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  • FIRST POST
    • rathernot
    • By rathernot 9th Aug 18, 8:26 PM
    • 334Posts
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    rathernot
    Multi-Asset Funds - Differences?
    • #1
    • 9th Aug 18, 8:26 PM
    Multi-Asset Funds - Differences? 9th Aug 18 at 8:26 PM
    I'm looking to put some money away into a LifeStrategy type multi-asset fund, around 40-50% equities maximum.

    From looking around the options seem to be:
    • LifeStrategy
    • HSBC
    • L&G
    • Blackrock consensus
    • Architas Passive

    LifeStrategy seems the most often mentioned as it's pretty much "fire and forget" which is the point.

    Are there any specific situations in which you'd be looking at the others in preference to LifeStrategy?
Page 1
    • MallyGirl
    • By MallyGirl 9th Aug 18, 9:25 PM
    • 3,122 Posts
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    MallyGirl
    • #2
    • 9th Aug 18, 9:25 PM
    • #2
    • 9th Aug 18, 9:25 PM
    Vanguard works on fixed percentage of equity to bonds whereas HSBC works on a targeted level of risk
    • A_T
    • By A_T 9th Aug 18, 9:50 PM
    • 566 Posts
    • 392 Thanks
    A_T
    • #3
    • 9th Aug 18, 9:50 PM
    • #3
    • 9th Aug 18, 9:50 PM
    I'm looking to put some money away into a LifeStrategy type multi-asset fund, around 40-50% equities maximum.

    From looking around the options seem to be:
    • LifeStrategy
    • HSBC
    • L&G
    • Blackrock consensus
    • Architas Passive

    LifeStrategy seems the most often mentioned as it's pretty much "fire and forget" which is the point.

    Are there any specific situations in which you'd be looking at the others in preference to LifeStrategy?
    Originally posted by rathernot
    There is also Fidelity Multi Asset Allocator
    • dunstonh
    • By dunstonh 9th Aug 18, 10:10 PM
    • 96,058 Posts
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    dunstonh
    • #4
    • 9th Aug 18, 10:10 PM
    • #4
    • 9th Aug 18, 10:10 PM
    As mentioned above. Some are returns focused and will move around the risk profile over an economic cycle. Some are risk targeted and the asset mix will be adjusted frequently to ensure they remain within the targetted volatility range.

    Some of them have rigid allocations that rarely change. Some tweak the allocations throughout the cycle.

    Some include property. Some do not.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • bostonerimus
    • By bostonerimus 10th Aug 18, 12:03 AM
    • 2,450 Posts
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    bostonerimus
    • #5
    • 10th Aug 18, 12:03 AM
    • #5
    • 10th Aug 18, 12:03 AM
    I'd go with a fund that rebalances to the asset allocation that makes you feel safe. Other than that I don't think it really matters what fund you choose; it's a choice between red apples or green apples.
    Misanthrope in search of similar for mutual loathing
    • bowlhead99
    • By bowlhead99 10th Aug 18, 6:36 AM
    • 8,306 Posts
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    bowlhead99
    • #6
    • 10th Aug 18, 6:36 AM
    • #6
    • 10th Aug 18, 6:36 AM
    I'm looking to put some money away into a LifeStrategy type multi-asset fund, around 40-50% equities maximum.

    From looking around the options seem to be:
    • LifeStrategy
    • HSBC
    • L&G
    • Blackrock consensus
    • Architas Passive
    Originally posted by rathernot
    They are far from the only multi-asset funds - of which there are hundreds, really - but I suppose you could say they are the most commonly-discussed popular options for what you're calling "LifeStrategy type multi-asset funds" i.e. the subset of open-ended funds that span multiple asset classes but are built out of mostly passive building blocks for the underlying exposure to stocks and bonds etc.

    LifeStrategy seems the most often mentioned as it's pretty much "fire and forget" which is the point.
    With a number of the rivals, you pick your risk level and the fund manager takes care of sticking to it for you, with the portfolio allocation mix changing from time to time in pursuit of the overall objective - following whatever strategy the manager employs for his asset allocation mix. The manager will do stuff behind the scenes as necesssary to keep the mix in line with whatever he or his advisers see fit at a point in time. It can be a fluid mix that changes somewhat over the course of an economic cycle in an attempt to target a particular level of rik or volatility. From your perspective you give the money to the manager and forget it.

