Working out % Equity allocation

Thrugelmir

bostonerimus said:

Deleted_User said:

Albermarle said:

Deleted_User said:

pip895 said:

Deleted_User said:

Houses and rentals would be classified as “illiquid assets”.  REIT is really equity under “liquid assets”. “Wealth preservation” is not an asset class but a marketing term.  You should X-ray the fund to figure out your asset allocation.  

Wealth preservation is my term to cover a range of funds & trusts which have wealth preservation as part of there core mandate.  I have picked them based on there relative success in achieving that end in the past. I am well aware that past success is no guarantee that they will all perform well in the future - which is why there are four rather than just one.   
They are bond alternatives - if bond/gilt yields improve I may well transfer to bonds/gilts but until that time I prefer these.  Many use complex arrangements - derivatives etc. to achieve their aims I don't think analysing them to work out the equity/fixed interest in them would help even if the x-ray tools could do it which on the whole they can't.

“Wealth preservation” funds as “bond alternative” = self-deception.  I understand your concerns about bonds but if you think that a marketing gimmick has anything to do with asset allocation then you are kidding yourself. 

I personally do not see the very well established Wealth Preservation funds in the UK ( Personal assets , Capital Gearing etc ) as just a marketing gimmick . They are actively managed funds with a very clear remit . Preservation of Capital as a priority , modest long term growth above inflation as a secondary objective . They are not particularly expensive, and they have so far proved themselves in difficult market conditions.
You are right of course that they are not an asset class in themselves though.

The funds might be solid investment options (or not) but the name is a marketing gimmick.  Every single fund under the sun has an objective to preserve “wealth”.  At least I have never come across any marketing material claiming “our objective is to destroy your wealth”. And I doubt they refuse investments from people who are not wealthy. The name is designed to play on our vanity and fear of losses. 

More to the point, these funds are not bonds, nor fixed income and should not be treated as such when allocating assets. 

I roll my eyes when I see funds marketed as "Wealth Preservation". They are just multi-asset funds. Capital Gearing Trust has a bunch of Index Linked Government Bonds, short term bonds and then around 40% in equities. 

Over the past 5 years CGT has returned capital appreciation of 40.9% (and paid out £1.69 per share in dividends) while VLS40 has returned 33.66%. Lower fees don't always equate to a better total return.  Sometimes selective asset purchase does pays off. 

The Church of Vanguard isn't all conquering as some disciples like to portray it to be. 

pip895

Deleted_User said:

The vast majority of funds sacrifice growth in good times to preserve it in bad times.  That goes for every singled “balanced”, “conservative”, “low volatility” and a multitude of other funds which are not 100% growth stocks.  

In most sectors I would think most funds are trying to beat their benchmark and be 1st or second quartile.  There are funds that have in their remit that they display lower volatility - for instance by investing in bond proxy equities that hold their value better in a downturn.  This sacrifices some returns but makes them more popular with many investors. 

As an aside I have often thought the presence of these funds could explain the apparent lack of outperformance of active funds over the passive ones, that of course have no such remit.

In any case, the great majority of these funds are still primarily trying to "grow your wealth" and they don't have access to the range of instruments that are available to funds in the targeted returns sector or to IT's such as PNL & CGT.   

RoadToRiches

VLS100 has no bonds, also consider the Vanguard World ETF to take away the rebalancing headache. The Church of Vanguard is well and truly alive.

pip895

RoadToRiches said:

VLS100 has no bonds, also consider the Vanguard World ETF to take away the rebalancing headache. The Church of Vanguard is well and truly alive.

I love rebalancing - particularly when its because something has outperformed .  Actually I have a considerable amount in trackers including Vanguard etfs.

Thrugelmir

RoadToRiches said:

VLS100 has no bonds, also consider the Vanguard World ETF to take away the rebalancing headache. The Church of Vanguard is well and truly alive.

Not everybody is comfortable being invested in a highly correlated volatile investment. 

RoadToRiches

Thrugelmir said:

RoadToRiches said:

VLS100 has no bonds, also consider the Vanguard World ETF to take away the rebalancing headache. The Church of Vanguard is well and truly alive.

Not everybody is comfortable being invested in a highly correlated volatile investment. 

Well it’s the no bond option

Thrugelmir

RoadToRiches said:

Thrugelmir said:

RoadToRiches said:

VLS100 has no bonds, also consider the Vanguard World ETF to take away the rebalancing headache. The Church of Vanguard is well and truly alive.

Not everybody is comfortable being invested in a highly correlated volatile investment. 

Well it’s the no bond option

There's other ways of gaining diversified exposure using equities. Listed companies undertake many activities. 

JohnWinder

Contributors to this thread know enough about PNL, it’s vices or virtues to need no further assistance. But for readers less familiar, I have a couple of observations (in the vices category).

It’s an IT. I shouldn’t open that can of worms, but it does mean it could fail to ‘hold its value’ for reasons other than the value of its underlying investments. That just potentially adds more volatility for a fund trying to behave like a bond on steroids.

Albermarle said:

They are actively managed funds with a very clear remit . Preservation of Capital as a priority , modest long term growth above inflation as a secondary objective ...

The company’s objectives for the fund don’t mention inflation as I read them. PNL is about ‘protecting and increasing value’. No one running that fund has to worry about inflation per se to meet its objectives, I’d posit.
I can’t discover what the equity/bond/gold/cash mix is. I’ll worry that’s an attempt to avoid comparison with another blended index tracking fund with lower cost, in the absence of a better explanation.

pip895 said:

Why do we bother investing in bonds at all?

For me its so that when equity goes down I have an asset that either goes up or doesn't go down as much, so reducing overall volatility and giving me something I can sell in a downturn, either to retain an income stream or to buy discounted equity if I think that is appropriate. These funds do the job better than many bonds - so whats the problem? 

I doubt PNL would do as good a job as government bonds, if you wanted an asset for that purpose. But when you want a bit of growth as well, a blended bond/equity fund like PNL is a better choice, at a modest management cost premium to a tracker alternative I'd imagine. Sorry to  harp on about 30 basis points, but don't forget it's in all out interests to keep calling out investments costs as being high, if they are; that way we can drive them down, as trackers have done across the industry. Standard and Poor estimate indexing has saved Americans $357bilion with a 'b' in fees over the last 25 years.

Albermarle

I can’t discover what the equity/bond/gold/cash mix is. I’ll worry that’s an attempt to avoid comparison with another blended index tracking fund with lower cost, in the absence of a better explanation.

Personal Assets Trust Portfolio Overview | GB0006827546 | Fidelity

In the Covid crash it went down less than 5% ( VLS40 7.5%) and its 3 years annualised growth is 8% ( VLS 40 6.5% ) 

JohnWinder

Thanks. Those look comparable funds, a bit of gold aside although the proportions might have changed a bit over several years. Vanguard gives annual returns by year number; I have no idea if that's calendar or financial or whatever year. Fidelity uses June 30 years. But both go back about 9 years, not three. Is anyone confident they could compare returns for comparable periods for which there is available data, perhaps 8 or 9 years? I tried and gave up.