A little confused about fund's equity allocation %

Sea_Shell

I've just noticed this wording on their Key Investor Information sheet...

Investment Strategy

The starting point for the Manager’s investment process is identifying the best mix of asset classes to create a strategic asset allocation (SAA) customised for each 7IM risk profile. The SAA is then adapted to financial markets to enhance return and reduce volatility on a tactical basis using 7IM’s tactical asset allocation process (TAA) making temporary and measured departures from the SAA. The funds’ portfolio of assets is constructed predominantly with passive securities. By Asset Allocated Passive (AAP) we mean that we actively choose third party managers or securities for their own expertise in selecting particular assets, where their objective is to closely track a pre-determined index.

So the BiB does suggest it is a temporary measure, that just happened to catch the month end.


ETA, the TAA is described as...

Tactical asset allocation (TAA)

At the same time, our tactical asset allocation committee thinks about shorter-term opportunities (three to 60 months), applying temporary tilting to maximise returns. Here too, the investment committee has the final word.

Sea_Shell

Just to come back to this thread.

The fund is still showing being 34% in cash as at the end of February 22.

Will this cash element actually be "doing" anything, like earning interest, within the fund?   Or is it just there to "steady the ship" as it were.   Like has been said before, we're effectively paying a fee on this cash!

I'll keep an eye on this, and see what allocation they have once the factsheets update for end of March.   

Between us we have about £70k in that fund, so that's effectively nearly another £24k in "cash", on top of our personal true cash savings of £54k, putting us at an overall cash percentage of 13%.


We have this fund as our "next best thing to cash" element of our overall pot, so it's doing that job, in so far as it isn't as volatile as our more equity heavy funds/pensions.

masonic

It won't be earning anything close to what you could get from a consumer easy access cash ISA (let alone a fixed term account). It would be more efficient to hold 70% of an equivalent fund that's fully invested and then manage the 30% cash yourself.

Sea_Shell

masonic said:

It won't be earning anything close to what you could get from a consumer easy access cash ISA (let alone a fixed term account). It would be more efficient to hold 70% of an equivalent fund that's fully invested and then manage the 30% cash yourself.

Hmmm, that's sort of the conclusion that I was coming too.   

Keep more 100% equities and manage our own cash.     Will give this some more thought.

Linton

Look on the March 2022 fact sheet issued yesterday.  You will see a rather different picture with very little cash.  Morningstar gives cash as 49% long and 15% short.  Currency hedging?  There is no evidence that the cash is sitting there doing nothing.

It appears the fund is primarily based on the manager's assessment of risks.  Is this what you want?  Is the fund meeting the objectives that caused you to buy it in the first place? If so I suggest with these sort of funds you have to just accept that the management knows what they are doing rather than second guess the strategy.   If you cant do that or want to run your portfolio on an overall asset allocation basis then choose a different fund. 

Personally I am happy to run my growth portfolio on an asset allocation basis and only choose funds where this is pretty constant.   On the other hand I trust the manager for wealth preservation objectives since I have no idea how to allocate assets appropriately.

Thrugelmir

Looking at the March 2022 monthly factsheet. The fund is currently shorting a number of markets including equities, gilts and corporate bonds. The apparent cash position is therefore a misnomer. Seems if this is one investment manager that is positioning for another sizable correction in the not too distant future. .  

Sea_Shell

@Linton

Do you have a link to which factsheet your looking at.  I was looking at Fidelity.

When I first started this thread, I seemed to get different information from different places.

Which is the definitive one? 7IM's own?

We originally chose it because it was in the 20-60% mixed asset class.  I think historically the equity element was at the higher end.

Linton

Sea_Shell said:

@Linton

Do you have a link to which factsheet your looking at.  I was looking at Fidelity.

When I first started this thread, I seemed to get different information from different places.

Which is the definitive one? 7IM's own?

We originally chose it because it was in the 20-60% mixed asset class.  I think historically the equity element was at the higher end.

The fact sheet is that provided by 7IM and so must be definitive.  You will find it here under "Documents".  In my experience Morningstar data is generally good, trustnet less so.  There are problems of interpretation.  Morningstar has defined categories and fits fund data into those.  Trustnet is much less consistent and more likely to use "other".  Also cash data for highly managed funds can be strange. For example you may see negative values or values >100%.  In dont know why, perhaps derivatives confuse matters.

I do not know the fund but from what I have seen today I would question whether it is appropriate for someone wanting a particular allocation as opposed to a particular outcome.   You may want to choose a regular multiasset fund.

Sea_Shell

Thanks for that.   I wonder how long those new allocations will take to populate over to Fidelity's factsheet. 

Sea_Shell

Also what are "global themes"?   Equities?  Something else?