Choice of Complementary Multi-Asset Fund

TCA

In short, I'm in search of a multi-asset fund/(s) to complement some wealth preservation holdings. Before I drone on, I'm aware this is a purely subjective choice and none of us are fortune tellers, but I'm interested to know what others would choose and why, as there will undoubtedly be stuff I've failed to consider.

Some general info. I'm 51. My planned SIPP will contain 2 or 3 investment trusts: Personal Assets, Capital Gearing and I might add a bit of RIT Capital Partners given the premium has almost disappeared. The obvious aim is wealth preservation and the plan is to start emptying the SIPP at age 55 and each subsequent year as tax efficiently as possible, which (along with cash savings and other income) should do me until age 67 when the state pension kicks in and I revert to my ISA for the rest of my needs. 

The ISA obviously has a longer time horizon to cover (let's say access at 67) so at least 16 years from now plus thereafter. My preference for the ISA is a 'fire and forget' multi-asset fund. The SIPP and ISA are roughly equal by amount and using any of the fund options below for the ISA would currently result in an approximate 50/50 bonds/equities split, which I'm happy with. I'll adjust this as I see fit via contributions/switches going forwards.

Here's a possible ISA fund shortlist below, all in the region of a 60/40 equity/bonds split, which gives a rough indication as to my preferred risk level, with the main points I can think of for consideration:

1) Vanguard Lifestrategy 60%: fixed allocation, home bias 15% (FTSE All Share), long dated UK bonds

https://www.trustnet.com/factsheets/o/acdq/vanguard-lifestrategy-60-equity-a-acc

2) HSBC Global Strategy Balanced: volatility managed, low UK equities allocation 3% (FTSE 100), high corporate bonds allocation

https://www.trustnet.com/factsheets/o/g1hd/hsbc-global-strategy-balanced-portfolio

3) L&G Multi Index 5 Fund: volatility managed, unit trust so has spread, low US equities allocation, home bias 12% (tracks FTSE All Share), specific property, infrastructure,commodities and small cap allocations, emerging market bonds (hard currency and local) and global high yield allocation

https://www.trustnet.com/factsheets/o/j84x/lg-multi-index-5

4) Fidelity Multi Asset Allocator Growth W Acc: unit trust so has spread, low UK equities allocation 2%, specific property and small cap allocations (6% each!), global govt and corporate bond funds (no specific UK)

https://www.trustnet.com/factsheets/o/0dt3/fidelity-multi-asset-allocator-growth-y-acc

There are probably other decent options, so any suggestions are welcome.

[Just to add - my pension is all in cash having just been transferred to Fidelity (landed yesterday) - so although my favoured wealth preservation trusts are close to all-time highs, I'm inclined just to go all in with lump sum purchases. My ISA is also all in cash having sold most of my holdings before Xmas in anticipation, so with current corona virus-related dips, probably as good a time as any for lump sum purchases]

Thanks in advance for any thoughts on the above.

bowlhead99

so although my favoured wealth preservation trusts are close to all-time highs, I'm inclined just to go all in with lump sum purchases.

Investments are supposed to be close to their all time highs when markets are buoyant, otherwise they are perhaps not very good at their job. You only happen to be in cash because of going through a platform change, not because being in investments was the wrong thing for you to be in last week, month or year. So, just get back into the market unless you feel you are god's gift to market timing.

As for mid risk mixed asset funds, you could probably add Architas's range to the mix under consideration. 

My parents have L&G multi asset 5, which seems adequate for a mid risk option, even if it may not the absolute best thing to be in. It seems it would get the job done at the target level of volatility. If it was going to be their entire ISA balance I would review in more detail against the rivals.

If you are not going to the higher end of the risk/performance spectrum I would generally be more on board with the funds that offer a risk targeted approach with the risk level you want, rather than forcing to a fixed ratio of bond to equity like Vanguard does. At 80-100% equity which is the top end of volatility then yes Vanguard would have appeal and I've held a lifestrategy fund like that as cheap 'filler' in a portfolio before. Whereas if you don't want that high volatility, why not let the manager use a more flexible blend of asset classes.

A reason to prefer a fixed ratio product (such as VLS60) in your ISA would be if you were trying to balance it with other fixed ratio funds or specialist single asset class holdings to create a specific portfolio allocation mix.  However, you're not trying to do that, because the other parts of your portfolio are actively managed with floating allocations as part of the 'growth with capital preservation' remit, trusting the managers to run the investment trusts as they see fit. Personal Assets for example could be 40-50% equities now, but 60-75% later. So, it's entirely compatible with what you're doing, to have actively managed investment trusts in your pension and a floating allocation, risk targeted OEIC in your ISA.

TCA

Thanks bowlhead.

Good point regarding the capital preservation remit and floating allocations. I was looking across both SIPP and ISA for initial overall bond/equity allocation but haven't been thinking too much about how that'll change going forwards given active management in the SIPP. As you said, this is still compatible with my proposed ISA approach, so not something I'll give too much thought.           

I'll check out the Architas range, cheers.

Albermarle

Also Blackrock Consensus range ?

Audaxer

TCA said:

In short, I'm in search of a multi-asset fund/(s) to complement some wealth preservation holdings. Before I drone on, I'm aware this is a purely subjective choice and none of us are fortune tellers, but I'm interested to know what others would choose and why, as there will undoubtedly be stuff I've failed to consider.

Some general info. I'm 51. My planned SIPP will contain 2 or 3 investment trusts: Personal Assets, Capital Gearing and I might add a bit of RIT Capital Partners given the premium has almost disappeared. The obvious aim is wealth preservation and the plan is to start emptying the SIPP at age 55 and each subsequent year as tax efficiently as possible, which (along with cash savings and other income) should do me until age 67 when the state pension kicks in and I revert to my ISA for the rest of my needs. 

Do you need the Wealth Preservation ITs planned for your SIPP to grow roughly in line with inflation each year to achieve your required income? Even although they are Wealth Preservation ITs, I would think there could still be falls in value over a 12 year period meaning you may not possibly be able to draw all your required income from the SIPP every year.

As regards a multi asset fund for your S&S ISA, I think VLS60 or HSBC Global Strategy Balanced would be okay, or investing 50% in each of these funds would also be fine in my view.

TCA

Thanks to you both for the above replies.

Albermarle - BlackRock Consensus doesn't hedge its overseas bonds, so it was ruled out on that basis. Also no Emerging Markets holding, which I'd prefer to have.

Audaxer - I'll have sufficient cash reserves to keep me going if need be. The 25% tax-free lump sum might also be retained for this purpose if the circumstances suit at the time. A 50/50 investment between VLS60 and HSBC GS Balanced has definitely crossed my mind, with maybe an annual rebalance to keep me interested.

cloud_dog

Blackrock MyMap series of volatility targeted funds?

TCA

Thanks cloud dog. Re MyMap, I'd be wary given the lack of track record, which means their active management is hard to evaluate. Also not overly keen on the large US equities allocation (35% in MyMap 5). 

cloud_dog

Yes true.  Just throwing it out there. 

I don't believe the 35% US equities is large at all, I thought it was quite reserved TBH.  The US is approx 55% of the world market???

TCA

cloud_dog said:

I don't believe the 35% US equities is large at all, I thought it was quite reserved TBH.  The US is approx 55% of the world market???

True enough. It's just my personal preference to have more equity exposure elsewhere.     

hyperhypo

TCA, interested to hear what transpired...as am considering using PNL etc type funds now to buy with redundancy sipp payment ..