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TJL
Posted: 19 February 2023 18:59:21(UTC)
#49

Joined: 14/03/2011(UTC)
Posts: 1,630
The 'grail' might actually be as simple as something like VG Global All Cap (or similar) - hiding in plain sight.
But then we would have nothing left to disagree and (occasionaly) be rude to each other about!
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Rory Barr
Posted: 19 February 2023 19:22:33(UTC)
#50

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TJL;258292 wrote:
The 'grail' might actually be as simple as something like VG Global All Cap (or similar) - hiding in plain sight.
But then we would have nothing left to disagree and be rude to each other about!


I think that all comes down to circumstance. I never (knowingly) owned bonds until I retired, and had decided I'd "won the war" and didn't want to then throw it away.

Going balls out equities is fine when you've time to recover from big drops, but at some stage in life, I think you have to compromise some long-term growth for something that should dampen volatility, thus making sure the money is there when you need it. It might not be as much money compared to staying 100% equities, but neither should it be only half as much either.

I'm at that place now, and for me, I'm looking for somewhere between 60-70% equities I think.

We are all different, and have different circumstance and beliefs. I acknowledge that.
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Guest on 20/02/2023(UTC), Aminatidi on 20/02/2023(UTC), TJL on 20/02/2023(UTC)
Bob Macondale
Posted: 19 February 2023 21:04:02(UTC)
#39

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Rory Barr;258283 wrote:
Aminatidi;258280 wrote:
How much actual variance is there between these anyway once you adjust for risk level?

So for example you can go buy £100K of LS60 or you can buy 10 x £10K active fund of passive ETF products that are "balanced" risk exposure.

Are you really making a big difference to your overall exposure and the overall outcome for the additional effort?


If I'm understanding your question properly, for me it makes sense having three or four that combine home bias/global, hedged global bonds/unhedged global bonds, and perhaps one that's quite actively/dynamically tweaked. That way you can cover all the bases IMHO.

So, for example, at the 60:40 nominal level in the spectrum, hold these three:

LS 60 - home bias, sterling hedged global bonds, index-linked bonds, all with fixed allocations

Fidelity Multi Asset Allocator 'Growth' - no home bias, unhedged global bonds, some small caps, and property, again fixed allocations

HSBC Global Strategy 'Balanced' - more 'actively managed', unhedged global bonds, some derivatives, property, no home bias

That would be 58% equities, and cover all the possibilities re the other variables (ie max diversification within the nominal 60:40 selection). Not bad for 20 bps.

Is that what you meant?


Rory, interesting thought, but are you surprised how close the performance is of the 3 funds if they are providing some degree of underlying diversification ?

Cumulative performance
Investment 3 months 6 months 1 year 3 years 5 years
Fidelity Multi Asset Allocator Growth W Acc 2.8% -2.35% -1.94% 8.4% 28.41%
Vanguard LifeStrategy 60% Equity A Acc 2.56% -1.86% -2.48% 7.02% 25.54%
HSBC Global Strategy Balanced Portfolio 2.72% -2.67% -1.65% 9.86% 29.85%
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Thrugelmir on 19/02/2023(UTC)
Rory Barr
Posted: 19 February 2023 22:42:30(UTC)
#40

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Bob Macondale;258298 wrote:

Rory, interesting thought, but are you surprised how close the performance is of the 3 funds if they are providing some degree of underlying diversification ?

Cumulative performance
Investment 3 months 6 months 1 year 3 years 5 years
Fidelity Multi Asset Allocator Growth W Acc 2.8% -2.35% -1.94% 8.4% 28.41%
Vanguard LifeStrategy 60% Equity A Acc 2.56% -1.86% -2.48% 7.02% 25.54%
HSBC Global Strategy Balanced Portfolio 2.72% -2.67% -1.65% 9.86% 29.85%



Just the opposite tbh Bob, I think there's quite a difference between the two most diverse (the active no home bias, unhedged bonds of HSBC, and the passive hedged bonds and home bias of LS 60). I make it about almost 17% difference on the previous 5 years.

I'm not expecting massively diverse outcomes, they are all essentially 60:40 funds, but if one can outperform the other by 17% over 5 years, that's worth taking. Who knows, the next 5 years may reverse this, or may not.

Why not take the additional diversification of three or four different funds within the one target asset allocation? It's a free lunch.
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Thrugelmir
Posted: 19 February 2023 23:40:29(UTC)
#41

Joined: 01/06/2012(UTC)
Posts: 5,317
Rory Barr;258299 wrote:

I'm not expecting massively diverse outcomes, they are all essentially 60:40 funds, but if one can outperform the other by 17% over 5 years, that's worth taking. Who knows, the next 5 years may reverse this, or may not.




Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss. Even the home bias has been of benefit more recently.
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Rory Barr
Posted: 20 February 2023 08:37:09(UTC)
#42

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Thrugelmir;258302 wrote:

Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss. Even the home bias has been of benefit more recently.


Perhaps it's your math.

LS 60 has returned 25.54% over past 5 years
HSBC Global Strategy Balanced Portfolio 29.85% over same period

That's an outperformance of 16.8% (4.31/25.54)

And remember, I'm not making a play of the added diversification of selecting more than one fund in the 60:40 range. I'm just saying why wouldn't you. It does add to your diversification, and reduces the risk of choosing the weakest performer (due to market conditions).
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Aminatidi on 20/02/2023(UTC)
Bob Macondale
Posted: 21 February 2023 22:52:07(UTC)
#51

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I like the sound of the 3 fund approach and don’t think it adds too much complication if you are simply allocating the same amount across the 3 and why would you not add a bit of diversification due to the slight differences in approach that Rory flagged.

As TJL mentioned on an earlier post, you could simply go all in with a global tracker. I had considered this when you look at the performance over the last 3 and 5 years. Obviously all down to individual choices and circumstances, but for the bulk of my allocation to trackers, I am inclined to go with a 60/40 stocks bonds. I believe in the past, the 60/40 allocation was always considered the best approach but this went out the window when the returns on bonds was so poor. So crystal ball time, but I am thinking that with the higher return on bonds the 60/40 allocation is the way to go and I might not end up missing out on too much performance compared with a 100% global equity tracker. I still have an allocation to global equity funds to keep things interesting.

Just a question of finding the optimum 60/40 low cost solution but the HSBC Global Strategy Balanced / VL60 / Fidelity Multi Asset growth looks a pretty good combination.
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Tim D on 22/02/2023(UTC), Aminatidi on 22/02/2023(UTC)
Thrugelmir
Posted: 21 February 2023 23:59:17(UTC)
#44

Joined: 01/06/2012(UTC)
Posts: 5,317
Rory Barr;258326 wrote:
Thrugelmir;258302 wrote:

Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss. Even the home bias has been of benefit more recently.


Perhaps it's your math.

LS 60 has returned 25.54% over past 5 years
HSBC Global Strategy Balanced Portfolio 29.85% over same period

That's an outperformance of 16.8% (4.31/25.54)

.


I prefer the base measurement of the differential of 4.31%, Far more meaningful. As that's what it is in £ per £100 invested.

Using 16% sounds as if you are trying to convince yourself of your strategy.


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Guest on 22/02/2023(UTC)
Rory Barr
Posted: 22 February 2023 08:34:12(UTC)
#45

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Thrugelmir;258497 wrote:
Rory Barr;258326 wrote:
Thrugelmir;258302 wrote:

Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss. Even the home bias has been of benefit more recently.


Perhaps it's your math.

LS 60 has returned 25.54% over past 5 years
HSBC Global Strategy Balanced Portfolio 29.85% over same period

That's an outperformance of 16.8% (4.31/25.54)

.


I prefer the base measurement of the differential of 4.31%, Far more meaningful. As that's what it is in £ per £100 invested.

Using 16% sounds as if you are trying to convince yourself of your strategy.




I'm not trying to convince myself, or anyone else for that matter, of any strategy. I'm just correcting your math.

"Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss."

Nothing was amiss. The outperformance I quoted is correct.
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Thrugelmir
Posted: 22 February 2023 09:09:24(UTC)
#46

Joined: 01/06/2012(UTC)
Posts: 5,317
Rory Barr;258513 wrote:
Thrugelmir;258497 wrote:
Rory Barr;258326 wrote:
Thrugelmir;258302 wrote:

Even VLS80 hasn't outperformed VLS60 by 17% over the past 5 years. Something seems amiss. Even the home bias has been of benefit more recently.


Perhaps it's your math.

LS 60 has returned 25.54% over past 5 years
HSBC Global Strategy Balanced Portfolio 29.85% over same period

That's an outperformance of 16.8% (4.31/25.54)

.


I prefer the base measurement of the differential of 4.31%, Far more meaningful. As that's what it is in £ per £100 invested.

Using 16% sounds as if you are trying to convince yourself of your strategy.




I'm not trying to convince myself, or anyone else for that matter, of any strategy. I'm just correcting your math.



Your maths may be right but your logic isn't. Bottom line is the differential could soon be wiped out. 4% over 5 years is minimal. Markets move 5% in a day.
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2 users thanked Thrugelmir for this post.
Guest on 22/02/2023(UTC), Tim D on 22/02/2023(UTC)
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