FTSE All World UCITS ETF

sstteeww

The Vanguard FTSE Global All Cap fund includes the developed world as well as small cap and emerging market. This is however a 100% equity index fund (no bonds, no automatic rebalancing). You'd have to team this up with a bond index fund and automatically rebalance them yourself on a regular basis - can you sell your winners to buy losers? It's hard to do, hence the adage "the biggest impediment to your investing success is the person staring at you in the mirror".

As others have suggested, a multi-asset fund that automatically rebalances itself would be the simplest approach and allow you to set up an automatic direct debit each month and allow you to get on with your life without needing to look at these investments for decades. You can then expect a very pleasant suprise when the time comes to cash it in.

bcfclee27

Ok so let's just say I went with this....

20% - HSBC Dynamic
20% - HSBC Balanced
20% - VLS 80
20% - VLS 60
10% - Emerging Markets
10% - Small Caps

Now first off is 10% each for EM & Small Cap about right or would I be better advised dropping their respective allocations to 5% each.

Once I have decided on my allocation percentages, all I need to do is keep these percentages in line every 6/12 months ?

So all I need to do is basically sell the best performers and purchase the under performers and bring everything back up to its percentage allocation.

If this is the case that sounds pretty manageable to be honest.

I am definitely inexperienced but eager to learn - however if people think I'd be best advised keeping it simple and just sticking with HSBC & VLS then that's what il do....

AlanP_2

Personally I wouldn't bother with 2 * VLS and 2 * HSBC. You effectively will have a "VLS70" and a "HSBC Balanced Plus". The extra effort to re-balance is minimal but is it worth it in the bigger context?

Which "EM"? There is a thread running on here or the Pensions board discussing this - lots of variants and interpretations on which markets are EM as opposed to Frontier and so on so worth a look possibly.

Small Cap - Which geographic area(s), or are you thinking UK?

bcfclee27

AlanP wrote: »

Personally I wouldn't bother with 2 * VLS and 2 * HSBC. You effectively will have a "VLS70" and a "HSBC Balanced Plus". The extra effort to re-balance is minimal but is it worth it in the bigger context?

Which "EM"? There is a thread running on here or the Pensions board discussing this - lots of variants and interpretations on which markets are EM as opposed to Frontier and so on so worth a look possibly.

Small Cap - Which geographic area(s), or are you thinking UK?

Was thinking of investing in.....

Vanguard - FTSE emerging markets ETF
Vanguard - Global Small Cap Index Fund

Are these decent options...

coyrls

bcfclee27 wrote: »

Ok so let's just say I went with this....

20% - HSBC Dynamic
20% - HSBC Balanced
20% - VLS 80
20% - VLS 60
10% - Emerging Markets
10% - Small Caps

Now first off is 10% each for EM & Small Cap about right or would I be better advised dropping their respective allocations to 5% each.

Once I have decided on my allocation percentages, all I need to do is keep these percentages in line every 6/12 months ?

So all I need to do is basically sell the best performers and purchase the under performers and bring everything back up to its percentage allocation.

If this is the case that sounds pretty manageable to be honest.

I am definitely inexperienced but eager to learn - however if people think I'd be best advised keeping it simple and just sticking with HSBC & VLS then that's what il do....

[FONT=&quot]I would say you either need to understand the principles of asset allocation, choose a model appropriate for your risk tolerance and requirement, invest in individual funds, ITs or ETFs and rebalance (periodically or trigger based) or invest in a single multi-asset fund appropriate for your risk tolerance and requirement. What you are suggesting is some worst of both worlds mix.[/FONT]

ValiantSon

AlanP wrote: »

Personally I wouldn't bother with 2 * VLS and 2 * HSBC. You effectively will have a "VLS70" and a "HSBC Balanced Plus". The extra effort to re-balance is minimal but is it worth it in the bigger context?

It's all obviously a matter of personal opinion and risk appetite, but I know from a previous thread that the OP had decided on the VLS80 and VLS60 combination (ditto the two HSBC funds) to deliberately increase equities exposure without going as high as the next fund up, e.g. in the Vanguard case the intention was to deliberately create a 70% equities allocation. This isn't something unheard of and can be a sensible move if the 60% portfolio is a little tame and the 80% portfolio a little too aggressive for your liking.

The OP had also decided on a combination of Vanguard and HSBC funds to increase exposure to corporate bonds and to reduce the overweighting towards UK equities in the Vanguard funds, without completely losing the surety of the gilts and currency benefits of the UK overweighting.

forextc

20% - HSBC Dynamic
20% - HSBC Balanced
20% - VLS 80
20% - VLS 60
10% - Emerging Markets
10% - Small Caps

This doesn't really make a lot of sense to me. :-/

Conventional wisdom would say that

-the less risk tolerance and investment time horizon you have the greater weighting of bonds say Vanguard 60/ HSBC Balanced
-the more risk tolerance and length of time of investment, the greater the size of the equity component say Vanguard 80/HSBC Dynamic

The VLS and HSBC global funds were really aimed at people who want a 'one stop' shop and could easily purchase this without having to worry about the finer details. OK, so they don't have explicit expose to small caps but do have an emerging markets element in line with current market weightings.

