Other funds ideas apart from VLS

SurfacePro

Hey Everyone,
1. I want to open an SIPP with cavendish for £500 per month. I was wondering if there other equivalent funds like Vanguard Life Strategy 60 to consider. I already have an ISA with Vanguard and I don't know if it makes sense to have vanguard as SIPP.
2. Is it worth buying various funds to diversify my portfolio. My initial thought was to select one fund and pay in £500. Will various management charges eat into my SIPP if I select 2 or 3 funds instead of 1. Am new to pensions and investment. Am 35 years if it helps.

xylophone

https://monevator.com/category/investing/passive-investing-investing/

may be worth a read.

Alexland

Have a look at Blackrock Consensus 60, HSBC Global Strategy Balanced and L&G Multi Index 5.

I don't see the point of holding more than 1 diversifed multi asset fund per account.

I keep my various investment accounts on different (unrelated) platforms invested with different fund managers to maximise FSCS protection. Still I have a couple of accounts over the £85k limit.

Alex

dunstonh

I was wondering if there other equivalent funds like Vanguard Life Strategy 60 to consider.

Plenty of them. Look in the mixed investment sectors and the volatility managed sectors. Several hundred of them.

I already have an ISA with Vanguard and I don't know if it makes sense to have vanguard as SIPP.

Vanguard do not have a SIPP and their proposed offering which will reach us one day is not going to be a SIPP. (SIPPs offer whole of market investments. Vanguard want to offer options similar to a stakeholder pension or a bit more like a master trust pension)

2. Is it worth buying various funds to diversify my portfolio. My initial thought was to select one fund and pay in £500.

It makes no sense to build a bespoke portfolio of single sector funds until the value is in high 5 digits or into 6 digits.

Will various management charges eat into my SIPP if I select 2 or 3 funds instead of 1.

No.

10 funds at 1% are the same cost as 1 fund at 1%.

Am new to pensions and investment.

So, forget at looking at building a portfolio and stick to multi-asset funds.

SurfacePro

Thank you.

SurfacePro

Thanks alot. Although it seems hsbc is actively managed fund. Am just looking for low cost index funds.

dunstonh

SurfacePro wrote: »

Thanks alot. Although it seems hsbc is actively managed fund. Am just looking for low cost index funds.

VLS is actively managed too. By their very nature, multi-asset funds, even when made up of underlying passives, have to have some management decisions. e.g. how much to place in UK equity, US equity etc. or which sectors to include (for example property or not).

VLS is not a low cost index fund. It is a fettered fund of funds.
HSBC GS is not a low cost index fund. It is an unfettered fund of funds.

HSBC GS is lower cost than VLS.

Alexland

SurfacePro wrote: »

Thanks alot. Although it seems hsbc is actively managed fund. Am just looking for low cost index funds.

You are not going to find a balanced fund which doesn't have any decisions on asset allocation. At the very least someone has to decide the types of assets that it contains (equities, bonds, property, etc) and the proportions. If you dig deep into the underlying holdings you will find these funds mostly use trackers for their equity allocations.

Alex

SurfacePro

Ok thanks. I was always under the impression that Vanguard is low cost index fund. Why is alot of folks flocking to them.
Also is there really any fund out there that is truly low cost passive index funds.
Sorry am a newbie in investments and all the materials i have read so far always talked about index funds.

Alexland

You can get funds and ETFs that track global indexes such as the FTSE All World but these are 100% equities. The problem is if you want to get a mix of assets to dampen the volatility down to balanced risk then someone has to make decisions on the formulation.

Alex

dunstonh

I was always under the impression that Vanguard is low cost index fund.

Vanguard is a fund house. They have dozens of funds in the UK (and hundreds worldwide - including some managed funds). In the UK they have tracker funds in Unit Trust/OEIC form and ETF form. They also have multi-asset funds with some element of management decision.

Why is alot of folks flocking to them.

Internet and sheep. Plus, a very religious like following. There are internet posters who pray at the church of Vanguard.

Vanguard offer a very good option with VLS. We used to use it a lot when it was the best option. However, with investments, it doesn't matter who you are or what you offer, something better will come along sooner or later. We no longer use VLS. When its multi-asset we use something cheaper on medium risk and high risk and something slightly more expensive but with a better asset mix and risk targetting on lower risk (which Vanguard does not do). On our model portfolios, we have been replacing some of the single sector tracker funds that were with Vanguard with alternatives as things have moved on and others have come in better. Although we still have a couple of Vanguard funds in there.

all the materials i have read so far always talked about index funds.

Its not quite as simple as that. By picking Vanguard over HSBC you have made a management decision. By picking a fund at a certain risk profile, you have made a management decision. The fund house with the multi-asset fund has made management decisions.

Research on active vs passive on the internet is usually heavily US based where it is an absolute brainer because of US taxation. In some countries in Europe, it is much the same. However, the UK bucks the trend and has a higher number of managed funds that beat the markets over a longer period. There are still plenty of dogs though. At your stage, you dont need to worry about that as unless you know what you are doing, you should stick to low cost multi-asset funds.

If you ended up with VLS then its not a problem. However, there are alternatives that are cheaper and may offer better asset mixes. (or worse).