    With Lifestrategy they don't attempt to target a particular level of risk or annualised volatility, They just promise you the result of x% equity (of which y% is domestic stockmarket rather than international stockmarkets), and y% bonds.

    As such, Mallygirl and Dunstonh above would describes the Lifestrategy product as 'performance targeted' rather than 'risk targeted'. The former builds a portfolio to targets the performance of whatever you'll get from taking exposure to x% equity and z% bonds, while the latter would target a particular level of risk appetite and more dynamically change the holdings to keep you in that 'risk band' over time based on what their consultants say is an asset mix that qualifies as being in that risk band from time to time..

    With the Vanguard product you can clearly 'go up and down the risk scale' by choosing the greater or lesser equity versions, so some people would say the distinction is just semantics. However, over the course of an economic cycle the probable risk or volatility being presented by a given mix of a% b% c% d% in different domestic and international regions and e% in domestic bonds, f% index linked bonds, g% international corporate bonds hedged to sterling, etc.. can change.

    So perhaps you pick VLS40 and someone reviews its contents and grades it 4 out of 10 risk one year and 5 out of 10 risk another year even though its contents didn't really change. Whereas if you picked L&G Multi Index 5 it would always expect to be rated 5 out of 10 every year because they design it to be able to efficiently change its composition to remain within that risk profile.

    Are there any specific situations in which you'd be looking at the others in preference to LifeStrategy?
    As a general rule it makes sense to look at all the options although depending on the amounts involved it may not be worth spending incremental extra time trying to finesse a solution from the very best thing you could possibly find - instead, just stopping when you have found something 'good enough'.

    So if you had five fund brands to look at and you were considering a couple from each range (e.g. HSBC Conservative and Balanced, L&G MI 4 and 5, etc) you have ten funds to look at. Maybe the third one you look at is good enough for your needs, in terms of 'putting some money away' at a reasonable cost with reasonable prospects and not excessive risk, so you don't bother to painstakingly evaluate the other seven which you haven't even looked at yet. So depending where you start on that list of ten funds and what your objectives are, you might never get to Vanguard. Or if you start at Vanguard you might never move past it. The more money you are investing, the more it is worth your while considering what choices are available and how they all operate.


    A number of years ago I used Blackrock Consensus 70 or 85 as filler in my parents ISA portfolios which I was trying to sort out for them and cut down the number of holdings. At the time, their platform (HL) had a discounted management fee on the fund so the effective OCF came down to around 0.1% which was welcome given the HL platform fee is a pretty high percentage.

    Fast forward to a couple of years ago after the portfolios became larger and we wanted to reduce the risk profile (and would be changing platforms to save costs, so the fee incentive on Blackrock wasn't relevant), they started to move over to L&G MI 5 instead (http://www.lgim.com/files/_document-library/adviser/multi-index-income-consumer-guide.pdf) which is a reasonable mix with dedicated property / listed infrastructure allocation.

    I say 'started to'; my mum moved her Consensus allocation over to the Multi Index, but my dad is always reluctant to sell things that have been having a good run (for something that might not go up as much in the good times, even though he doesn't like the idea of losses...) so he still has about 5% left in Consensus which won't really change the portfolio outcome too much compared to being something lower risk from another provider.

    With hindsight, Vanguard's greater US index allocation would have given it a better result than Blackrock for the same level of equities over the last five years, but that's not a feature which will endure from one period to the next as the US won't aways be the best place to be invested.
    • rathernot
    • By rathernot 10th Aug 18, 7:47 AM
    • 334 Posts
    • 85 Thanks
    rathernot
    • #7
    • 10th Aug 18, 7:47 AM
    • #7
    • 10th Aug 18, 7:47 AM
    Wow some good info there thank you

    The aim here is to park some money that I don't plan on needing but don't want to take as much of a chance on as I do with my money that is in actively managed equity funds.

