Schroders Managed Balanced v HSBC Global Strategy

eastmidsaver

hi.   i am having a bit of a dilemma and wondering if anyone can help me.

for a few years i have been investing in the Schroders Managed Balanced,  but now i am thinking of switching to HSBC Global Strategy Dynamic.

back then i did not know much about investing and my employee pension contributions were going to HL's default fund which was Schroders. 

so i am a bit torn whether to just keep it as it is, and keep investing into Schroders..... or divert the fund to HSBC GS Dynamic.
keeping Schroders means HL's platform fee is slightly cheaper for anything invested in that fund, and also they pay a loyalty bonus rebate. 
however i think HSBC overall cost will be much cheaper. as it has lower OCF and transaction costs.

i understand Schroders is a fund of funds which are actively managed, and that has higher transaction costs.  and HSBC invests more in index funds which helps keep the costs lower. they both appear to alter allocations for each sector depending how they see the market going.  please correct me if i am wrong.

would be interested to know your views which might help me make my decision.   

thanks.

El_Torro

I think most of us will tell you that passive is better than managed so stick it all in HSBC GS. The performance over the last 5 years of the two funds certainly seems to show this (previous performance is not an indicator of future performance, etc...).

If you're hesitant about saying goodbye to Schroder altogether why not stick 50% in each and see how it goes over the next few years? Neither is a terrible fund so I don't see a major problem in doing this. 

It's your money though, do what you want with it

eastmidsaver

thanks. 

i think main reason wanting to move it is because of the costs.   main reason for staying is just because i've had it for a few years now.

but as you say,  it seems passive is a more favored strategy,  so i do move it i can add some satellite funds if there is anything i fancy at the time.

i am i correct in understanding HSBC GS correctly,  in that they alter allocations ?   or is it fairly static ?

El_Torro

High costs in an active fund aren't necessarily a problem, if the fund performance is giving you returns above passive alternatives. The problem with these two funds though is that Schroder's fund charges (at least in recent years) appears to only be dragging the performance down further.

Yes, HSBC GS do make active choices on bond allocation. As I understand it the global weighting by region is tracked but the bond allocation is decided by the fund manager. If you want a stable bond allocation there are alternatives which will give you this though. For example VLS or Fidelity Multi Asset Allocator.

newatc

I'm a real amateur and anyone taking fund advice from me needs help!

I can say that I had HSBC Global Dynamic, Schroders Managed (influenced by HL) and Baillie Gifford Managed in my fund portfolio for a few years but having seen the Schroders consistently beaten by the other two, I got rid of the Schroders.  

MX5huggy

HSBC is 46% US Equity less than 2% UK Schroeder’s less than 10% US and 18% UK. 

tebbins

Personally I prefer the VLS range for the home bias - what does well in one decade (the US and Asia Pacific, UK small-caps and tech) has a habit of not doing as well in the next, and vice versa for UK large-cap which has done crap in the last decade. The VLS range is more overweight on the UK than the HSBC range.

Either way, VLS 80 & HSBC GS Dynamic have behaved almost identically so far:

Albermarle

i am i correct in understanding HSBC GS correctly,  in that they alter allocations ?   or is it fairly static ?

In the jargon , it is 'risk targeted' It means each HSBC GS fund is designed for a certain risk level and then equity, bond allocations etc are changed to continue to aim at this risk level when market conditions change . Problem here is that risk level is hard to quantify exactly and is up to the fund managers judgement. You could say these funds are managed passives if that makes sense.
In reality the performance is very similar to their fixed allocation counterparts as shown in the chart in the previous post . 
The recent slightly better performance of the HSBC GS fund is almost certainly down to a low UK % than anything else , but this may not have the same effect in future .

eastmidsaver

thanks for your comments, i appreciate the input.   

i think it does appear HSBC has a better longer term track record,   whereas Schroders seems to have had a stronger last 12 months. but as many point out, it is hard for active to keep outperforming an index.

with regards to HSBC,   i understand what you are saying in that the fund manager will decide on how much equity to hold compared to other assets, and may increase / decrease in accordance to market conditions.

however, in terms of the equity allocation it holds,  does it mainly follow what the market cap is for that particular sector?  or do they ever change it.

also, in terms of the other assets,  it is mainly fixed income, and property which is self explanatory...   but what does "alternative" mean?

tebbins

eastmidsaver said:

thanks for your comments, i appreciate the input.   

i think it does appear HSBC has a better longer term track record,   whereas Schroders seems to have had a stronger last 12 months. but as many point out, it is hard for active to keep outperforming an index.

with regards to HSBC,   i understand what you are saying in that the fund manager will decide on how much equity to hold compared to other assets, and may increase / decrease in accordance to market conditions.

however, in terms of the equity allocation it holds,  does it mainly follow what the market cap is for that particular sector?  or do they ever change it.

It doesn't follow sectors, it broadly follows the total global stock market. The fund manager changes it at their own discretion to what they think it should be. How much equities have risen or fallen as a % of the fund recently will be a factor in that decision, however if stocks rally 10% in a 60/40 fund and the rest stays still, the new portfolio is still only 62.3% ( (0.6+0.06) /1.06) ) stocks, unlikely to make a meaningful difference.

also, in terms of the other assets,  it is mainly fixed income, and property which is self explanatory...   but what does "alternative" mean?

Alternative can mean anything, usually private equity, hedge funds, derivatives, sometimes commodities. These are generally not accessible to retail investors due to requiring often 6-7 figures to invest as a minimum, expensive intermediaries etc.

eastmidsaver

thanks.  appreciate the comments.