Popular global multi asset funds

Mrc44

Hi, 
Having started looking into investment a lot more recently there seems to be lots of positivity around the vanguard LifeStrategy funds, are these funds really any better over the long term 10/20yrs than the others available such as the HSBC global strategy , legal & general multi index?? I ask because I am a newbie investor and assume it wouldn’t be a good idea to stick to the same fund for both s&s isa and SIPP and to keep some more diversification between the two. Not huge numbers we’re talking about here more so 10/15k lump sums and then 200mnth Payments into each with an extra lump sum into the SIPP in March each year. I like the idea of the global multi asset funds for easiness of just funding and forgetting about them and checking back in when I reach my 40’s , 50’s and so on but just wondering if overall over the long term there’s really not much between the mentioned funds or can you point me in the direction of some other alternatives I would be better off looking into. 

Thank you 

eskbanker

Depends what you mean by 'better' really!

VLS is a popular choice on here but has a slightly higher cost than some of the others, and has a significantly larger bias towards the UK than those based on a purer global market cap weighting, plus different allocation philosophies too.

There will inevitably be substantial overlap between the underlying holdings for each of these, but diversification across different platforms and fund managers is achievable by using separate approaches for ISA and SIPP.

If you're still under 40 then consider using a Lifetime ISA for money you're putting by for retirement....

Alistair31

Personally I’ve split my allocation to multi-assets 50/50 VLS80 and HSBC Global Dynamic. Simple enough to manage. 

bowlhead99

Mrc44 said:

Hi, 
Having started looking into investment a lot more recently there seems to be lots of positivity around the vanguard LifeStrategy funds, are these funds really any better over the long term 10/20yrs than the others available such as the HSBC global strategy , legal & general multi index?? I

They are an easy thing for people to recommend due to being cheap and simple; some people do not really want to do their own research or given a broad set of choices with their own pros and cons and nuances, so are grateful when someone says 'why don't you just buy something like VLS60%' without the post being made lengthier by their helper going on to expand on the 'something like' with other examples. Yes you should consider the other rivals and there are plenty of threads here which you could find via the search tool or google which discuss them.

If they were really accepted as the best thing on the market than everyone would buy them and the other brands would give up. That's not the case.  If you know you want 80-100% equities then you have a high tolerance of risk/volatility and you will get that with Vanguard's 80 or 100% product, so it's probably fine. If you are more a 5 or 6 out of 10 risk level person, then there is probably merit in NOT doing what the VLS product does with its fixed ratio of debt to equity and UK to international holdings at all times, and instead use one of the others you mention (such as L&G MI, or HSBC GS etc etc) which has a blend of assets melded together to keep within a targeted risk level over the course of an economic cycle.

Mrc44

eskbanker said:

If you're still under 40 then consider using a Lifetime ISA for money you're putting by for retirement....

yes i am quite a way off 40 yet so would I be better off investing through a s&s Lisa rather than just a usual s&s isa? For the 25% government contribution I assume? 

eskbanker

Mrc44 said:

eskbanker said:

If you're still under 40 then consider using a Lifetime ISA for money you're putting by for retirement....

yes i am quite a way off 40 yet so would I be better off investing through a s&s Lisa rather than just a usual s&s isa? For the 25% government contribution I assume? 

The 25% bonus is definitely the major plus point with LISAs, but you'd need to evaluate whether that offsets the negative of the withdrawal penalties that would apply should you access the money before 60....

Mrc44

bowlhead99 said:

If they were really accepted as the best thing on the market than everyone would buy them and the other brands would give up. That's not the case.  If you know you want 80-100% equities then you have a high tolerance of risk/volatility and you will get that with Vanguard's 80 or 100% product, so it's probably fine. If you are more a 5 or 6 out of 10 risk level person, then there is probably merit in NOT doing what the VLS product does with its fixed ratio of debt to equity and UK to international holdings at all times, and instead use one of the others you mention (such as L&G MI, or HSBC GS etc etc) which has a blend of assets melded together to keep within a targeted risk level over the course of an economic cycle.


thank you bowlhead , I am quite comfortable with taking the high risk as would be leaving the investments for for 10/20years then onto longer before I could even touch the SIPP at 57 so would you suggest that the VLS80/100 would be a suitable option for that and then a 50/50 split of 2 of the mentioned funds to diversify the SIPP a bit more? Appreciate your lengthy informative reply’s. 

bowlhead99

Mrc44 said:
thank you bowlhead , I am quite comfortable with taking the high risk as would be leaving the investments for for 10/20years then onto longer before I could even touch the SIPP at 57 so would you suggest that the VLS80/100 would be a suitable option for that 

VLS80-100 is probably fine for a 20 year view.  In the long run, equities should return more than cash or bonds because the returns are unlimited rather than being contractually fixed. 

