Active Multi Asset Funds - Baillie Gifford Managed Fund a good option?

Audaxer

I really like the look of the Baillie Gifford Managed B fund. It has 74% equities yet has almost the same 5 years returns as the VLS80, and the fund has been going since 1987 averaging 8.2% annually since then, which seems very good to me. The OCF of 0.44% is very low for an active multi asset fund. There is quite a lot of UK equity, but I am thinking of adding it to my portfolio alongside a passive multi asset fund, HSBC Global Strategy Balanced, with has a lot less home bias.

I am surprised that active multi asset funds are not discussed more on these forums as this one in particular seems like a very good option. Is there any reason why I shouldn't include this fund in a portfolio alongside passive multi asset funds as it seems to do a better in some years and not in others, so would balance out returns a bit, and as I say has a good long track record?

pinkllama

Not heard of this fund. 0.44% is very cheap for a managed fund, but still twice as expensive as VLS80 and HSBC Global Strategy Dynamic.
Looking at the 5 year performance on Trustnet they are near identical, which given their different investments goes to show that you shouldn’t sweat too much about getting a perfect asset allocation. Just figure out your risk tolerance and buy one of the suitable funds and forget about it.

Linton

pinkllama wrote: »

Not heard of this fund. 0.44% is very cheap for a managed fund, but still twice as expensive as VLS80 and HSBC Global Strategy Dynamic.
Looking at the 5 year performance on Trustnet they are near identical, which given their different investments goes to show that you shouldn’t sweat too much about getting a perfect asset allocation. Just figure out your risk tolerance and buy one of the suitable funds and forget about it.

Funds having a similar performance over the past 5 years isnt too significant as the past 5 years have been extremely benign - a rising tide etc etc. If you look at the high level allocation both the Baillie Gifford fund and VLS80 have much the same % in developed world large companies.

One point of interest possibly arises if you look at the returns over the past 5 individual years. The BG fund varied from 5.4% to 17.1% whereas VLS80 varied from 1.2% to 24%. That may be significant for someone who is buying a multi-investment fund to control volatility, which is perhaps the main reason for buying such a fund

If you arent too bothered about the allocation why bother about a 0.2% difference in charges? The allocation could well have a very much larger effect.

Audaxer

Linton wrote: »

One point of interest possibly arises if you look at the returns over the past 5 individual years. The BG fund varied from 5.4% to 17.1% whereas VLS80 varied from 1.2% to 24%. That may be significant for someone who is buying a multi-investment fund to control volatility, which is perhaps the main reason for buying such a fund

That's one of the things I liked about the BG fund. In 2015 for example where the returns on HSBC Global Strategy Balanced and VLS were very low the BG fund was higher but lower the following year, so I liked the fact that having both would go some way to even out annual return percentages.

ColdIron

It seems to hold a fair bit of cash though it does have a wider spread across market capitalisations which may or may not stand it in good stead going forward

Alexland

According to my data source this fund is lightweight in US holdings but the equities still have a p/e ratio of nearly 21 and price/book if 2.9 which are both a bit on the high side for my preference.

Still the historical and projected earnings growth both look good. On the bonds side the durations look a bit shorter than VLS but still clearly long enough to help volatility.

So yeah it's an option.

Audaxer

Alexland wrote: »

According to my data source this fund is lightweight in US holdings but the equities still have a p/e ratio of nearly 21 and price/book if 2.9 which are both a bit on the high side for my preference.

Still the historical and projected earnings growth both look good. On the bonds side the durations look a bit shorter than VLS but still clearly long enough to help volatility.

So yeah it's an option.

Thanks Alex. Although the US equity is a bit low, I was thinking of investing it alongside HSBC Global Strategy Balanced which as you know is high in US equity. I'm also thinking of adding another active multi asset fund to go alongside these two and that is Royal London Sustainable Diversified Trust Class C Inc. These 3 multi asset funds in equal proportions combined give about 65% equities overall.

aroominyork

Audaxer wrote: »

I am surprised that active multi asset funds are not discussed more on these forums

Agreed. There are some very interesting funds out there, Royal London Sustainable World being another. When I started DIYing six months ago I bought the BG and RL funds but soon sold them as I figured I was not making a proper decision about whether I was investing actively or passively. I am not a moment defending that logic but maybe it partly explains why these actively managed multi-asset funds are not discussed more.

DennisTenus

aroominyork wrote: »

Agreed. There are some very interesting funds out there, Royal London Sustainable World being another. When I started DIYing six months ago I bought the BG and RL funds but soon sold them as I figured I was not making a proper decision about whether I was investing actively or passively. I am not a moment defending that logic but maybe it partly explains why these actively managed multi-asset funds are not discussed more.

Isn't it best to have a mix of both though? Active and Passive funds i mean....

Are "multi-asset funds" funds of funds basically? LIke VLS80 for example?

bostonerimus

Audaxer wrote: »

I really like the look of the Baillie Gifford Managed B fund. It has 74% equities yet has almost the same 5 years returns as the VLS80, and the fund has been going since 1987 averaging 8.2% annually since then, which seems very good to me.

As another data point I average 8.5% from 1987 to 2014 with an essentially 60/40 mix using an index fund portfolio.

Linton

DennisTenus wrote: »

Isn't it best to have a mix of both though? Active and Passive funds i mean....

Different people take different views. Mine is you decide what you want to invest in first and then choose the most appropriate fund. In some areas passives work well, in other areas actives work better. In some broad areas you may be able to find a particular fund that focusses on a specific aspect. Such a fund may happen to be active or passive.

Are "multi-asset funds" funds of funds basically? LIke VLS80 for example?

Yes. Fund of funds with an overall strategy- eg keeping asset allocations constant as is the case with VLSnn or keeping within a risk band as is the case with some others.