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Passive Multi-Asset Fund Options

Ready-made baskets of investments managed for you by an expert. A great way to avoid making a clanger by choosing one duff share.  

 

These are all low-cost collections of investments where the fund manager is choosing and managing the countries, sectors and types of investments on your behalf.  All you have to do is to pick which investment house you like the look of. And then you pick which ‘flavour’ you want. Typically you’ll have about 5 choices which will range from the most cash-like, least volatile choice, up to the most spicy and bumpy ride.

 

You’ll read about asset allocation. This just means the choice of where to allocate the money – is it to shares, to cash, to property etc? Does the manager stick it all in US shares or just a portion? This is asset allocation. Like any good cook, this ability to blend the right mix of investments makes for a good ‘multi-asset’ manager.

 

Your decision should really be made by timeframes. Even though no-one likes thinking of taking risks with their money, we have to balance this against the risk that our money won’t work hard enough if it sits in cash for 20 years, going backwards. So try and avoid the human tendency to plump for the “mid range toaster” or “third cheapest bottle of wine on a list” and think hard about timeframes and peace of mind. Even if you are investing for 10 years +, there’s no point in choosing a more spicy portfolio with 80% or 100% shares in it if you’ll have endless sleepless nights as the shares go through the inevitable turbulence.

 


 

Do it for me

What on earth is a 'passive' fund!? 

These mellow fellows can be a great way for the less-confident to get going. Low-cost too. 

We have partnered with independent fund research house Square Mile and asked them to come up with 4 investment houses which all offer decent, low-cost ‘multi-asset’ funds

HSBC Global Strategy Portfolios

The five Global Strategy funds managed by HSBC offer investors a diversified mix of global equities, global fixed income and global property investments which target a specified level of risk over the longer term. The team amend the exposure to these types of investments in response to economic changes. They deliver this for an ongoing charge fee that is around 0.20%. Square Mile believe that the funds offer investors good value for money and are structured to be able to adapt to the changing economic environment. 

Fund manager, Jane Davies, is an experienced multi-asset investor who is supported by the well-resourced Global Multi-Asset Team. Square Mile believe that HSBC's robust proprietary optimisation process and their sensible forward-looking market assumptions help form a strong strategic asset allocation framework for the funds, which is on a par with other approaches we have seen. This essentially means that this team knows what it’s doing and have great inputs to program their investment sat nav with. The HSBC passive funds, which are likely to represent a significant portion of the portfolio, are well managed by HSBC's passive management team. 

 

L&G Multi-Index funds

L&G has created a range of low-cost risk-targeted funds which Square Mile think plays to a number of the business’ key strengths. The group has a proven track record in building and managing risk aware multi-asset strategies, as can be illustrated by the success of its long-running with-profits fund. Additionally, L&G is a market leader within index funds and one of the largest providers in the UK. Their range of index funds is broad and this permits the managers to build portfolios that are well-diversified across asset class and via regions. 

The resources at L&G are deep and strong across asset allocation, fund management and risk management. Square Mile think this gives them a good platform from which to build multi-asset solutions. The lead manager of the funds is Justin Onuekwusi and he is experienced in managing risk-targeted and other multi-asset products.  He is well-supported by the asset allocation team which has grown over recent years to meet the growth in assets they are responsible for as well as the wide opportunity set now available to multi-asset investors.

Square Mile believe that L&G has the capability within the business to provide high-quality risk-targeted investment solutions. The Multi Index funds offer investors access to five portfolios that are low cost and actively managed and which are well-diversified by asset class. The overall cost of the funds makes them a particularly compelling proposition for investors that wish to have a greater control over the level of risk they are prepared accept to meet their financial goals. Investors should remember that as the funds predominantly use passive strategies as building blocks, the returns of these strategies will be limited to the returns of the index they are tracking.

 

Standard Life MyFolio Market range

This fund is part of a strong overall risk targeted proposition offered by Aberdeen Standard Investments (ASI). The three main facets to the funds’ strategy - strategic asset allocation (long-term view) , tactical asset allocation (shorter-term tweaking)  and fund selection - are all well-resourced and contain suitably experienced individuals. This includes the ASI Multi-Asset Investment team, who are responsible for the popular Global Absolute Return Strategy (GARS) fund, providing the tactical overlay. The whole process is overseen and controlled by a committee of senior executives within ASI. This combination is one which Square Mile feel is robust and can deliver an outcome for clients which should meet their expectations. This is a low-cost solution that will predominantly invest in index tracking funds. 

 

Having merged in August 2017, ASI is the combined entity of Aberdeen Asset Management plc and Standard Life plc. In time, there will undoubtedly be integration of various parts of the businesses but the investment teams are currently operating in the manner that preceded the merger.

 

(Note: Aberdeen Asset Management is a 11% shareholder in Boring Money, just to be totally squeaky clean and above board. But a) we didn’t write this original piece and b) sunlight is the best disinfectant!)

 

Vanguard Lifestrategy funds

The Vanguard Lifestrategy range are a fixed-weighted range of five funds which provide investors with a graduated exposure to equity assets. This means the funds follow a predetermined asset allocation which is set in stone and doesn’t change. For example you might pick the 80% equity option. 

Vanguard believe that this is the best approach as over time investors have found it difficult to add value through tactical asset allocation. The short-term tweaking. However, from a risk perspective it could be argued that this approach has its drawbacks as the fund could be “blindly” investing into highly valued assets without any regard to the price that the assets are trading at. The funds care made up of Vanguard’s own passive index tracking funds, and therefore the ongoing charge figure (OCF) for the funds is very low.  Square Mile believe at this level the funds represent good value for money, as investors can obtain access to a diversified global portfolio for about one- third of the price of a standard active equity fund. Square Mile also have a high regard for the constituents in the portfolio and think investors are accessing one of the best passive providers in the market.

Square Mile like:

  • HSBC Global Strategy Portfolios
  • L&G Multi-Index Funds
  • Standard Life MyFolio Range
  • Vanguard Lifestrategy Funds