Blackrock Consensus

IvanOpinion

Thee is a lot to be said for keeping things as simple as possible and not making things more complex than they have to be ... I have been very guilty of that in the past.

JohnWinder

Wow, is it time to take a deep breath? Are we being distracted by minutiae. I think you’re right to consider whether diversifying between product providers is worthwhile, and to ask if people have thoughts on why.

My ill-informed view is that it’s probably not an issue to worry about, but I keep it listed back of mind as something I want to get more dot points about. Recently Mr Blackrock, Larry Fink, has been in the news for favouring ESG style investing; and we’re starting to see his ordinary old index funds changing direction to now be ordinary old index funds put through a ESG sieve to get rid of the nasties. Well, if you were a solely Blackrock fund owner and you didn’t like being forced to accept that, you might be pleased you had some of your investments elsewhere. I don’t know if Vanguard are going to annoy investors with unpredicted and unwanted changes, but diversifying gives you some protection. That's another dot point, but still, I’m not sure it’s worth it.

VLS100 has copped some flak, but let’s keep things in perspective; it’s not a bad equities fund. It’s made up of cap weighted index funds; it roughly reflects the global weighting with some UK home bias for which there is enough evidence to suggest it’s a very valid approach (ask if you want the evidence); it contains some small and micro companies which some global equity index funds do not; it has costs similar to the best of the Vanguard products which have been leaders in the field of cost containment. On the matter of it underperforming its brethren: let’s compare their risk adjusted returns before pronouncing judgment; and let’s not infer that past performance will be future performance.

A few random observations on commentary so far:

VLS100 can and might in future hold bonds, so choosing it because it now doesn’t might be a mistake if you don’t want bonds.

How do you choose between >400 funds in your category? Vanguard pioneered index funds, putting great investment choices in the hands of ordinary people without needing professionals to advise them, and drove down cost across the industry by not profiteering with fund fees the way the industry had for decades. So one could wade through brochures on 400 different funds, tabulating relevant criteria, weighing up virtues, or you could start looking for one starting with ‘V’.  It might be imperfect but it makes sense.

We learn more as we go on, and our attitudes evolve (including simplicity having more appeal). So expect to have some second thoughts.

You may not choose VLS100 in future, but anything better would not be better by much in my view if you compare them with sound criteria; and that does not include performance, not even risk adjusted performance, because that’s in the past. You have not committed a hanging crime with VLS100; don’t feel bad about it.

whatstheplan

JohnWinder said:

Wow, is it time to take a deep breath? Are we being distracted by minutiae. I think you’re right to consider whether diversifying between product providers is worthwhile, and to ask if people have thoughts on why.

My ill-informed view is that it’s probably not an issue to worry about, but I keep it listed back of mind as something I want to get more dot points about. Recently Mr Blackrock, Larry Fink, has been in the news for favouring ESG style investing; and we’re starting to see his ordinary old index funds changing direction to now be ordinary old index funds put through a ESG sieve to get rid of the nasties. Well, if you were a solely Blackrock fund owner and you didn’t like being forced to accept that, you might be pleased you had some of your investments elsewhere. I don’t know if Vanguard are going to annoy investors with unpredicted and unwanted changes, but diversifying gives you some protection. That's another dot point, but still, I’m not sure it’s worth it.

VLS100 has copped some flak, but let’s keep things in perspective; it’s not a bad equities fund. It’s made up of cap weighted index funds; it roughly reflects the global weighting with some UK home bias for which there is enough evidence to suggest it’s a very valid approach (ask if you want the evidence); it contains some small and micro companies which some global equity index funds do not; it has costs similar to the best of the Vanguard products which have been leaders in the field of cost containment. On the matter of it underperforming its brethren: let’s compare their risk adjusted returns before pronouncing judgment; and let’s not infer that past performance will be future performance.

A few random observations on commentary so far:

VLS100 can and might in future hold bonds, so choosing it because it now doesn’t might be a mistake if you don’t want bonds.

How do you choose between >400 funds in your category? Vanguard pioneered index funds, putting great investment choices in the hands of ordinary people without needing professionals to advise them, and drove down cost across the industry by not profiteering with fund fees the way the industry had for decades. So one could wade through brochures on 400 different funds, tabulating relevant criteria, weighing up virtues, or you could start looking for one starting with ‘V’.  It might be imperfect but it makes sense.

We learn more as we go on, and our attitudes evolve (including simplicity having more appeal). So expect to have some second thoughts.

You may not choose VLS100 in future, but anything better would not be better by much in my view if you compare them with sound criteria; and that does not include performance, not even risk adjusted performance, because that’s in the past. You have not committed a hanging crime with VLS100; don’t feel bad about it.

Thanks.  Tbh I feel fine with my first foray being LS100.  I get the fact other funds are no doubt performing better and will have portfolios that some feel are 'better' for want of a more professional word.  However when doing my research, albeit inexperienced research, I didn't see much if any advice advising to steer clear of Vanguard or its LS products, depending on your objectives of course.  That's not to say x months from now I might question my choice, however as you touch on that's all part of learning.  I don't mean this flippantly given we all invest sums that are, to each of us, not insignificant, however there is so much choice and so much advice out there, at some point you simply need to invest in something otherwise you risk being bogged down with info and doing nothing.

