlated than the large companies, the latter mainly operating in the same global markets. On the other hand small companies tend to be more volatile than large ones. So on balance I dont know

.
Under the bucket approach do you have about a third of your investment total in each of your 3 portfolios, and top up the income and wealth preservation portfolios from the growth one every year to keep each portfolio around a third of the total?

The current balance is 45% Growth, 28% WP, and 27% Income. Rebalancing happens as money is withdrawn from SIPPs and re-invested in ISAs. The aim is to steadily run down Growth as "long term" becomes less of a concern.

bostonerimus

Audaxer wrote: »

Under the bucket approach do you have about a third of your investment total in each of your 3 portfolios, and top up the income and wealth preservation portfolios from the growth one every year to keep each portfolio around a third of the total?

The bucket approach is just another way of thinking about asset allocation. They can be though of in different ways....asset class, risk, chronological order of spending etc. but if you get your overall asset allocation correct and take a total return approach you can avoid this extra level of organization.

A_T

Audaxer wrote: »

I had been thinking because your growth portfolio was well diversified with different asset classes that are not correlated, that you wouldn't have as big a loss as others in a big equity crash like that of 2007/2008, so I'm surprised you say you have little idea how the portfolio would behave in these circumstances.

How can one know until it happens? There is no reason to think diversifying equities will protect in a big crash. You need to look away from equities for that kind of protection.

JustAnotherSaver

Alexland wrote: »

VLS if you want fixed allocation with UK equity bias. L&G if you want risk managed allocation with UK equity bias. HSBC if you want risk and opportunity managed allocation with no country equity bias but as a result heavy in the US.

As you say it doesn't make a huge amount of difference but gives us something to talk about while my son is having his afternoon nap today.

Alex.

I'm just trying to get to grips with this so hopefully you can stay with me on this...

Take VLS60 & HSBC Balanced for example (unless they're not equivalents of sorts but anyway...)

Looking at the geographical info for each...

VLS60: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-60-equity-accumulation/fund-analysis/geographical-analysis
HSBC-Balanced: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-global-strategy-balanced-portfolio-c-accumulation/fund-analysis/geographical-analysis

I understand that the UK market makes up for a small percentage of the global market & that therefore 25% in the UK is actually quite high.

But also VLS60 has pretty much 36% in the Americas ... HSBC Balanced only 29%.

Granted VLS60 is much more invested in UK at 25% than the HSBC at just over 3%.

But VLS60 also is more heavily invested in Asia 13% compared to about 8%

So VLS in comparison is more diverse is it not? It may be more biased towards the UK but it also holds more of other areas also, seemingly?


Although i've just now realised that we're comparing a figure of 90some% to 50some% so hardly fair. It also doesn't give someone like me (limited knowledge) much confidence going forward.

Why would they leave out about 50% off the geographical map?

Excuse me while i find a brick wall to put my head through