Multi Asset Fund or Self Managed Portfolio?

MK62

Linton said:

MK62 said:

If you build your own portfolio, and then track it's performance vs a global MA fund, you have to be careful that you don't inadvertently invest beyond the risk level of the MA fund.......very easy to do........but you wouldn't then be comparing apples to apples. You also need to rebalance regularly, or again the comparison's validity drifts out........

I dont track my portfolio's performance against an MA fund except for amusement.  All that is important is that it delivers to my requirements.  Comparison is not so easy as you may think.  An MA fund may be risk 5 - what does that mean in reality? My requirements may include having £50K close to cash  and £100K at significantly lower than 100% equity risk.  The rest can be 100% equity.  That is easy to set up and monitor with a self-built portfolio.  Far less easy to find an MA fund that provides this.

Yes you do need to review regularly (not necessarily rebalance).  But in retirement that is also the case with an MA fund.   It is likely that your actual returns will be very different from those on which you have based your retirement plan.  So you will be in the position where you have chosen say a fund of risk 5 and find you are accumulating beyond your planned needs. You need to do something rather than ignore it or not even bother to check - eg go down to risk 4, increase expenditure, or decide to just let it run.

My comment was a general one tbh......not aimed at anyone in particular.

All I'm saying is that it's difficult to compare an MA fund to a self constructed portfolio in any meaningful sense......other than, as you say, for amusement/ interest......or a sort of "this is what would have happened if you'd invested in this instead".

Agree to a point about RPI...........however one retiree's personal inflation rate can be quite different to another's.......and both could be quite different to RPI.......but it's useful as a general guide.

Thrugelmir

OldMusicGuy said:

Moe_The_Bartender said:

I track my portfolio against UK RPI. In retirement, that’s the one that matters if your pot is big enough.

Agree, all I need to do is to be ahead of inflation. That's why getting market average returns is fine for me.

Markets at some point in time are going to underperform inflation. Been a while since they have.  

OldMusicGuy

Thrugelmir said:

Markets at some point in time are going to underperform inflation. Been a while since they have.  

Not any time soon IMO. I'll take action before then. 

Moe_The_Bartender

Thrugelmir said:

OldMusicGuy said:

Moe_The_Bartender said:

I track my portfolio against UK RPI. In retirement, that’s the one that matters if your pot is big enough.

Agree, all I need to do is to be ahead of inflation. That's why getting market average returns is fine for me.

Markets at some point in time are going to underperform inflation. Been a while since they have.  

That’s why you need to diversify. It’s the only free lunch.

ChilliBob

The next logical tangent on this thread, I feel, is which MA type funds people rate? Is it the likes of HSBC/VLS/MyMap which aren't too expensive or, do people pay a bit more (double or triple in reality) for say Rathbones, Marlborough and the like?

With the 'you don't get what you pay for' vibe and the lower fees tend to point to better performance it would suggest the former.

I attended a good multi asset presentation from Rathbone which was very convincing that their gmap funds were different to others by having less bonds and more commodities, property etc, I can't remember exactly but it seemed sensible! 

Linton

ChilliBob said:

The next logical tangent on this thread, I feel, is which MA type funds people rate? Is it the likes of HSBC/VLS/MyMap which aren't too expensive or, do people pay a bit more (double or triple in reality) for say Rathbones, Marlborough and the like?

With the 'you don't get what you pay for' vibe and the lower fees tend to point to better performance it would suggest the former.

I attended a good multi asset presentation from Rathbone which was very convincing that their gmap funds were different to others by having less bonds and more commodities, property etc, I can't remember exactly but it seemed sensible! 

 I would mainly base the choice of MA on what it is invested in, especially the non equity part.  The VLS funds are mostly in gilts and other very safe bonds, others diversify much more.  Fractions of 1% difference in fees are small compared with the effect of asset allocation.

older_and_no_wiser

ChilliBob said:

The next logical tangent on this thread, I feel, is which MA type funds people rate? Is it the likes of HSBC/VLS/MyMap which aren't too expensive or, do people pay a bit more (double or triple in reality) for say Rathbones, Marlborough and the like?

With the 'you don't get what you pay for' vibe and the lower fees tend to point to better performance it would suggest the former.

I attended a good multi asset presentation from Rathbone which was very convincing that their gmap funds were different to others by having less bonds and more commodities, property etc, I can't remember exactly but it seemed sensible! 

Great point @ChilliBob

I've done a Trustnet chart comparison of the main "consumer friendly" multi-asset funds. These are for the higher risk portfolio (80-90% equity) options in each - and compared them to Rathbone multi-asset. This is over a 1 year span. For some reason LifeStrategy 80% only has history for 1 year and MyMap has only been on the scene for 2 years I think. 

Looking at the figures, you could argue that the Rathbone fund isn't value for the extra ongoing charge you'll be paying. However, that fund looks like it's currently around 65% equity based, so the fund could be lagging for that reason. I prefer a higher equity percent in my portfolio.

I've been eying up the MyMap 6 fund for a while as it looks a good option in my portfolio. I just wanted a little more history as it's fairly new but seems to be holding it's own against the main competition in the low cost multi-asset market.

ChilliBob

That's why I was drawn to the Rathbones approach, especially with the current environment for bonds, but then it could have just been their decent investor relations presentation and the fund is naff!

I've gone active for a while now on my ISA money (quite a few years worth) so I'm going full circle back to passive global trackers and MA funds now for the core of my GIA. 

dunstonh

The next logical tangent on this thread, I feel, is which MA type funds people rate? Is it the likes of HSBC/VLS/MyMap which aren't too expensive or, do people pay a bit more (double or triple in reality) for say Rathbones, Marlborough and the like?

The term multi-asset fund captures a wide range of investment strategies and options.  Some are fettered fund of funds.  Some are unfettered fund of funds. Some are catchalls within a single fund with direct underlying assets.      Generally speaking, most of the catchall multi-asset funds are pretty naff.      Many are computer run or closet trackers (in terms of underlying assets) but still charge full whack.

The unfettered fund of funds with underlying passives (or mostly underlying passives) tend to be the better ones.  So, if you have identified multi-asset as your preferred solution then the ones you mention are the ones to consider.     You can get away with the fettered versions but I wouldn't personally.

With the 'you don't get what you pay for' vibe and the lower fees tend to point to better performance it would suggest the former.

It can work with a bespoke portfolio with selections from single sector funds but with multi-asset it doesn't pay off most of the time.

I attended a good multi asset presentation from Rathbone which was very convincing that their gmap funds were different to others by having less bonds and more commodities, property etc, I can't remember exactly but it seemed sensible! 

commodities are higher risk than fixed interest securities (in general).   Exposure to commodities will exist indirectly in all of them even if they don't have direct exposure.  Typically, the weighting to explicit commodities is only single-digit percentages.

older_and_no_wiser

Actually, looking at your post @ChilliBob, it looks like you were shown the Gmap funds - which are the Greenbank multi-asset funds and different from the one I posted in the Trustnet chart. Apologies!

These are sustainable focussed funds and only been operating for a few months, so not worth charting it. They do have the different risk/volatility options like the other multi-asset funds mentioned.

The Dynamic option has between 50-95% equities according to the factsheet. I guess they'll be actively managed based on market conditions. The aim of the fund is to be CPI + 4%.