However, if most of what you hold has high volatility (e.g. VLS100 could drop 50%+ over a one to two year period before eventually recovering and growing again) then psychology comes into it.  You said this investment would initially be for 10-20 years - how would you feel if you check in on your funds in ten years time and they have grown unspectacularly and then dropped a big chunk? 

The textbook answer that you *think* will be your reality is to say, "oh, I would not be worried because I don't need the funds until I'm 57, I will enjoy the opportunity to add more at low prices".  But when you actually get there and it is happening, and there are tens of thousands of pounds at stake, you may think, "Jeezus, I didn't know I was really going to get these wild swings, when I looked at the history of 2011 to 2019 it had not really dropped more than 20% and seemed to be going up really nicely, and that has not been the case at all from 2020-2030. I have clearly invested in the wrong thing and should get something safer like VLS40 or HSBC Cautious or Conservative".

By doing that, you would cash out  of the high volatility product at market lows (never a good time to cash out) and the 'scare' factor may then drive you to something which is too low on the risk/reward scale to be able to properly meet your objectives, ultimately damaging your wealth. 

So if you are really looking for a 20 year or permanent investment, 100% equity is fine ; but if you are thinking you will be looking at it frequently and only considering 10 years as the initial term, you might do better with something with a lower risk profile, depending on what your attitude to volatility really is. For someone who has always used cash accounts and not investments, you are used to your money in a savings pot always being there unless you spend it. You know investment is different, and it is very easy to pay lip service to people warning of crashes and simply say "ah, but I learned on a forum that investments can go down as well as up, and I'm in it for the long term so the day-to-day value is irrelevant". It's a different matter ten years down the line when you actually check in and see that you literally had £50k lin the pot a year or so ago and now you have £20-30k.

As such, if you are thinking of a 10 year view and not genuinely a 20 year one, you might be better served with something lower than maximum volatility, even though the maximum gains over 20+ years would typically come from products with maximum volatility.

and then a 50/50 split of 2 of the mentioned funds to diversify the SIPP a bit more? Appreciate your lengthy informative reply’s. 

If a product is diversified and meets your objectives there is little point buying two more products 'to diversify a bit more'.   If you have 50k-100k invested and are nervous it is not right for you, then certainly you should re-evaluate it and maybe splitting between two products would help your fear of the unknown.  But if you are just starting out from a low base and putting £200 a month in, on a 20 year journey, it's completely unnecessary to faff around with multiple funds. It is more important to just get on with the business of investing rather than not investing. Wait until you have an amount of money where a difference in style or approach makes a significant difference to your outcome, before you start to tinker.

Mrc44

bowlhead99 said:

Mrc44 said:
thank you bowlhead , I am quite comfortable with taking the high risk as would be leaving the investments for for 10/20years then onto longer before I could even touch the SIPP at 57 so would you suggest that the VLS80/100 would be a suitable option for that 

VLS80-100 is probably fine for a 20 year view.  In the long run, equities should return more than cash or bonds because the returns are unlimited rather than being contractually fixed. 

However, if most of what you hold has high volatility (e.g. VLS100 could drop 50%+ over a one to two year period before eventually recovering and growing again) then psychology comes into it.  You said this investment would initially be for 10-20 years - how would you feel if you check in on your funds in ten years time and they have grown unspectacularly and then dropped a big chunk? 

The textbook answer that you *think* will be your reality is to say, "oh, I would not be worried because I don't need the funds until I'm 57, I will enjoy the opportunity to add more at low prices".  But when you actually get there and it is happening, and there are tens of thousands of pounds at stake, you may think, "Jeezus, I didn't know I was really going to get these wild swings, when I looked at the history of 2011 to 2019 it had not really dropped more than 20% and seemed to be going up really nicely, and that has not been the case at all from 2020-2030. I have clearly invested in the wrong thing and should get something safer like VLS40 or HSBC Cautious or Conservative".

