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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 5
    • AlanP
    • By AlanP 19th Nov 19, 12:46 PM
    • 1,764 Posts
    • 1,414 Thanks
    AlanP
    The cost argument of ETFs vs mutual fund(s) plays out differently, depending on size of the investment. For smaller accounts mutual funds save hustle for a few quid. The cost savings on large accounts become significant.
    Originally posted by Mordko
    Dealing frequency is also a consideration. Monthly, relatively small contributions can be more cost effective via funds with no dealing fee than ETFs.
    • Mordko
    • By Mordko 19th Nov 19, 12:54 PM
    • 708 Posts
    • 520 Thanks
    Mordko
    Dealing frequency is also a consideration. Monthly, relatively small contributions can be more cost effective via funds with no dealing fee than ETFs.
    Originally posted by AlanP
    Same issue. For large accounts it does not matter. If you are contributing 30k every few months, 10 quid fee is 0.03%. You can wait, keep cash in a high interest account and buy shares every 2 or 3 months. Contribution will be a small fraction of your net worth and the tracking error will be small.
    • AlanP
    • By AlanP 19th Nov 19, 1:12 PM
    • 1,764 Posts
    • 1,414 Thanks
    AlanP
    Same issue. For large accounts it does not matter. If you are contributing 30k every few months, 10 quid fee is 0.03%. You can wait, keep cash in a high interest account and buy shares every 2 or 3 months. Contribution will be a small fraction of your net worth and the tracking error will be small.
    Originally posted by Mordko
    £30k every few months is not, in my view, a relatively small contribution so I stand by my original post.
    • Mordko
    • By Mordko 19th Nov 19, 1:17 PM
    • 708 Posts
    • 520 Thanks
    Mordko
    £30k every few months is not, in my view, a relatively small contribution so I stand by my original post.
    Originally posted by AlanP
    Sorry; I meant “small compared to the account size”. If you have 1M investment then having 30k uninvested for a while is neither here nor there. Guess you need to be contributing a minimum of 3-5k at a time; 30k was just an example.

    Without doing the calcs, someone with a 100k account contributing 5k every 6 months should be ok. Only 20 pounds in fees and the delay in investment won’t result in a meaningful tracking error.
    Last edited by Mordko; 19-11-2019 at 1:25 PM.
    • fizio
    • By fizio 19th Nov 19, 1:28 PM
    • 246 Posts
    • 62 Thanks
    fizio
    Dealing frequency is also a consideration. Monthly, relatively small contributions can be more cost effective via funds with no dealing fee than ETFs.
    Originally posted by AlanP
    I would be looking at a one-off large deposit and then the occasional withdrawal so trading frequency not particularly relevant.
    • fizio
    • By fizio 19th Nov 19, 1:32 PM
    • 246 Posts
    • 62 Thanks
    fizio
    The cost argument of ETFs vs mutual fund(s) plays out differently, depending on size of the investment. For smaller accounts mutual funds save hustle for a few quid. The cost savings on large accounts become significant.
    Originally posted by Mordko
    How do we define a 'large account' eg above 0.5M?
    • Thrugelmir
    • By Thrugelmir 19th Nov 19, 1:38 PM
    • 65,911 Posts
    • 58,026 Thanks
    Thrugelmir

    "A good alternative to a fund-of-funds is to pair a simple global equity tracker with a UK gilt tracker, rebalance annually, and be satisfied with a job well done."

    Originally posted by haf63
    As a portfolio not diversified sufficiently. To weather the ups and downs of different asset classes year to year.
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
    • Mordko
    • By Mordko 19th Nov 19, 2:28 PM
    • 708 Posts
    • 520 Thanks
    Mordko
    How do we define a 'large account' eg above 0.5M?
    Originally posted by haf63
    My guesstimate is that savings will become meaningful after one gets to 100k, but specifics depend on the exact vehicles one is using (platform, ETFs and funds).

    You can compare yourself. On a 100k account you can design an ETF portfolio with total annual costs of 0.2% or 200 pounds (less for larger portfolios). If your MF portfolio is costing you 0.5% then it’s a 300 pound delta that keeps compounding annually. If you get to 300k portfolio then the delta is over 1000 pounds in annual savings as the cost of your ETF portfolio moves towards 0.1% per year.
    Last edited by Mordko; 19-11-2019 at 2:34 PM.
    • fizio
    • By fizio 19th Nov 19, 3:57 PM
    • 246 Posts
    • 62 Thanks
    fizio
    Found a useful comparison
    http://diyinvestoruk.blogspot.com/2017/06/a-look-at-hsbc-global-strategy-fund.html


    Having read more, I am thinking I may go for both but have one 60/40 and one 80/20.



    Looks like lowest cost route maybe to go directly to vanguard for their and will check for hsbc if that can be direct as well.
    • JustAnotherSaver
    • By JustAnotherSaver 19th Nov 19, 9:31 PM
    • 4,157 Posts
    • 746 Thanks
    JustAnotherSaver
    Sounds like you are a bit confused.

    FTSE are an index provider and don't provide investment funds. They (and other groups such as MSCI and Russell) provide indexes: a set of rules and calculations for tracking the change in value of certain assets within financial markets. They publish and licence this data.

    For example, the UK FTSE All Share index is an index tracking the value or performance of shares in all eligible companies listed on the London Stock Exchange's (LSE) main market, which pass screening for size and liquidity. The index captures 98% of the UK's market capitalisation.

