hsbc global balanced fund question

dannybbb

I have all my SIPP in this fund now, do i need to be concerned about its US weighting? Despite being a global fund i believe its significantly weighted to the US.  how actively managed are these funds?
Should I be thinking about a second fund to add diversification or just keep going wit this one?
thanks in advance for any opinions

El_Torro

Yes, it is heavily invested in the US, though that’s because the US makes up a big chunk of the global stock market. You’ll find the same issue with all other multi asset funds  and global trackers. You ask if it’s actively managed, not more so than other multi asset funds. 

Personally I hold HSBC Global, Vanguard Life Strategy, Fidelity Multi Asset Allocator and a managed smaller companies fund. I’m happy with this mix, though if I held just one multi asset fund the overall difference to my long term gains wouldn’t be much.

You certainly can diversify, though you don’t really need to.

One option would be to add some other trackers that don’t invest in the US if you think the US is going to do worse in the long term than other regions. Bear in mind that your multi asset fund will rebalance over time anyway, keeping the global weighting. So if the US does poorly your fund will hold less in fhe US in the future than it does today. 

Hoenir

dannybbb said:

how actively managed are these funds?

Hopefully you performed some due diligence before buying originally. There's 5 risk adjusted  HSBC Global Strategy funds to chose from. You selected the one that was closest to your risk appetite and personal objectives. 

dannybbb

@ELToro thanks, can i ask what kind of factors influence your selection of funds? especially if the overall difference wouldnt be much? Ive left it late to start investing in a sipp at 50 so want to make sure im not doing anything stupid! and to feel confident to keep adding to one fund. If it will rebalance in the long term is there any real benefit to looking at a differently weighted fund? and if so could you reccomend one?

El_Torro

HSBC Global Strategy is a bit different to other multi asset funds because the bond allocation isn't fixed. So with the Balanced fund you have it holds up to 40% bonds. The fund manager can reduce this figure if they want to. 

The big thing about Vanguard Life Strategy is that it holds a lot of UK equities. The UK proportion is about 25%. Some people think this is a good thing, especially if you are UK based and holding funds in Pounds rather than US Dollars. The bond allocation is fixed. 

Fidelity Multi Asset Allocator holds some small cap equities. The bond allocation is fixed.

The three funds aren't that different to each other, they aren't identical though. I like to hold all 3 because it gives me over exposure to UK equities, though a lot less than 25% (if I was just holding VLS). 


If you are looking  for a recommendation then I would say stay as you are. For what it's worth if I was to reduce my multi asset funds to 1 fund I would probably choose HSBC.

This article also goes into the different multi asset funds available: https://monevator.com/passive-fund-of-funds-the-rivals/

vacheron

My pensions are currently split between these 4 funds:

Below gives
The fund
(The genal consensus / fund strategy)
3 month / 6 month / 1 year) returns

HSBC Global Strategy Dynamic Portfolio.
(A managed medium-high risk OEIC with approximatley a 50% North American exposure)
-8.8 / -3.7 / 4.1

Scottish Widows Pension Portfolio Two
(A "plodding" balanced default pension fund from an established provider with approximately 40% in US Equities) 
-8.9 / -3.7 / 2.7

RLP Governed Portfolio Enhanced
(Medium- High risk fund with 33% US Equities, 20% UK plus a resonable amount of property)
-7.9 / -2.8 / 2.3

Vanguard LifeStrategy 100
(Generally considered to be slightly more UK oriented, but also 100% equities, so hypothetically the most risk.)
-8.7 / -2.7 / 4.5

Really, for all the marketing waffle and subtle tweaking of allocations, they have all pretty much tracked each other within a percent or two when something far reaching and global happens as we have seen of late.

dunstonh

This article also goes into the different multi asset funds available: https://monevator.com/passive-fund-of-funds-the-rivals/

It's worth noting that monevator is biased to Vanguard.   

for example, take these three statements:

The other multi-asset funds in the table also hold lots of index trackers. But the difference is they employ active management.

Of the passive multi-asset funds, the Vanguard LifeStrategy range is the clear leader. Its balance of sensible asset allocation, consistency, reasonable cost, and long-term returns make it a great choice. 

Every other contender on the list must really be viewed as an alternative to Vanguard LifeStrategy. 

VLS was not a clear leader.    Its home bias was an active management decision.   Others are closer to market capitalisation.  So, to claim VLS didn't have active decisions is plainly wrong.

It's cost is reasonable but it isn't the cheapest.   So, it was not a leader on cost.
And on long term returns, it was not the best performer by some way.  So, not a leader on returns.

For some reason, monevetor has been biased towards Vanguard for a very long time.    There is nothing wrong with Vanguard, and it is certainly a reasonable choice.  However, to say that every other portfolio of passive funds should be considered an alternative to the clear leader is disengenuous.

Its hard to claim any of them as being a clear leader.  HSBC is probably the one that is closest to that moniker, but you wouldn't say it was a clear leader as most of them are variations of a theme and it's whether you like their decisions or not. 

El_Torro

dunstonh said:

This article also goes into the different multi asset funds available: https://monevator.com/passive-fund-of-funds-the-rivals/

It's worth noting that monevator is biased to Vanguard.   

for example, take these three statements:

The other multi-asset funds in the table also hold lots of index trackers. But the difference is they employ active management.

Of the passive multi-asset funds, the Vanguard LifeStrategy range is the clear leader. Its balance of sensible asset allocation, consistency, reasonable cost, and long-term returns make it a great choice. 

Every other contender on the list must really be viewed as an alternative to Vanguard LifeStrategy. 

VLS was not a clear leader.    Its home bias was an active management decision.   Others are closer to market capitalisation.  So, to claim VLS didn't have active decisions is plainly wrong.

It's cost is reasonable but it isn't the cheapest.   So, it was not a leader on cost.
And on long term returns, it was not the best performer by some way.  So, not a leader on returns.

For some reason, monevetor has been biased towards Vanguard for a very long time.    There is nothing wrong with Vanguard, and it is certainly a reasonable choice.  However, to say that every other portfolio of passive funds should be considered an alternative to the clear leader is disengenuous.

Its hard to claim any of them as being a clear leader.  HSBC is probably the one that is closest to that moniker, but you wouldn't say it was a clear leader as most of them are variations of a theme and it's whether you like their decisions or not. 

Fair points about VLS. This article is pretty old (though it does get updated regularly, most recently on the 1st of April of this year) so it might be a throwback to when VLS really was a market leader. Times change, though Monevator doesn't seem to have moved with the times on this point. Or maybe Monevator is sponsored by Vanguard, I don't know. 

Even so I think the article is worth reading for people who are new to multi asset funds and want to familiarise themselves with the differences. As with any article it's important to separate the article writer's opinion from the facts.

noclaf

I am certainly not a Vanguard fanboy though I previously held the VLS 80 fund and my S&SISA was with them.
That said, as a suggestion to the OP and if I was closer to retirement would follow a similar approach is having both the HSBC fund and one of the Vanguard funds...you would need to understand what allocations sit 'under the bonnet' of each but could be a way to blend two or more funds to reduce US exposure (if that's what you intend to do or whatever desired exposure you desire).
Not to say it's the right/wrong/optimum approach and I am just another bloke on the internet but it could be one approach. To some extent I use this approach now in my ISA/SIPP accounts e.g: I am overweight FTSE 100