    I'm on a fixed fee platform so other than 10 for the trade all I'd be paying is the OCF so whilst I get that there are lots of multi-asset funds I think what I meant to say was I'm focusing on the lower cost ones.

    Does anyone have any experience of Architas? I only ask as I hadn't really heard of them but they appear to be risk balanced and have a very low OCF (the Intermediate Passive Z class on my platform is 0.19%) but do appear rather UK focussed.

    https://uk.architas.com/siteassets/documents/uk-factsheets/passive-funds/architas-ma-passive-intermediate-fund-factsheet
    • dunstonh
    • By dunstonh 10th Aug 18, 10:10 AM
    • 96,058 Posts
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    dunstonh
    • #8
    • 10th Aug 18, 10:10 AM
    • #8
    • 10th Aug 18, 10:10 AM
    Does anyone have any experience of Architas?
    yes. Very big fund house.

    Whereas the VLS funds are fettered fund of funds and not risk targetted, the Architas funds are unfettered fund of funds and are risk targeted.


    Another one not often mentioned is the Standard Life Investments MyFolio Market.

    They dont all match up on a like for like risk basis. So, some fo them the returns may be better/worse due to the risk level being taken and the asset weightings used. Indeed, I just ran a comparison of the performance of all the usual suspects and then a risk analysis of all of them and the positions of the funds were almost the same with both i.e. the riskiest fund was top (as you would expect following a long growth period) and lowest risk fund was bottom and most in between matched positions. A few were a bit out but in the ballpark.

    The bottom line is that if you go with any of these, you will get broadly similar performance with all of them when matching risk profile (or as close as you can get). One will do better in one period as it has more in an area that is doing better. The next period it will be someone elses turn and so on.
    Last edited by dunstonh; 10-08-2018 at 3:02 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • rathernot
    • By rathernot 10th Aug 18, 2:57 PM
    • 334 Posts
    • 85 Thanks
    rathernot
    • #9
    • 10th Aug 18, 2:57 PM
    • #9
    • 10th Aug 18, 2:57 PM
    Dunsonh thank you, appreciate that

    Do you have a view on how different fund providers allocate geographically?

    I've noticed that, for example, Architas seem to be very UK focussed for all components at > 50% whilst others such as LifeStrategy seem to be spread out a little more globally, with a US focus.
    • dunstonh
    • By dunstonh 10th Aug 18, 3:03 PM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    Dunsonh thank you, appreciate that

    Do you have a view on how different fund providers allocate geographically?

    I've noticed that, for example, Architas seem to be very UK focussed for all components at > 50% whilst others such as LifeStrategy seem to be spread out a little more globally, with a US focus.
    Originally posted by rathernot
    VLS has done well over the last decade because of its increased weighting in US. If it has existed in the previous decade when the US underperformed global markets, it would have suffered.

    You are not going to know what the next decade brings.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • rathernot
    • By rathernot 10th Aug 18, 3:12 PM
    • 334 Posts
    • 85 Thanks
    rathernot
    VLS has done well over the last decade because of its increased weighting in US. If it has existed in the previous decade when the US underperformed global markets, it would have suffered.

    You are not going to know what the next decade brings.
    Originally posted by dunstonh
    Both very good points which is why this is so damned difficult
    • dunstonh
    • By dunstonh 10th Aug 18, 3:32 PM
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    dunstonh
    Both very good points which is why this is so damned difficult
    Originally posted by rathernot
    in a way, not knowing does help because if you are looking at underlying passive funds, then there are only three things to consider.

    1 - asset allocation (home bias, property inclusion etc)
    2 - and style (rigid allocations or fluid - will aim to stay in a volatility range or float up and down the scale a bit).
    3 - charges

    Cautious investors should look to those that are risk targetted. If you are higher up the scale then its not really an issue and returns are the focus.

    L&GMI, Architas, HSBC, Std Life for example at the lower to medium end as they are all risk targetted.
    Last edited by dunstonh; 10-08-2018 at 3:36 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • rathernot
    • By rathernot 10th Aug 18, 3:41 PM
    • 334 Posts
    • 85 Thanks
    rathernot
    Thank you

    Would you say I'm missing anyone or any category of fund off my list if "LifeStrategy Like" was my intention?
    • dunstonh
    • By dunstonh 10th Aug 18, 3:53 PM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    Thank you

    Would you say I'm missing anyone or any category of fund off my list if "LifeStrategy Like" was my intention?
    Originally posted by rathernot
    I think the main names are all mentioned on this thread.