Going back to my original question, someone had asked a question elsewhere re alternatives to LS and received a reply listing Blackrock's Consensus and another that escapes me for now.  This got me thinking as to whether there was any logic in splitting my investment across two providers.  Whilst advice and feedback is of course always welcome (here to learn and all that) it was slightly disappointing for this to be turned into a 'why have you chosen LS?' discussion as that wasn't the premise of my post.

dunstonh

However when doing my research, albeit inexperienced research, I didn't see much if any advice advising to steer clear of Vanguard or its LS products, depending on your objectives of course.

You don't need to steer clear of Vanguard.   Vanguard, like all fund houses, has some less successful funds as well as its better ones.    You often find a higher proportion of DIY investors think Vanguard is best at everything.  It would be like saying that Heinz beans are best therefore everything I buy must be made by Heinz.  

Vanguard has some very strong options and is best in some areas.  It has weaker options as well.    I have three Vanguard funds in my portfolio.   

VLS 20,40,60,80 are mutli-asset funds.  VLS100 is not.  When people are talking about the VLS range, it is logical to think that 100 would be included but it's a different beast to the others.   So, the 20 through to 80 are being compared with other multi-asset funds.   100 is being compared to global equity funds....

Whilst advice and feedback is of course always welcome (here to learn and all that) it was slightly disappointing for this to be turned into a 'why have you chosen LS?' discussion as that wasn't the premise of my post.

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

whatstheplan

dunstonh said:

However when doing my research, albeit inexperienced research, I didn't see much if any advice advising to steer clear of Vanguard or its LS products, depending on your objectives of course.

You don't need to steer clear of Vanguard.   Vanguard, like all fund houses, has some less successful funds as well as its better ones.    You often find a higher proportion of DIY investors think Vanguard is best at everything.  It would be like saying that Heinz beans are best therefore everything I buy must be made by Heinz.  

Vanguard has some very strong options and is best in some areas.  It has weaker options as well.    I have three Vanguard funds in my portfolio.   

VLS 20,40,60,80 are mutli-asset funds.  VLS100 is not.  When people are talking about the VLS range, it is logical to think that 100 would be included but it's a different beast to the others.   So, the 20 through to 80 are being compared with other multi-asset funds.   100 is being compared to global equity funds....

Whilst advice and feedback is of course always welcome (here to learn and all that) it was slightly disappointing for this to be turned into a 'why have you chosen LS?' discussion as that wasn't the premise of my post.

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

Thanks. I choose Vanguard LS100 because I liked its aggressive nature, portfolio and low fees.  Now by that, I'm not asserting it's the best in all these areas, however on balance it suited me.  Even I wouldn't be naïve enough to think Vanguard's the best at everything, however as a first step I was happy enough going with them.  As a consequence, that's why I didn't choose another product.  However, as per my earlier responses, when it comes to my next injection of cash I don't necessarily intend to simply put it into LS100.  That's where I need to further investigate other options and take on board advice given here to inform that decision.  And of course, x months/years down the line I might conclude LS100 isn't right for me and move away from that product.  However we all start somewhere, right?  And some will start off better than others

granta

OP - thanks for starting this post as I am trying to grapple with similar issues and helpful reading all the responses. I am a beginner investor (and the more I read the Forum, the more i realise just what a beginner I am!)

Like you, I put a chunk of money into LS100 (early 2020) as I wanted good growth and low fees. It has done well over the past year, but I too am learning as I go and looking at other options. For example, I also have a chunk in HSBC Global Strategy dynamic. I had not considered BlackRock or L and G, and to be honest, I am not sure how to tell the difference between them. Also, more recently, I have seen posts referring to various global tracker funds and ETFs and wondered whether that would be a better (and often cheaper) option.

But dunstonh's point about LS100 not being multi-asset was not one I had considered when I bought into the fund and longer-term, for my buy and hold portfolio, I think that might be the way forward. So I might switch everything to HSBC GS.

I would be interested to hear people's thoughts on the relative merits of a global tracker vs HSBC GS dynamic for a long-term hold (10-20 years).

dunstonh

whatstheplan said:

dunstonh said:

However when doing my research, albeit inexperienced research, I didn't see much if any advice advising to steer clear of Vanguard or its LS products, depending on your objectives of course.

You don't need to steer clear of Vanguard.   Vanguard, like all fund houses, has some less successful funds as well as its better ones.    You often find a higher proportion of DIY investors think Vanguard is best at everything.  It would be like saying that Heinz beans are best therefore everything I buy must be made by Heinz.  

Vanguard has some very strong options and is best in some areas.  It has weaker options as well.    I have three Vanguard funds in my portfolio.   

VLS 20,40,60,80 are mutli-asset funds.  VLS100 is not.  When people are talking about the VLS range, it is logical to think that 100 would be included but it's a different beast to the others.   So, the 20 through to 80 are being compared with other multi-asset funds.   100 is being compared to global equity funds....

