Asset Allocations by Country and Asset Type

chiang_mai

leosayer said:

chiang_mai said:

I'm pleased with my switch from the L&G US Index tracker, into the HSBC FTSE All World last week, the latter fell 0.51% overnight whilst the former lost 1.61%. Diluting the US segment was definitely a good move. 

My big fallers were Global EM's, a predictable -1.5%; Japan large caps -1.5% and interestingly, Japan small caps -0.5%, FTSE UK -1%. A modest =0.5% overall. 

The HSBC fund values at 12:00 UK time so yesterday's fund price won't include yesterday's US stock prices.

I'll review it over three days and report the comparison.

chiang_mai

leosayer said:

chiang_mai said:

I'm pleased with my switch from the L&G US Index tracker, into the HSBC FTSE All World last week, the latter fell 0.51% overnight whilst the former lost 1.61%. Diluting the US segment was definitely a good move. 

My big fallers were Global EM's, a predictable -1.5%; Japan large caps -1.5% and interestingly, Japan small caps -0.5%, FTSE UK -1%. A modest =0.5% overall. 

The HSBC fund values at 12:00 UK time so yesterday's fund price won't include yesterday's US stock prices.

Day 1

L&G US Index -1.61%
HSBC FTSE AW - 0.51%

Day 2

L&G US Index +0.07%
HSBC FTSE AW - 1.01%

It looks like the 3 hour difference in settlement times make a big difference.

masonic

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

chiang_mai

masonic said:

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

I was trying to see if my switch from an exclusively US Index, to the FTSE AW Index, produced the results I expected. I wanted to dilute the effects of the US markets by including it in the AW fund. I expect to see a smaller return on the upside but also less of a fall on the downside.

InvesterJones

chiang_mai said:

masonic said:

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

I was trying to see if my switch from an exclusively US Index, to the FTSE AW Index, produced the results I expected. I wanted to dilute the effects of the US markets by including it in the AW fund. I expect to see a smaller return on the upside but also less of a fall on the downside.

Which you could do by comparing the HSBC American with the HSBC Ftse all world - but by using the same provider you standardise a bunch of things which should make the comparison easier.

chiang_mai

InvesterJones said:

chiang_mai said:

masonic said:

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

I was trying to see if my switch from an exclusively US Index, to the FTSE AW Index, produced the results I expected. I wanted to dilute the effects of the US markets by including it in the AW fund. I expect to see a smaller return on the upside but also less of a fall on the downside.

Which you could do by comparing the HSBC American with the HSBC Ftse all world - but by using the same provider you standardise a bunch of things which should make the comparison easier.

Yes, except HSBC settles at noon whereas L&G settles at 3pm, the time difference is important to the losses/gains of a days trade, which may or may not subsequently be recovered.

masonic

chiang_mai said:

InvesterJones said:

chiang_mai said:

masonic said:

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

I was trying to see if my switch from an exclusively US Index, to the FTSE AW Index, produced the results I expected. I wanted to dilute the effects of the US markets by including it in the AW fund. I expect to see a smaller return on the upside but also less of a fall on the downside.

Which you could do by comparing the HSBC American with the HSBC Ftse all world - but by using the same provider you standardise a bunch of things which should make the comparison easier.

Yes, except HSBC settles at noon whereas L&G settles at 3pm, the time difference is important to the losses/gains of a days trade, which may or may not subsequently be recovered.

That's the reasoning for not comparing the L&G fund with the HSBC fund over short periods of time like individual days. You would need to pick two funds with the same valuation time to make a meaningful comparison.

leosayer

chiang_mai said:

InvesterJones said:

chiang_mai said:

masonic said:

Why not compare HSBC American Index with HSBC FTSE All-World Index to see the true difference on a like for like basis?

I was trying to see if my switch from an exclusively US Index, to the FTSE AW Index, produced the results I expected. I wanted to dilute the effects of the US markets by including it in the AW fund. I expect to see a smaller return on the upside but also less of a fall on the downside.

Which you could do by comparing the HSBC American with the HSBC Ftse all world - but by using the same provider you standardise a bunch of things which should make the comparison easier.

Yes, except HSBC settles at noon whereas L&G settles at 3pm, the time difference is important to the losses/gains of a days trade, which may or may not subsequently be recovered.

Sorry to be a pedant but the correct term is "Valuation point" which is the time of the day when the fund is valued. The fund administrator gathers the latest available market prices and exchange rates at that time along with other factors (accrued interest calcs, fee accruals, subs & reds etc.) to calculate the fund NAV and then the individual class prices.

The above process happens for both ETFs and 'normal' funds however we don't really see this for ETFs because the price changes all the time thanks to it being traded on an exchange.

For this reason it's very difficult to compare ETFs and normal funds over short periods. Even if you had an ETF and normal class of the same fund, it would give different results. 

Settlement date is something else entirely.

chiang_mai

masonic said:

That's the reasoning for not comparing the L&G fund with the HSBC fund over short periods of time like individual days. You would need to pick two funds with the same valuation time to make a meaningful comparison.

It was the L&G fund that I sold, in favour of the HSBC AW fund that I purchased, those are the only two funds I'm interested in comparing. 

masonic

chiang_mai said:

masonic said:

That's the reasoning for not comparing the L&G fund with the HSBC fund over short periods of time like individual days. You would need to pick two funds with the same valuation time to make a meaningful comparison.

It was the L&G fund that I sold, in favour of the HSBC AW fund that I purchased, those are the only two funds I'm interested in comparing. 

The reason I suggested comparing equivalent funds that share a valuation point is that it’s the only way to get an intellectually honest result using fund prices.

If you only want to compare the L&G US Index and the HSBC All-World, you have to look past the wrapper of the fund and at the indices they actually track. Both of these funds are simply tracking an index that is valued more than once per day and can be compared like for like.

The difference you saw isn't a real performance difference in the underlying assets, it's a reporting lag. Because the L&G fund prices 3 hours later, it captured part of relevant global markets' movement that the HSBC fund missed. To see if your US dilution actually worked in the short term, you have to look at the indices themselves over a synchronised period. If you compare the FTSE USA Index against the FTSE All-World Index for that same period, you will see the true difference. That removes the timing mirage created by the fund providers' different valuation points. Until you synchronise the timeframes by looking at the indices, you aren't comparing the performance of your move you’re just comparing performance over different periods. It is like trying to demonstrate your back garden is cooler than your front garden by checking the thermometer in the front at midday and at the back at 3pm.

Whereas if you are just trying to demonstrate you got lucky (or otherwise) by effectively being out of the market during the switch, then indeed that is part and parcel of switching between funds. But that would concern relative performance on T-1 day and T-2 days.