Spreading risk between funds....

Matt002

I currently have the following investments in my SIPP:
£65k in VLS 80
£65k in HSBC GS Dynamic
£40k in Blackrock Consensus 85
£30k in Blackrock Mymap 6
From what I could see there wasn't much difference between consensus and Mymap as they are both an active management of index trackers. However the Mymap had cheaper fees so I stopped adding to consensus and started adding to mymap.

I have recently been considering adding Ballie Gifford Managed B to this just so I don't have too much money sat with each fund manager in the event of something going wrong or there being a major fraud etc. I know this fund is not a fund of funds as it also invests in some companies directly. 

Am I better to stick with my up to 80% equities fund of funds approach with a smidge of active management or does adding something like Ballie Gifford Managed B actually sit along side the others quite nicely?

I fully expect to get ripped to shreds in the reply but I am happy to accept constructive criticism. 

Albermarle

money sat with each fund manager in the event of something going wrong or there being a major fraud etc.

Are you aware how large these companies are ?. You are worrying unnecessarily and this should not be factor in your investment strategy,

Matt002

I am aware how big they are and that it would be unlikely for them to evaporate. I guess I just feel more comfortable having things spread between a number of places. 

dunstonh

From what I could see there wasn't much difference between consensus and Mymap as they are both an active management of index trackers. 

I dont believe you are correct.   One is risk targetted and the other is returns focused.

Am I better to stick with my up to 80% equities fund of funds approach with a smidge of active management or does adding something like Ballie Gifford Managed B actually sit along side the others quite nicely?

All the others could easily be held as one.  Its like having 4 different brands of vanilla ice cream.

Personally, with that value, I would be on single sector funds rather than multi-asset. However, you may not have the knowledge for that.     

Matt002

Thanks Dunstonh
I do stand corrected on the two BlackRock funds.

With your other point what defines your tipping point where you would go from multi-asset to single sector? What are the advantages etc?

As you correctly assume I do not currently have the knowledge to do this. What would an example portfolio of single sector funds look like? I assume the end goal is still to cover a global and sector diverse collection of funds?

Audaxer

Matt002 said:

Am I better to stick with my up to 80% equities fund of funds approach with a smidge of active management or does adding something like Ballie Gifford Managed B actually sit along side the others quite nicely?

I like multi asset funds, but I don't think you need 4 or 5. If your comfortable with around 80% equities, I think splitting the total between VLS80 and HSBC GS Dynamic would be a good choice, although I do also like the look of Ballie Gifford Managed B.

You may do better with single sector funds, but you could do much worse if you don't have the experience and confidence to set-up and manage the portfolio correctly. There are more decisions to be made about whether to keep funds that may have performed poorly recently and whether or when to rebalance by selling a percentage of the funds that have done well and buying more of the funds that have not done so well, to get the portfolio back to its original weightings. Even if holding just one of the multi asset funds you are getting a professionally constructed, globally diversified portfolio with the rebalancing done for you, so in my opinion there is much less chance of getting it wrong.  

dunstonh

With your other point what defines your tipping point where you would go from multi-asset to single sector? What are the advantages etc?

Monetary wise, I would generally say £100k.  However, that is from a commercial point of view.  An individual going DIY could go a lot lower.  

The advantage of single sector funds is that you get the investments cheaper than a multi-asset fund and you can pick and choose the funds to build your portfolio.      No one fund house has the best funds in all areas.   

However, from a knowledge point of view, there may be no monetary value to consider.  Its all about knowing what you are doing.and there is more scope to mess it up with single sector funds.   So, you have to be comfortable in what you are doing and keep them under review more (you control your own strategy and weightings and do your own rebalancing for example).  If you are not at that level then stick with multi-asset funds.

If we look at the usual suspects when it comes to multi-asset funds with underlying passives, the fettered versions use their own brand trackers.   The unfettered use whole of market.   So, if you hold multiple fund of funds, you can find that you are just repeating the same holdings.  So, its not really reducing fraud potential (which is a tiny risk in the mainstream market)

Matt002

Audaxer said:

I like multi asset funds, but I don't think you need 4 or 5. If your comfortable with around 80% equities, I think splitting the total between VLS80 and HSBC GS Dynamic would be a good choice, although I do also like the look of Ballie Gifford Managed B.

Thanks for this, like the look of BG Man B as in you would sit it alongside the VLS80 and HSBC GSD?

I get the point about single sector funds now, with enough skill you select the best performers from as many different providers as required rather than buying a bundle in a multi asset fund.

I also get that although I may be invested in a bunch of funds of funds the funds that actually make them up may be the same. 🤦‍♂️

Audaxer

Matt002 said:

Audaxer said:

I like multi asset funds, but I don't think you need 4 or 5. If your comfortable with around 80% equities, I think splitting the total between VLS80 and HSBC GS Dynamic would be a good choice, although I do also like the look of Ballie Gifford Managed B.

Thanks for this, like the look of BG Man B as in you would sit it alongside the VLS80 and HSBC GSD?

I get the point about single sector funds now, with enough skill you select the best performers from as many different providers as required rather than buying a bundle in a multi asset fund.

I also get that although I may be invested in a bunch of funds of funds the funds that actually make them up may be the same. 🤦‍♂️

I have both VLS60 and HSBC GS Balanced as well as an income portfolio of active funds. I have liked the look of BG Managed B for a while but not invested in it yet. If you want to hold 3 multi asset funds I think BG Managed B would be okay if held alongside VLS80 and HSBC GS Dynamic, but it's up to you after doing your own research.

With single sector funds, I don't think its a case of just picking the funds with the best performances. I think getting your asset allocation right is more important, and may be more difficult with single sector funds unless you are experienced.

Albermarle

Having VLS 80 and HSBC Dynamic makes some sense, as although they are similar they are not the same .
VLS has UK bias and a fixed equity allocation whilst HSBC has no UK bias but a floating equity allocation .
Regarding single sector vs multi asset , there are some potential savings but not really that much as multi asset funds on a competitive platform are relatively cheap anyway .
 As well as the potential for doing it wrong , it is more work as well.