Whilst advice and feedback is of course always welcome (here to learn and all that) it was slightly disappointing for this to be turned into a 'why have you chosen LS?' discussion as that wasn't the premise of my post.

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

Thanks. I choose Vanguard LS100 because I liked its aggressive nature, portfolio and low fees.  Now by that, I'm not asserting it's the best in all these areas, however on balance it suited me.  Even I wouldn't be naïve enough to think Vanguard's the best at everything, however as a first step I was happy enough going with them.  As a consequence, that's why I didn't choose another product.  However, as per my earlier responses, when it comes to my next injection of cash I don't necessarily intend to simply put it into LS100.  That's where I need to further investigate other options and take on board advice given here to inform that decision.  And of course, x months/years down the line I might conclude LS100 isn't right for me and move away from that product.  However we all start somewhere, right?  And some will start off better than others

So, putting VLS100 to bed, if you are going to introduce a second option, rather than use a similar global fund with virtually identical performance, you should now be looking at the global trackers as the second option.

A Global tracker may be worth holding as the second option.  Rather than holding two virtually identical apples, you hold an apple and an orange instead.

Albermarle

I would be interested to hear people's thoughts on the relative merits of a global tracker vs HSBC GS dynamic for a long-term hold (10-20 years).

Your question would be better split into two parts 

1) What do you think about comparing a global tracker with 100% equities, and a multi asset fund containing a relatively high % of equities but also some other components like bonds ?

2) When looking at Multi asset funds with a relatively high equity content , what do think about HSBC GS dynamic vs VLS 80 vs L&G multi index 6 vs Blackrock MYmap 6 or Fidelity multi allocator adventurous 

The answer to question 1) is that for a long term hold you might as well go for the 100% equity global tracker fund - IF your nerves are strong enough to live through the volatility, which would be lessened a little by having something like GS dynamic.

The answer to question 2) is whether you prefer fixed or floating allocations and/or what level of home bias you like .

granta

Albermarle said:

I would be interested to hear people's thoughts on the relative merits of a global tracker vs HSBC GS dynamic for a long-term hold (10-20 years).

Your question would be better split into two parts 

1) What do you think about comparing a global tracker with 100% equities, and a multi asset fund containing a relatively high % of equities but also some other components like bonds ?

2) When looking at Multi asset funds with a relatively high equity content , what do think about HSBC GS dynamic vs VLS 80 vs L&G multi index 6 vs Blackrock MYmap 6 or Fidelity multi allocator adventurous 

The answer to question 1) is that for a long term hold you might as well go for the 100% equity global tracker fund - IF your nerves are strong enough to live through the volatility, which would be lessened a little by having something like GS dynamic.

The answer to question 2) is whether you prefer fixed or floating allocations and/or what level of home bias you like .

This is brilliant, thank you! I see exactly what you mean about how to ask the question as your answers then go on to show.

If I could unpack your responses a bit further:

1. In this sense, then LS100 for a long term hold is the same as having a 100% equity global tracker (though the latter can be bought as slightly lower cost). The GS dynamic has some bonds and property (less than 5% i think) - are you saying that they help reduce the volatility? My reasoning was that I might receive some growth from those assets over time, albeit smaller than equities long term.
Personally, with a 20 year timeframe, I believe I can cope with volatility, though I have only experienced market corrections rather than a big crash.

2. This gets to the nub of what I'm confused about when I read the posts comparing these options. I understand what the fixed allocations are (e.g. 50% US 10% UK etc etc), but I don't understand how floating allocations work and the reasoning. Does the fund manager changes these according to market forecasts? And as a beginner, how should I choose between the two? Genuinely, as a beginner, I wouldn't know how to choose, or to determine how much home bias I want. It's only recently that I even realised that an old pension pot had UK holdings of 75% and I've now rectified that!
Finally, biggest naive question coming up: Is HSBC GS fixed or floating allocation? 

dunstonh

2. This gets to the nub of what I'm confused about when I read the posts comparing these options. I understand what the fixed allocations are (e.g. 50% US 10% UK etc etc), but I don't understand how floating allocations work and the reasoning. Does the fund manager changes these according to market forecasts? And as a beginner, how should I choose between the two? Genuinely, as a beginner, I wouldn't know how to choose, or to determine how much home bias I want. It's only recently that I even realised that an old pension pot had UK holdings of 75% and I've now rectified that!

Fluid allocations are usually based on economic data over the long term and perception of the risk levels.   They look to retain the portfolio within the volatility risk range.  For example, investment-grade bonds, global bonds and index-linked gilts have been out of favour for varying periods.  However, in other periods, they will be back in favour.    Fluid models can adjust their weightings.  Fixed models do not.

Weightings are a management decision. And professional models use an awful lot of data, analysis and a dose of opinion to set them.   At different times, the different models will be better or worse than the others.  I personally prefer the fluid models but I have the benefit of a supplier that has a track record of the right weightings.   I know someone else that uses a different supplier and theirs are not so good. Theirs is more fixed with tiny tweaks.   

Finally, biggest naive question coming up: Is HSBC GS fixed or floating allocation?  

The HSBC GS range is risk targetted and has fluid weightings.