HSBC Global Strategy Vs Vanguard LifeStrategy

bowlhead99 wrote: »

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.