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  • FIRST POST
    • fronty
    • By fronty 6th Nov 19, 7:04 PM
    • 72Posts
    • 19Thanks
    fronty
    HSBC Global Strategy Vs Vanguard LifeStrategy
    • #1
    • 6th Nov 19, 7:04 PM
    HSBC Global Strategy Vs Vanguard LifeStrategy 6th Nov 19 at 7:04 PM
    Hi all,

    Looking at going DIY so just starting to look at mixed asset funds, I want to dump the cash into a small number of funds that have a decent mix of sectors and countries. So far I've come across the Vanguard LifeStrategy and HSBC Global Strategy funds, I'll be checking them out on trustnet but just wondering what people thought of these and whether there's any others I should be looking at?

    I'm horrified at the charges I am currently paying (IFA + platform fees) so hoping to get these down as low as possible.

    I have about 380K to invest, once it's invested I don't intend to chop'n'change, I'll check that annual performance is adequate and hopefully leave it invested until I retire (I'm 50 so circa 10-15 years time).

    Cheers,

    Fronty
Page 1
    • AnotherJoe
    • By AnotherJoe 6th Nov 19, 7:09 PM
    • 16,373 Posts
    • 19,676 Thanks
    AnotherJoe
    • #2
    • 6th Nov 19, 7:09 PM
    • #2
    • 6th Nov 19, 7:09 PM
    They are decent funds. I prefer HSBC to Vanguard Lifestrategy because of the artificial 25% in a few industries. There are other vanguard than LifeStrategy though.
    Bear in mind, "their" performance is really teh performance of global markets, that's what you are signing up for
    • El Torro
    • By El Torro 6th Nov 19, 7:22 PM
    • 465 Posts
    • 452 Thanks
    El Torro
    • #3
    • 6th Nov 19, 7:22 PM
    • #3
    • 6th Nov 19, 7:22 PM
    Personally I own both funds, mainly because they are not identical and I do see benefits of both.

    Vanguard Lifestrategy has about 25% in the UK, whereas HSBC Global Strategy tends to apply global weighting, which currently for the UK is about 4%.

    There is more to it than that. VLS is more rigid when it comes to its allocations. So for example if you buy VLS60 you know that you will always have 40% of your investment in bonds. HSBC is more fluid and can change its allocation based on what the fund manager thinks is best.

    That's the crux of it. Others have explained it much better than I have though. Take a look at this article for example: https://monevator.com/passive-fund-of-funds-the-rivals/

    On this forum you'll find that most people prefer VLS. Best to do your own research and decide which is best suited for you though. Like me you might decide that having multiple multi asset funds isn't a bad choice.
    • Audaxer
    • By Audaxer 6th Nov 19, 7:27 PM
    • 1,928 Posts
    • 1,196 Thanks
    Audaxer
    • #4
    • 6th Nov 19, 7:27 PM
    • #4
    • 6th Nov 19, 7:27 PM
    I think they are both a good option. I have HSBC Global Strategy Balanced and Vanguard LifeStrategy 60 in my portfolio, which are both medium risk and well diversified globally. If you look at them on Trustnet they have fairly similar returns and volatility over the last 5 years. I think to have both as your main funds in your portfolio is a decent option.
    • shinytop
    • By shinytop 6th Nov 19, 7:41 PM
    • 590 Posts
    • 668 Thanks
    shinytop
    • #5
    • 6th Nov 19, 7:41 PM
    • #5
    • 6th Nov 19, 7:41 PM
    Like others I've got a foot in each camp and am going for both HSBC Balanced and VLS60. The purists will will say pick the one that matches your investment strategy, risk appetite, blah blah. Me, I'm just hedging my bets a bit although I do want a bit more UK bias than HSBC gives me hence going for some VLS. I doubt there's much in it really.
    • Mordko
    • By Mordko 6th Nov 19, 8:46 PM
    • 713 Posts
    • 525 Thanks
    Mordko
    • #6
    • 6th Nov 19, 8:46 PM
    • #6
    • 6th Nov 19, 8:46 PM
    If it were me, I would go for VLS because:
    1. Don’t want a fund manager to mess with the allocations
    2. Being a little overweight in the home market makes sense as long as it’s modest (Vanguard has a paper demonstrating that).

    Don’t particularly like what Vanguard is doing with bonds. They tend to pick foreign bonds as well as domestic and then hedge them. While juicing returns (so,etimes), not sure it helps with the overall portfolio risk profile. Still... It’s a relatively minor problem given the convenience.