    We changed our position on VLS almost two years ago from a buy to a hold. New money goes elsewhere. But that is just our position.

    The US stimulus has been given at the wrong point of the cycle. Throwing oil on a raging fire doesn't give a significant benefit vs the amount you pour on. Whereas pouring that on a weak fire can bring it to life. Stimulus is best given at a different point and there may not be the money to use when it is needed. Or it may not be enough (if you have poured on so much stimulus that you have nothing left to give then it will just die and you won't have anything to help rebuild and boost it).

    So, I suspect the next decade will be like the pre-credit crunch decade for the US. Again, its a guess but you rarely see the same sectors perform best two times in a row.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • rathernot
    • By rathernot 10th Aug 18, 4:23 PM
    • 334 Posts
    • 85 Thanks
    rathernot
    Thanks and interesting take on VLS mostly because on here it seems to be almost worshipped

    Looking into the MyFolio range now.
    • A_T
    • By A_T 10th Aug 18, 6:27 PM
    • 566 Posts
    • 392 Thanks
    A_T
    Thank you

    Would you say I'm missing anyone or any category of fund off my list if "LifeStrategy Like" was my intention?
    Originally posted by rathernot
    Baillie Gifford Managed is another. Rather than index funds it holds individual shares.
    • aroominyork
    • By aroominyork 10th Aug 18, 7:05 PM
    • 698 Posts
    • 236 Thanks
    aroominyork
    I think the main names are all mentioned on this thread.

    We changed our position on VLS almost two years ago from a buy to a hold. New money goes elsewhere. But that is just our position.

    The US stimulus has been given at the wrong point of the cycle. Throwing oil on a raging fire doesn't give a significant benefit vs the amount you pour on. Whereas pouring that on a weak fire can bring it to life. Stimulus is best given at a different point and there may not be the money to use when it is needed. Or it may not be enough (if you have poured on so much stimulus that you have nothing left to give then it will just die and you won't have anything to help rebuild and boost it).

    So, I suspect the next decade will be like the pre-credit crunch decade for the US. Again, its a guess but you rarely see the same sectors perform best two times in a row.
    Originally posted by dunstonh
    So do you think that when people say global markets are increasingly integrated and moving in similar directions, that is just because stimulus has been sending all Western markets up at the same time while emerging markets are, um, emerging, and that the apparent integration is just a blip?
    • dunstonh
    • By dunstonh 10th Aug 18, 7:38 PM
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    • 63,875 Thanks
    dunstonh
    So do you think that when people say global markets are increasingly integrated and moving in similar directions, that is just because stimulus has been sending all Western markets up at the same time while emerging markets are, um, emerging, and that the apparent integration is just a blip?
    Originally posted by aroominyork
    In a globalised economy, all will follow. It will just be degrees of difference.

    Over the last 5 years, the sector average:
    66.61 Global sector
    69.91 Japan
    47.72 UK
    94.06 North America]

    The split is much the same over 10 years except the US pulling away more.

    In every cycle, the one pulling away and the laggard is usually different to the one before. Often swapping places.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • masonic
    • By masonic 10th Aug 18, 7:39 PM
    • 10,286 Posts
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    masonic
    I think someone needs to launch a multi-multi-asset fund that invests in the available multi-asset funds according to their weighting in discussion in threads like this.
    • Audaxer
    • By Audaxer 10th Aug 18, 10:02 PM
    • 1,491 Posts
    • 920 Thanks
    Audaxer
    The bottom line is that if you go with any of these, you will get broadly similar performance with all of them when matching risk profile (or as close as you can get). One will do better in one period as it has more in an area that is doing better. The next period it will be someone elses turn and so on.
    Originally posted by dunstonh
    That seems to me a good reason for have at least a couple of multi asset funds for a large portfolio (if not using single sector funds) rather than putting it all in one multi asset fund, as some other people on the forum have previously recommended.
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