By doing that, you would cash out  of the high volatility product at market lows (never a good time to cash out) and the 'scare' factor may then drive you to something which is too low on the risk/reward scale to be able to properly meet your objectives, ultimately damaging your wealth. 

So if you are really looking for a 20 year or permanent investment, 100% equity is fine ; but if you are thinking you will be looking at it frequently and only considering 10 years as the initial term, you might do better with something with a lower risk profile, depending on what your attitude to volatility really is. For someone who has always used cash accounts and not investments, you are used to your money in a savings pot always being there unless you spend it. You know investment is different, and it is very easy to pay lip service to people warning of crashes and simply say "ah, but I learned on a forum that investments can go down as well as up, and I'm in it for the long term so the day-to-day value is irrelevant". It's a different matter ten years down the line when you actually check in and see that you literally had £50k lin the pot a year or so ago and now you have £20-30k.

As such, if you are thinking of a 10 year view and not genuinely a 20 year one, you might be better served with something lower than maximum volatility, even though the maximum gains over 20+ years would typically come from products with maximum volatility.

and then a 50/50 split of 2 of the mentioned funds to diversify the SIPP a bit more? Appreciate your lengthy informative reply’s. 

If a product is diversified and meets your objectives there is little point buying two more products 'to diversify a bit more'.   If you have 50k-100k invested and are nervous it is not right for you, then certainly you should re-evaluate it and maybe splitting between two products would help your fear of the unknown.  But if you are just starting out from a low base and putting £200 a month in, on a 20 year journey, it's completely unnecessary to faff around with multiple funds. It is more important to just get on with the business of investing rather than not investing. Wait until you have an amount of money where a difference in style or approach makes a significant difference to your outcome, before you start to tinker.

Thank you so much for this reply bowlhead reading this puts it right into perspective and makes you think long and hard regarding being used to savings being sat in cash and always being there unless you spend it and with investing possibly looking at it and being 20/30k + down  , deep down this is why I only said 10/15k lump sums in each isa/SIPP and then 200mthly contributions as I am to scared to go all in with my cash savings and will keep plenty in cash savings for the time being until I’m up to scratch with investing. 

With your advice on just sticking with the one fund for the time being at such low amounts would you advise the same fund be used in both s&s isa and SIPP or say for example vls80 is isa and HSBC global / L&G index in SIPP? 

bowlhead99

GMrc44 said:

With your advice on just sticking with the one fund for the time being at such low amounts would you advise the same fund be used in both s&s isa and SIPP or say for example vls80 is isa and HSBC global / L&G index in SIPP? 

If you have different objectives for the two pots (e.g. they will be accessed at different times) then it can make sense that they hold different investments. If they have the same objective then it stands to reason that what works for one will work for the other.  The investments can be changed later, of course. 

You might find that one platform is better for your investment patterns (number of transactions, value invested at a point in time) than another, and that might be different for the ISA vs the SIPP.  Generally decide what you want to hold before deciding where to hold it (especially given the fact that investment platforms do not all offer every investment that you could possibly want).

Mrc44

bowlhead99 said:

GMrc44 said:

With your advice on just sticking with the one fund for the time being at such low amounts would you advise the same fund be used in both s&s isa and SIPP or say for example vls80 is isa and HSBC global / L&G index in SIPP? 

If you have different objectives for the two pots (e.g. they will be accessed at different times) then it can make sense that they hold different investments. If they have the same objective then it stands to reason that what works for one will work for the other.  The investments can be changed later, of course. 

You might find that one platform is better for your investment patterns (number of transactions, value invested at a point in time) than another, and that might be different for the ISA vs the SIPP.  Generally decide what you want to hold before deciding where to hold it (especially given the fact that investment platforms do not all offer every investment that you could possibly want).

I the isa would be accessed sooner (roughly 10/15yrs) whilst the SIPP I wouldn’t be able to access for nearing 25years so the intention on that would be the best possibility for long term growth. Pretty much the same as the isa intention really only just over a longer time frame. 

In regards to investment patterns it would be very much the same, an initial lump sum followed by £200monthly contributions there after except very likely another lump sum contribution to the SIPP every March. With so many investment choices out there in regards to funds It’s hard to get my head around and settle on one which is why I asked over such a long period of time would they roughly even themselves out give or take a few £ , after reading what you have said I am thinking more towards fidelity/AJ bell platforms so I do get that option of so many funds to choose from rather than just being stuck to vanguard funds. I believe you can buy the VLS80
fund through fidelity/Aj bell?