    Don’t think “hedging” by having both funds makes any sense but it won’t do too much harm either. Just an unnecessary complication which does nothing for diversification or expected returns.
    • shinytop
    • By shinytop 7th Nov 19, 6:22 AM
    • 590 Posts
    • 668 Thanks
    shinytop
    • #7
    • 7th Nov 19, 6:22 AM
    • #7
    • 7th Nov 19, 6:22 AM
    Don’t think “hedging” by having both funds makes any sense but it won’t do too much harm either. Just an unnecessary complication which does nothing for diversification or expected returns.
    Originally posted by Mordko
    You're probably right but it (probably completely illogically) makes me sleep a tiny bit better and that's got to be worth it
    • MK62
    • By MK62 7th Nov 19, 7:57 AM
    • 530 Posts
    • 420 Thanks
    MK62
    • #8
    • 7th Nov 19, 7:57 AM
    • #8
    • 7th Nov 19, 7:57 AM
    Take your pick, or use both.........but be aware that while they're probably the best known round here, they aren't the only two horses for that course....

    Sat here today though, there is simply no way to know which, if any, of the "roughly equivalent" funds from each range will fare best over the next 5, 10, 20 years.........so I really wouldn't fret that much over it........once you've decided on a strategy of using Global Multi Asset fund(s) (or fund of funds), at around the risk level you feel comfortable with, then just pick one (or more.... ).....or you could end up in "analysis paralysis" mode.......
    • scoot65
    • By scoot65 7th Nov 19, 9:23 AM
    • 230 Posts
    • 96 Thanks
    scoot65
    • #9
    • 7th Nov 19, 9:23 AM
    • #9
    • 7th Nov 19, 9:23 AM
    I also have both funds HSBC GS (Balanced) and VLS60. Although I'm no expert, I just feel that having both gives me a good balance. The large UK weighting in VLS was factor in me not just having that fund alone.
    • waveydavey48
    • By waveydavey48 7th Nov 19, 10:52 AM
    • 70 Posts
    • 92 Thanks
    waveydavey48
    I'm trying to educate myself so please forgive me if I have this wrong.

    My understanding was that if someone doesn't want to use an IFA they could DIY and that would require them to decide their objectives and appetite for risk then research what funds are suitable for their situation. They would then buy those funds (say about 6), wrapped in a SIPP, and they would have to review their portfolio, probably annually and make any changes.

    Is it the case, as it seems from the posts above, that there is a simple "fire and forget" option ie just place the lot in VLS or HSBC global strategy?

    I believe VLS (and presumably HSBC GS) is rebalanced automatically so there's actually no need to do anything if you don't want to?

    I know lots of forum members are interested in investing and I'm full of admiration but is the above a reasonable option for those of us who have no interest in the subject but want reasonable returns but don't want to use an IFA?
    • El Torro
    • By El Torro 7th Nov 19, 11:09 AM
    • 465 Posts
    • 452 Thanks
    El Torro
    I'm trying to educate myself so please forgive me if I have this wrong.

    My understanding was that if someone doesn't want to use an IFA they could DIY and that would require them to decide their objectives and appetite for risk then research what funds are suitable for their situation. They would then buy those funds (say about 6), wrapped in a SIPP, and they would have to review their portfolio, probably annually and make any changes.

    Is it the case, as it seems from the posts above, that there is a simple "fire and forget" option ie just place the lot in VLS or HSBC global strategy?

    I believe VLS (and presumably HSBC GS) is rebalanced automatically so there's actually no need to do anything if you don't want to?

    I know lots of forum members are interested in investing and I'm full of admiration but is the above a reasonable option for those of us who have no interest in the subject but want reasonable returns but don't want to use an IFA?
    Originally posted by waveydavey48

    Yes, VLS, HSBC GS and other multi asset funds (for example the ones listed in the link in my earlier post) rebalance automatically. So in theory you could just leave your investment as it is and after 10 years or more, when you start cashing it in, you will hopefully have had a good return.


    There is more to it than that, including the psychology of making sure you don't sell when you shouldn't. So for some people an IFA will still add value. Multi asset funds make it easier than ever to DIY these days though.


    Arguably people who buy various different geographical funds are pretty much replicating a multi asset fund anyway, just making things a bit more complicated for themselves.


    For those who have faith in managed funds (Fundsmith, Lindsell, etc...) multi asset funds aren't really suitable as they are passive.


    For some buying individual shares is the answer. This isn't a popular choice in this forum though, due to the level of complexity, cost and risk involved.
    • Mordko
    • By Mordko 7th Nov 19, 11:16 AM
    • 713 Posts
    • 525 Thanks
    Mordko
    I'm trying to educate myself so please forgive me if I have this wrong.

    My understanding was that if someone doesn't want to use an IFA they could DIY and that would require them to decide their objectives and appetite for risk then research what funds are suitable for their situation. They would then buy those funds (say about 6), wrapped in a SIPP, and they would have to review their portfolio, probably annually and make any changes.

    Is it the case, as it seems from the posts above, that there is a simple "fire and forget" option ie just place the lot in VLS or HSBC global strategy?

    I believe VLS (and presumably HSBC GS) is rebalanced automatically so there's actually no need to do anything if you don't want to?

