Multi Asset Fund or Self Managed Portfolio?

older_and_no_wiser

I'd be interested in people's opinions on this article.

I suppose it will depend on how confident an individual is in building their own portfolio as opposed to letting a multi-asset fund do the work and rebalancing when required. 

Interesting to see that a well chosen (easy to know in hindsight!) portfolio will outperform a multi-asset fund.

I suppose this is where IFAs can come in and do the portfolio choosing for those less confident?

eskbanker

Not really a surprise that an investment company claims that its portfolios outperform others in the market, but as the piece was published in 2019 it should be possible to validate whether or not its analysis holds true today....

Yodelar Investment Services offer 10 risk-rated portfolios that target maximum growth at low cost. Each portfolio contains top performing funds and represents the best in their class. Sector top performing funds are strategically weighted to produce a range of exceptional portfolios that have consistently outperformed some of the most widely used and popular portfolios currently on the market.

dunstonh

Some investors will build their own portfolio and do better than a multi-asset fund.  Some will do worse.  it is impossible to know in advance what option will be best but you make your best judgement call.  More often than not, those that know what they are doing and have a structure and process will do better than those that pick funds they see in the media and put random percentages into each of them.

If you do not have the knowledge and understanding then do not be afraid to use a decent multi-asset fund.  They are great for people in that case.

Moe_The_Bartender

I wouldn’t let an IFA choose my portfolio. That’s not what they are good at and tend to outsource it, for want of a better word. I used to accept my ex-IFAs fund suggestions until I took a really good look at where I was invested and immediately took matters into my own hands.

george4064

It seems you are actually asking IFA vs self managed portfolio, I would argue that another 3rd option is most suitable for your average investor. That 3rd option is simply investing in a one fund portfolio, that fund being a globally diversified passive multi-asset or 100% equity fund, depending on your risk tolerance.

Fire and forget, no need to re-evaluate except for once a year.

dunstonh

Moe_The_Bartender said:

I wouldn’t let an IFA choose my portfolio. That’s not what they are good at and tend to outsource it, for want of a better word. I used to accept my ex-IFAs fund suggestions until I took a really good look at where I was invested and immediately took matters into my own hands.

You are right, most now either buy in the data and use that or totally outsource.  Mainly as a result of the RDR, RMAR and MiFIDII requirements.    However, going DIY is not always the answer.   We have taken on some clients recently who lost money in LC&F, which they would not have done with an IFA and invested in Woodford (again, avoidable with the major data research companies warning advisers back in 2017, two years before it failed).   The primary objective of an IFA is suitability to the individual in question and modern requirements mean that portfolio management is not possible without some buying in of research and data or totally outsourcing the lot.   The days of picking funds from a pink paper and making up percentages to go into each should be long gone.

ChilliBob

An ifa I spoke with on a few occasions seemed keen in multi asset funds as opposed to building a portfolio, for a large sum too. This surprised me somewhat but it was a long the lines that Asset Allocation is best decided by a manager, based in objectives they state, than an ifa, who was more sbout planning/tax/etc

Prism

I used a multi asset fund for the first 15 years or so, until I had built up a reasonable amount and then switched into a portfolio of my own selected funds. At this point I would not go back and prefer the control however as I get older and possibly want a simple strategy I might go back to a single fund.

Thrugelmir

How much time are you prepared to commit to self management?  For many people finance and business in general aren’t their area of expertise. Their human capital is deployed better elsewhere. 

dunstonh

ChilliBob said:

An ifa I spoke with on a few occasions seemed keen in multi asset funds as opposed to building a portfolio, for a large sum too. This surprised me somewhat but it was a long the lines that Asset Allocation is best decided by a manager, based in objectives they state, than an ifa, who was more sbout planning/tax/etc

Absolutely correct.    And confirms what I said earlier (and previously on other threads).  

bostonerimus

Low cost multi-asset funds are a great solution for the vast majority of retail investors, but they have to choose one that is appropriate for their goals. Once they have done that they get a diversified portfolio and if they get something like the VLS funds it will also rebalance through the ups and downs of the economy. 

I have a simple portfolio consisting of a multi-asset fund with a high percentage of bonds and then international and domestic equity trackers.