    By contrast, the FTSE All-World Index is a broader index representing the performance of the large and mid cap stocks from the FTSE Global Equity Index Series (which covers developed and emerging markets all over the world). It will cover 90-95% of the investable market capitalisation. That's about $48 trillion-worth of company shares - whereas the All Share index mentioned above is UK-only and only about £2.3 tn.

    But both of those two named indexes are not in themselves investment products. They are simply a bunch of data points, tracking the results of financial instruments listed on a market. Rather than investment funds that you can buy.

    If you want to actually invest in a set of companies which deliver the returns shown in one of the indexes (whether it is an index of UK company shares or international company shares or corporate bonds or government bonds or something else), you use an investment product such as an index tracker fund or an ETF. Such funds buy all the shares or bonds in the index they are trying to track, in the proportions that each of those holdings make up of the index. The indexes are calculated by groups such as FTSE and MSCI, while the investment products which track the indexes are offered by groups such as HSBC, Vanguard, L&G, Blackrock iShares etc etc

    Your HSBC FTSE All Share Index fund, whose goal is to deliver the same investment performance as is shown by the FTSE All Share Index, will have about 8% of its money invested in Royal Dutch Shell shares, 4% in BP shares, 4% in Astra Zeneca shares, etc. If you instead bought a Vanguard FTSE All Share Index product it would hold the same investments (8% in Shell, 4% in BP , 4% in Astra Zeneca, etc) because it is also trying to track the result of the FTSE All Share Index. While if you bought either an HSBC or Vanguard version of a fund that tracked the broader FTSE All-World Index, it would have 2% in Apple and Microsoft, and only 0.4% in Shell.

    What this thread is actually about is constructing a sensible investment portfolio for low cost and minimum hassle, and specifically the options of using either HSBC's "Global Strategy" fund range, versus Vanguard's "LifeStrategy" fund range (or perhaps other rivals which do the same sort of thing but didn't feature in the title of the thread), to give you a balanced portfolio in one single fund product.

    The funds in the Global Strategy range (eg 'Conservative', 'Balanced', 'Dynamic' or 'Adventurous' versions) and the funds in the Lifestrategy range (e.g. 80% equity, 60% equity, 40% equity versions) are mixed asset fund solutions. They do not themselves track an index. What they do is invest in a number of other low-cost funds which each do track particular indexes, so that you can access a whole portfolio of different types of assets just by buying the one multi-asset fund.

    So if you buy Vanguard Lifestrategy 60% equity it will invest some of its money in a fund which tracks the UK FTSE All Share index, but it will also invest some of its money in a fund that will track a Japanese equities index, and some into a product that tracks a Emerging Markets index and a fund that tracks a government bond index and so on.

    Likewise if you invest in something from the HSBC Global Strategy stable it will be in turn investing into a UK equity index and a Japan equity index and an emerging markets equity index and a bunch of bond indexes and so on.

    What you have said you own are two specialist index funds. Your HSBC fund that tracks the FTSE All Share, and the HSBC fund that tracks the FTSE All World, are not rivals for the HSBC Global Strategy series or the Vanguard Lifestrategy series, because the former two are specialist funds each holding one class of assets (UK equities or global largecap equities) while the latter two are funds holding a portfolio of other funds which hold various types of stocks and bonds and could be bought as a one-stop off-the-shelf solution to constructing your portfolio.

    The specialist funds that you hold are the sort of thing that the managers of the Global Strategy or LifeStrategy funds might use to construct their portfolio, but they are not really rivals to Global Strategy or LifeStrategy.

    It doesn't really make sense to ask: "The FTSE version doesn't qualify?" , as FTSE do not offer a 'multi asset investment portfolio solution'. FTSE simply produce a set of indexes of data, from which investment product providers like HSBC or Vanguard or Blackrock can produce index-tracking funds. You bought an HSBC index tracking fund which tracked the UK stockmarket. You could have instead bought an HSBC mixed asset fund which would have in turn bought that index tracking fund and a bunch of other index-tracking funds covering other markets and different asset classes.
    Originally posted by bowlhead99



    I'm curious. I remember asking a while ago about one fund over another or having them both together.


    Your reply at the time was basically to make my mind up, pick one and stop messing around (although in a few more words than that).


    I read your post, took what you said on board and although you may have thought i'd take offence to the way you put it, i didn't - i actually agreed with you after reading the way you put it across.


    So would your view not also apply here? As in ... just pick one and get on with it?

    • Mordko
    • By Mordko 19th Nov 19, 9:52 PM
    • 708 Posts
    • 520 Thanks
    Mordko
    I'm curious. I remember asking a while ago about one fund over another or having them both together.


    Your reply at the time was basically to make my mind up, pick one and stop messing around (although in a few more words than that).


    I read your post, took what you said on board and although you may have thought i'd take offence to the way you put it, i didn't - i actually agreed with you after reading the way you put it across.


    So would your view not also apply here? As in ... just pick one and get on with it?
    Originally posted by JustAnotherSaver
    If you want to buy the world in a multi-asset fund then yes, buy just one. That’s the whole point of a multi-asset fund.

    If, in order to cut cost/add flexibility, you want to buy individual indeces then you need more than just FTSE 100 (UK only, no bonds). Multi-asset fund includes a bunch of indeces within it.
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