    I know lots of forum members are interested in investing and I'm full of admiration but is the above a reasonable option for those of us who have no interest in the subject but want reasonable returns but don't want to use an IFA?
    Originally posted by waveydavey48
    Absolutely.

    By the way, there is a school of thought, which believes that “buy and forget” is always the best approach for your returns, as long as you have a diversified portfolio. Rebalancing helps those who regularly look at portfolios to keep their sanity during downturns. That’s because rebalancing usually moves stocks (higher return, higher volatility into bonds) and hence reduces the maximum drawdown. Doesn’t actually help long term returns.

    The main risk to long term returns is investor himself who does something stupid after a major bear. Many people who say they can withstand major drops during the good times, actually can’t. The other risk is an advisor; a bunch of them recommend unnecessarily complex portfolios or portfolios with too much cash and high fees.
    • Albermarle
    • By Albermarle 7th Nov 19, 11:26 AM
    • 1,877 Posts
    • 1,200 Thanks
    Albermarle
    A halfway house is to use a simple, low cost multi asset fund(s) as the backbone of your portfolio but also have some managed funds/Investment trusts
    This could be because you have a particular interest/optimism about a certain sector ( ethical , health etc ) or you have faith that some managed funds can beat the market or act as a good defence in bad times .
    Plus it is more interesting than 100% in Life strategy !
    • Mordko
    • By Mordko 7th Nov 19, 12:00 PM
    • 713 Posts
    • 525 Thanks
    Mordko
    Plus it is more interesting than 100% in Life strategy !
    Originally posted by Albermarle
    “Interesting” is not usually a good philosophy for buying an investment.
    • fronty
    • By fronty 7th Nov 19, 12:41 PM
    • 72 Posts
    • 19 Thanks
    fronty
    Plus it is more interesting than 100% in Life strategy !
    Originally posted by Albermarle
    Love this idea!
    • BLB53
    • By BLB53 7th Nov 19, 12:51 PM
    • 1,564 Posts
    • 1,407 Thanks
    BLB53
    Personally, I prefer the HSBC funds. The VLS is overweight in oil due to its 25% allocation to the UK and with climate change and big pension funds divesting away from oil, I believe the VLS funds will underperform.

    Until this year I had quite a large percentage of my portfolio in VLS but have now completely sold out.
    We have a climate emergency and need to re-think investing strategies to avoid sectors that are part of the problem such as oil & gas and embrace climate-friendly options such as renewable energy.
    • OldMusicGuy
    • By OldMusicGuy 7th Nov 19, 5:33 PM
    • 1,122 Posts
    • 2,349 Thanks
    OldMusicGuy
    A halfway house is to use a simple, low cost multi asset fund(s) as the backbone of your portfolio but also have some managed funds/Investment trusts
    Originally posted by Albermarle
    That's where I started out. Put 60% into multi asset funds and 40% into an actively managed income focused fund to generate income in retirement.

    I soon realised that was not the approach for me, maybe because I used Woodford Income Focus as the active income fund

    Got out of that after 9 months and realised all low cost multi-asset was the way to go. Can't see any logic in riding the luck of some stock picker for a fee, but that's probably just me.....

    FWIW I hold both VLS and HSBC, plus another low cost multi-asset fund.
    • green_man
    • By green_man 7th Nov 19, 5:50 PM
    • 297 Posts
    • 151 Thanks
    green_man
    I intend to used HSBC GS shortly, I prefer a higher percentage in my home uk market but I would prefer supplementing with a uk mid or small cap fund to bring the percentage up (and possibly a global smaller companies fund as well).

    To the OP I’m sure if you poked around this site much you would have seen them mentioned, but you also need to consider similar Blackrock and L & G multi asset funds that do a similar thing. Research all options, all have their fans, none could be considered a bad choice ( assuming you understand this risk profile of each)
    • waveydavey48
    • By waveydavey48 7th Nov 19, 5:52 PM
    • 70 Posts
    • 92 Thanks
    waveydavey48
    Thanks for those informative replies folks - helpful as ever.

    Can I just ask if there's any need to go with more than 1? We are building up S&S with VLS. Is having a SIPP also with Vanguard a case of "eggs in 1 basket"?

    Apologies to OP if I've gatecrashed your thread!
    • Mordko
    • By Mordko 7th Nov 19, 6:15 PM
    • 713 Posts
    • 525 Thanks
    Mordko
    Thanks for those informative replies folks - helpful as ever.

    Can I just ask if there's any need to go with more than 1? We are building up S&S with VLS. Is having a SIPP also with Vanguard a case of "eggs in 1 basket"?

    Apologies to OP if I've gatecrashed your thread!
    Originally posted by waveydavey48
    No need to go with more than 1. You already own the world; the fund is just a wrapper. The only reason to own more than one for me would be if you want more control and to invest in different factors (e.g small, value, momentum, quality, etc). Still, simplicity is a good thing.

    As Vanguard is a wrapper, I don’t see an issue of using it in multiple accounts.
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