So essentially at present you have a 'mis mash' of funds that aren't serving at all to increase your diversification. They are invested in exactly the same funds just in slightly different proportions.

I think you first need to define your risk, time horizon and then just go with the fund that fits. In 10 years time you can always switch to reflect your risk then.

Something like the VLS60 would be a good long term fit imho for say 10-20 years (more risk with VLS80). If you want to split the risk between fund managers then maybe go 50:50 with the HSBC fund. But it's important to understand that you aren't really splitting the market risk much as the funds are broadly similar in their objectives.

You seem quite risk averse so I'm not too sure I get the inclusion of the Small Caps and Emerging markets in proportions suggested. As mentioned earlier, the VLS funds already have some EM exposure and if these markets grow over time this will naturally increase within the funds.

Also don't forget that in the portfolio you suggested, the multi asset funds have bond exposure
so adding additional equity fund holdings will disproportionately weight your equity exposure to these sectors. You would end up with something like 40% of your assets in global stocks, 10% in global small caps and 10% in EM which is a significant overweight to these riskier markets.

Maybe a better allocation, and to keep it easy would be something along the lines of this:

45% - VLS 60 or VLS 80
45% - HSBC Balanced or HSBC Dynamic
5% - Emerging Markets
5% -Smaller Companies

It's easy to manage and gives you the exposure you are looking for. Also if you purchased it direct from Vanguard you get very low platform fees of 0.15% and no dealing charges.

bcfclee27

forextc wrote: »

20% - HSBC Dynamic
20% - HSBC Balanced
20% - VLS 80
20% - VLS 60
10% - Emerging Markets
10% - Small Caps

This doesn't really make a lot of sense to me. :-/

Conventional wisdom would say that

-the less risk tolerance and investment time horizon you have the greater weighting of bonds say Vanguard 60/ HSBC Balanced
-the more risk tolerance and length of time of investment, the greater the size of the equity component say Vanguard 80/HSBC Dynamic

The VLS and HSBC global funds were really aimed at people who want a 'one stop' shop and could easily purchase this without having to worry about the finer details. OK, so they don't have explicit expose to small caps but do have an emerging markets element in line with current market weightings.

So essentially at present you have a 'mis mash' of funds that aren't serving at all to increase your diversification. They are invested in exactly the same funds just in slightly different proportions.

I think you first need to define your risk, time horizon and then just go with the fund that fits. In 10 years time you can always switch to reflect your risk then.

Something like the VLS60 would be a good long term fit imho for say 10-20 years (more risk with VLS80). If you want to split the risk between fund managers then maybe go 50:50 with the HSBC fund. But it's important to understand that you aren't really splitting the market risk much as the funds are broadly similar in their objectives.

You seem quite risk averse so I'm not too sure I get the inclusion of the Small Caps and Emerging markets in proportions suggested. As mentioned earlier, the VLS funds already have some EM exposure and if these markets grow over time this will naturally increase within the funds.

Also don't forget that in the portfolio you suggested, the multi asset funds have bond exposure
so adding additional equity fund holdings will disproportionately weight your equity exposure to these sectors. You would end up with something like 40% of your assets in global stocks, 10% in global small caps and 10% in EM which is a significant overweight to these riskier markets.

Maybe a better allocation, and to keep it easy would be something along the lines of this:

45% - VLS 60 or VLS 80
45% - HSBC Balanced or HSBC Dynamic
5% - Emerging Markets
5% -Smaller Companies

It's easy to manage and gives you the exposure you are looking for. Also if you purchased it direct from Vanguard you get very low platform fees of 0.15% and no dealing charges.

Thanks for the in depth reply I really appreciate it.

Maybe I'm over thinking it, but what you suggested was what I wanted to do in the first place - however I could not decide whether to do 60/dynamic or 80 balanced.....
Maybe it's splitting hairs in the grand scheme of things but this was why I was thinking just do all 4 literally because I couldn't decide which of the 2 blends to go for.......

bcfclee27

forextc wrote: »

20% - HSBC Dynamic


So essentially at present you have a 'mis mash' of funds that aren't serving at all to increase your diversification. They are invested in exactly the same funds just in slightly different proportions.

Haven't the dynamic funds got considerably less in corporate bonds than the balanced on the HSBC funds ?

This was also a factor as it meant a mix of corporate and government bonds - again possibly over thinking it....

Audaxer

bcfclee27 wrote: »

Haven't the dynamic funds got considerably less in corporate bonds than the balanced on the HSBC funds ?

This was also a factor as it meant a mix of corporate and government bonds - again possibly over thinking it....

It's the VLS funds that have more government bonds and the HSBC funds that have more corporate bonds.

I think you are over-thinking things. I think 50% in VLS60 and 50% in HSBC GS Balanced sit quite well together.

It might be worth reducing these allocations to 45% each so you can add in 5% of EM and 5% of Small Caps, but if they are so beneficial it makes me wonder why Vanguard and HSBC have not included more EM and Small Caps in their multi asset funds.