L&G Global 100...?

JustAnotherSaver

Just wondering about this & hoping someone can explain the difference as maybe we're (I'm) comparing apples & pears here or maybe there's something else that's gone on, I don't know - that's why I'm here.

So across different ISAs with different providers & SIPPs my wife & I hold Vanguard LifeStrategy & HSBC Global Strategy funds.

When the Lifetime ISA came out however many years ago, I picked the Vanguard 100 whereas my wife had the L&G Global 100 Index.

Now looking at them on & off over time, the Vanguard and HSBC have basically been in & about each other. A little difference but basically the same.

The L&G one has always done significantly more it seems - & that's why I'm here - to ask why.

Looking at the graph, the trend across all 3 seem to match each other, yet Vanguard & HSBC are essentially the same - which matches what I've been tracking/seeing in terms of £return£ each month.

The L&G 100 though just increases the gap in terms of %percentage%. Looking at the chart it seems specifically after Covid-times. With the exception of April 2018 it doesn't look like it's ever dipped below baseline unlike the others.

Looking at the breakdown of the fund, Vanguard & HSBC break down in to more pieces than the L&G.

Vanguard seems to have a higher UK weighting than both the other 2 and L&G has a significantly heavier weighting towards North America than Vanguard & HSBC.

So is that really what it is - North America has just done really well over this timeframe perhaps? & the next 5 years could be the reverse for examples sake?

I don't have enough of an understanding to know why this is so to satisfy my curiosity - over to you guys.

Side question - how come Vanguard is the biggie for getting mentioned on here & HSBC seems to get mentioned a fair bit also but the L&G, I just don't see that getting mentioned so much?

coastline

Not the full answer but the top three holdings account for 34% of the fund. Apple , Microsoft and Amazon. All three have been significant performers over the period despite recent falls.

Legal & General Global 100 Index Trust I Class Accumulation Portfolio Overview | GB00B0CNH056 | Fidelity

Look at the top ten in VWRL. Top three still the same but only 10% of fund.

Vanguard FTSE All-World UCITS ETF Portfolio Overview | IE00B3RBWM25 | Fidelity

Set to 5 yrs on the chart to see the picture.

Apple | AAPL - Stock Price | Live Quote | Historical Chart (tradingeconomics.com)

Microsoft | MSFT - Stock Price | Live Quote | Historical Chart (tradingeconomics.com)

Amazon | AMZN - Stock Price | Live Quote | Historical Chart (tradingeconomics.com)

MX5huggy

Is it a misunderstanding of “100” the L&G fund holds the 100 biggest (traded) companies in the world. Life strategy 100 is the Life Strategy fund that is 100% invested in equities as opposed to 80 which is 80% equities 20% bonds (and the other LS funds down to LS20). The equites is LS are global with a UK bias holding many thousands of different companies. 

dunstonh

The L&G one has always done significantly more it seems - & that's why I'm here - to ask why.

it hasn't.    You are just looking at a short term period when certain tech was the area to be in and comparing against funds with short history.  As you will see below, the L&G fund spent most of its history below sector average (on a cumulative basis)


If your fund happens to be invested heavier in the area of the moment then you will do better.  However, if you are heavy in an area that is out of fashion or not ideal for where we are in the current cycle then you will underperform.

JustAnotherSaver

Thanks for the replies there.

dunstonh - for once I don't feel like you've answered the question. I know you tend to answer questions with questions but this time round I feel like you've missed it totally.

I was talking about trying to understand what's gone on since I opened the Lifetime ISA. I couldn't remember exactly when that was but I was hazarding a guess at the 5year mark since it came out - so why one has been different to the other two so much over that timeframe whereas while there's been a little difference between 2 of the 3, it's been hardly anything really.

You then start talking about 20 years ago.

Bit like saying a load of bread is expensive these days & you responding yeah but in 1947......

Prism

They are very different investments, the L&G one being focused on a few huge companies and the other two on the whole of the world. It just so happens that over the last few years those big companies have performed better than much of the rest. Over the longer term that hasn't always been the case.

JustAnotherSaver

Prism said:

They are very different investments, the L&G one being focused on a few huge companies and the other two on the whole of the world.

That's fair enough then & is the answer to my question.

At the time I thought they were similar options. Clearly not.

ChilliBob

As per the answer above, Vanguard 100 signifies that it's 100% equities, as opposed to say 80,60 etc. There will be a significant number of equity holdings, into the thousands. 

The L&G one, the 100 signifies top 100 companies, so it's considerably less diversified.

As said above, a concentrated bet when the ingredients are flavour of the month = decent returns. The opposite obviously true - just look at say Netflix, Peleton etc.

Vanguard and HSBC will be similar, but LS funds have a significant UK overweight 

JustAnotherSaver

@ChilliBob yeah I'm glad I asked anyhow. I was looking at jigging something about a little bit & had the L&G in mind for it.

However now that I know the how behind the why it doesn't actually fit with my long term plan.

Also over time, I've come to learn more than I knew about Vanguard etc so at this stage I have a preference for HSBC over Vanguard as I'm not overly keen on the heavy UK weighting of Vanguard (at least not for the bulk of it such as my SIPP. Maybe more suitable for some savings dibble-dabbling).

On that note then, what are the alternatives to the HSBC Global Strategy <type> funds that are closer to HSBCs geographical spread than say Vanguards?

ChilliBob

I believe HSBC global strategy is basically their range of multi asset funds eith different levels of risk - cautious, balanced, adventurous etc.

In which case ishares/Blackrock MyMap ones are worth a look, they use a number system where I think 6 or 7 are the highest risk.

There's a fairly old article on Monevator called funds of funds the rivals, that's worth a look. 

To my knowledge, its only VLS that had this massive UK overweight 

ChilliBob

I found the article, https://monevator.com/passive-fund-of-funds-the-rivals/

Bear in mind it's pre pandemic and as such some of it may be less relevant, never the less it's interesting to see the differences - some have fixed allocations of equities, some variable, some property, some more small cap etc.

In essence it's probably tinkering around the edges really with most of them if they have a similar level of equities, and you're holding for the long term.

Oh and don't forget fees, 0.17 vs 0.22 does stack up over the years.