Global Muliti Assett Fund/Global Index tracker, difference?

cattie

As in the title, I don't quite understand the difference between a global multi asset fund & a global index tracker. Both seem to be recommended for low cost & minimal investor input. I do have money in a couple of global muti asset funds, but unsure as to what type of fund would be best for my newbie investor sister.

grumiofoundation

Global index tracker = 100% shares.
e.g. https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc


(Global) Multi assets funds  <100% shares plus other assets, mostly bonds also could include cash, commodities, property.

Examples of multi-assest funds (article couple of years old now)
https://monevator.com/passive-fund-of-funds-the-rivals/

Albermarle

The global tracker will track global share markets . There are different ones that have some minor differences in exactly how they do this, but the results tend to be pretty similar.
If held long term they should be  relatively low risk but they will be volatile , so during the time you hold the tracker it could be a bumpy road and you have to be prepared for it to go down a lot quickly , like this time last year and just hold on and wait for the upturn.

The multi asset funds dilute this volatility to some extent, but probably at the expense of not achieving the same long term growth as the tracker .

dunstonh

As in the title, I don't quite understand the difference between a global multi asset fund & a global index tracker.

A global tracker will be 100% equity.  A multi-asset fund cannot be 100% equities.  It had multiple asset types. Not just equities.  So, that means fixed interest, cash and/or property will form part of its make up.

Most people do not have the risk profile to invest 100% into a global tracker.   New investors especially. (although it is recognised that new DIY investors are more likely to invest above their risk profile).    So, its statistically more likely that your sister would be better suited to a multi-asset fund.

Be very careful making recommendations to family.   You may have a certain risk profile and experience that your sister does not. What you hold may be unsuitable for your sister.   You may be able to handle a 30% loss but your sister may baulk at a 3% loss.   Families have fallen out when it comes to things like this.

JohnWinder

There are global bond indexes. Why can't a global tracker track a bond index?

dunstonh

JohnWinder said:

There are global bond indexes. Why can't a global tracker track a bond index?

There are but I think it was pretty clear what cattie was referring to with the reference to a global index tracker.  And if you are going to start using single sector funds (like a global bond tracker) then you are adding complications.  Such are how much to hold in global bonds,whether it should be hedged or unhedged, how much to hold in investment-grade bonds, what types and now much to hold in UK gilts and index linked gilts.    

Global bonds are not particularly attractive as a risk reducer if unhedged.  Investment-grade bonds are not particularly attractive either. Its pretty much choice of gilts or cash as the least worst option.   I suspect catties sister isn't wanting to make those kinds of decisions and keep it under review.

DrSyn

Global Index Tracker= 100% shares. These should track either the FTSE All World Index or MSCI World.

Global Multi Asset Fund = Share/ other assets (bonds, property,cash etc) split. 
 Example 60% shares/40% bonds.
The other assets are there to reduce the up & down price movements that you get with a 100% share portfolio.

I suggest a newbie investor get a Global Mult Asset Fund with a share/other asset split that they are comfortable with. That will allow them to sleep at night and stay invested when the markets fall, as they do sometimes.

eskbanker

DrSyn said:

Global Index Tracker= 100% shares. These should track either the FTSE All World Index or MSCI World.

What's wrong with all the other global equity indices?

JohnWinder

dunstonh said:

JohnWinder said:

There are global bond indexes. Why can't a global tracker track a bond index?

There are but I think it was pretty clear what cattie was referring to with the reference to a global index tracker.

Not really; which bit made that clear to you it was about an equity tracker, the mention of a 'global index tracker'?

grumiofoundation

JohnWinder said:

dunstonh said:

JohnWinder said:

There are global bond indexes. Why can't a global tracker track a bond index?

There are but I think it was pretty clear what cattie was referring to with the reference to a global index tracker.

Not really; which bit made that clear to you it was about an equity tracker, the mention of a 'global index tracker'?

Logically it seem unlikely that anyone would be looking to invest solely in bonds. 

 

coyrls

Global bond trackers only track bonds, global equity trackers only track equities, a multi asset fund will include equities and other assets, typically including bonds and most low cost multi asset funds will include equity and bond trackers.