Query about Multi-Asset Fund Charges?
Asghar
Posts: 433 Forumite
Do you get charged twice for investing in Multi-Asset funds or fund of funds? Not sure what to call them.
A popular one like the Vanguard LifeStrategy 100% Equity Fund charges 0.22% and holds other vanguard funds which have their own charges.
Some of the funds it contains are:
Vanguard US Equity Index - which charges 0.10%
Vanguard FTSE Developed World ex-UK Equity - which charges 0.15%
Vanguard FTSE UK All Share Index - which charges 0.08%
Vanguard Emerging Markets Stock Index - which charges 0.27%
Are the individual funds taking their own charges and then you are charged another 0.22% for investing in them through the Vanguard LifeStrategy 100% Equity Fund? So basically paying for vanguard to manage the asset allocation.
Or is the 0.22% the only charge of all the funds combined?
A popular one like the Vanguard LifeStrategy 100% Equity Fund charges 0.22% and holds other vanguard funds which have their own charges.
Some of the funds it contains are:
Vanguard US Equity Index - which charges 0.10%
Vanguard FTSE Developed World ex-UK Equity - which charges 0.15%
Vanguard FTSE UK All Share Index - which charges 0.08%
Vanguard Emerging Markets Stock Index - which charges 0.27%
Are the individual funds taking their own charges and then you are charged another 0.22% for investing in them through the Vanguard LifeStrategy 100% Equity Fund? So basically paying for vanguard to manage the asset allocation.
Or is the 0.22% the only charge of all the funds combined?
0
Comments
-
Or is the 0.22% the only charge of all the funds combined?0
-
It's a very good question and although I have seen the standard answer I have never really been sure. I don't think I would be satisfied unless the multi fund manager allowed me to inspect their internal fee deduction transactions!0
-
I was looking for something similar to that so thanks to the OP for posting. It appears to be a global equities fund but is not a mixed asset fund since it doesn't appear to contain bonds of any type. nevertheless, from a risk perspective, it appears very low since the geographic spread is so wide.0
-
chiang_mai wrote: »It appears to be a global equities fund but is not a mixed asset fund since it doesn't appear to contain bonds of any type
By definition LS100 is 100% equities. LS80 is 80%, LS60 is 60% etc.0 -
chiang_mai wrote: »I was looking for something similar to that so thanks to the OP for posting. It appears to be a global equities fund but is not a mixed asset fund since it doesn't appear to contain bonds of any type. nevertheless, from a risk perspective, it appears very low since the geographic spread is so wide.
It is exposed to risks that affect global equity prices, events that have happened in recent history so not 'very low'. FE Risk Score of the fund is 97 - a volatility very similar to the baseline of 100 leading UK shares.loose does not rhyme with choose but lose does and is the word you meant to write.0 -
Sorry, I was merely pointing out to the OP that the fund is a single asset (equities) fund and not mixed assets, as he suggested. Agreed however the fund is not very low risk but it is certainly below average, geographic risk seems to be something people outside the UK are more easily willing to accept than those inside hence my perception of it being lower than it really is.0
-
chiang_mai wrote: »Sorry, I was merely pointing out to the OP that the fund is a single asset (equities) fund and not mixed assets, as he suggested. Agreed however the fund is not very low risk but it is certainly below average, geographic risk seems to be something people outside the UK are more easily willing to accept than those inside hence my perception of it being lower than it really is.0
-
Any fund that is 100% equities would be not be classed as below average risk.
To be fair it would be below average risk for an 100% equity fund, given that most 100% equity funds invest in single geographic markets. There is not really any such thing as "average risk".
On the standard risk scale it would be called something like "high medium risk".0 -
Any fund that is 100% equities would be not be classed as below average risk.
I disagree very strongly, it's all about context. The fund in question is below average risk when compared to other equity funds. Of course, if you compare it against savings bonds then it's ultra high super duper high risk! I think that understanding that risk (in context) is essential when selecting equity funds in order to help match your risk profile. And....average risk refers to an average of a group of similar fund types, again it's the context that's important. If you look at the risk rating of a particular fund for example on the FT site, that shows relative risk by comparison to other funds in the same class and demonstrates above and below average very well. https://markets.ft.com/data/funds/tearsheet/risk?s=IE00B3NS4D25:GBP0 -
chiang_mai wrote: »I was looking for something similar to that so thanks to the OP for posting. It appears to be a global equities fund but is not a mixed asset fund since it doesn't appear to contain bonds of any type.
So the only 'mix' they are offering in that particular version of the Lifestrategy range is by geographic region (25%UK, 75% non-UK) and they take that exposure by investing the fund's money into other Vanguard regional-specialist equity index funds, using major market-capitalisation weighted index trackers for their exposure to each region. In the versions that are less than 100% equities (e.g. the Lifestrategy 80, Lifestrategy 60, 40, 20) they have a lower proportion of the value allocated to equity tracking funds and more in bond index tracking funds.nevertheless, from a risk perspective, it appears very low since the geographic spread is so wide.
For example, the FTSE All-World index has 4000+ companies from across all major developed and emerging markets, yet within the last decade the largest peak-to-trough drawdown for that index (before management fees, operating costs and platform fees) was 58% - between 2007-2009 for a US dollar investor. So as you say, 100% equity funds are super-duper risky compared to a bond fund.It's a very good question and although I have seen the standard answer I have never really been sure. I don't think I would be satisfied unless the multi fund manager allowed me to inspect their internal fee deduction transactions!Do you get charged twice for investing in Multi-Asset funds or fund of funds? Not sure what to call them.Are the individual funds taking their own charges and then you are charged another 0.22% for investing in them through the Vanguard LifeStrategy 100% Equity Fund? So basically paying for vanguard to manage the asset allocation.
Or is the 0.22% the only charge of all the funds combined?
The answer is yes , it should be, based on the industry guidance given for a situation where an open-ended fund invests into another open-ended fund. The expense ratio info from the lower-tier fund should get bundled into the top fund's numbers. In this particular case of Vanguard it's pretty easy for them to do that because they are all one fund house and don't have any problem getting the data from the underlying positions.
In some other cases, a fund-of-funds type product might hold some opaque investment trusts or other investment companies with difficult-to-meaningfully-track expenses figures ; in such cases you don't get a full lookthrough and will just need to bear in mind the nature of the underlying holdings to guess the overall expenses to which you might be exposed.
At the end of the day though, any charges that are expensed by the fund... or by its investees... or are capitalised into the cost of its investment portfolio (or its investees' investment portfolios)... will all come out in the wash when you look at the published performance ; i.e., what is the fund worth per unit now compared to what was it worth five years ago on a total returnn basis.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards