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Cm258
Posted: 22 January 2025 19:02:30(UTC)
#70

Joined: 30/07/2022(UTC)
Posts: 458
ANDREW FOSTER;331948 wrote:
Rory Barr;331916 wrote:


The question it posed was "Could it really as simple as choosing a multi-asset fund(s) (i.e., AJB / HSBC / LifePlan / LifeStrategy / L&G / MyMap) aligned to your risk and volatility requirements and be done with it?" and I think the answer, for most people at least, is probably "yes".



One of my 'rules' is 'never buy a fund of funds'...which usually rules out multi asset funds

The reason is simple, it's the opaque charging.

Are you paying a charge on the parent fund AS WELL as the constituent funds?

If you are thats very bad, but finding out if you are is usually extremely difficult. And usually seems to be 'yes, you are double paying'.

If you want just look at the top 10 holdings and replicate those ten. Rebalancing every so often if you want to.


How are you paying double in a unitised fund of funds like Vanguard LS60 exactly? Genuinely curious. These implicit costs aren't on the costs & charges disclosure I don't believe.
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Rob B
Posted: 22 January 2025 19:20:41(UTC)
#86

Joined: 07/10/2018(UTC)
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Cm258;331949 wrote:
ANDREW FOSTER;331948 wrote:
One of my 'rules' is 'never buy a fund of funds'...which usually rules out multi asset funds

The reason is simple, it's the opaque charging.

Are you paying a charge on the parent fund AS WELL as the constituent funds?

If you are thats very bad, but finding out if you are is usually extremely difficult. And usually seems to be 'yes, you are double paying'.

If you want just look at the top 10 holdings and replicate those ten. Rebalancing every so often if you want to.

How are you paying double in a unitised fund of funds like Vanguard LS60 exactly? Genuinely curious. These implicit costs aren't on the costs & charges disclosure I don't believe.

This is an area Tim D is well versed. For a fund of funds that is comprised of just OEICs I still believe you are not allowed to charge above the quoted figure.

For a mix of ETFs and OEICs there is no roll-up.....

Tim D;191571 wrote:
Rob B;191554 wrote:
Some guidance on what OEICs are allowed to charge in multi-asset funds (i.e. LifeStrategy) versus ITs (i.e. AVI Global) would be helpful (as in I believe with an OEIC you can't have fund on funds costs).

Yes, and this is quite an important one to be aware of when comparing some things.

With OEICs of OEICs (e.g Lifestrategy) the OCFs of the sub-funds have to be "rolled up" into the headline OCF. That's there in black and white in the PRIIPs regulations somewhere if you look for it, and you can see the calculation in the Lifestrategy annual report (the "wrapper" charge is only about half of the 0.22% OCF, with the rest being the contribution of the sub-funds' own OCFs).

But for OEICs of ITs (e.g Unicorn Mastertrust or RM Alt Income) or OEICs of ETFs (e.g MyMap) or ETFs of ITs (e.g IUKP) or ITs of ITs (e.g AGT) there's no such roll-up and none of the holdings' own OCFs are included in the reported OCF.

(That's the high level view anyway... I have a vague idea it can get more complicated with more exotic things like RCP, BHMG, HVPE, HGT... might be something about sub-holdings' performance fees do get rolled up Into one the wrapper's additional costs categories? Can't remember.)
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Cm258 on 22/01/2025(UTC), Aminatidi on 22/01/2025(UTC), ANDREW FOSTER on 22/01/2025(UTC), CV2 602 CC on 22/01/2025(UTC)
Aminatidi
Posted: 22 January 2025 19:26:16(UTC)
#87

Joined: 29/01/2018(UTC)
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The funds usually declare it i.e.

https://www.investcentre..._Current_portfolios.pdf

"(1) The VT AJ Bell Funds take a fixed Ongoing Charges Figure (OCF) inclusive of fund running costs, ongoing charges of underlying investments and a variable AMC."
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ANDREW FOSTER on 22/01/2025(UTC)
SF100
Posted: 22 January 2025 19:44:14(UTC)
#73

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Jed Mires;331947 wrote:
Rory Barr;331916 wrote:

But once you're in your 60s, have worked hard to build some wealth which you'll depend upon for the rest of your days (in SIPPs, ISAs and GIAs), why not just go with one or two 60:40 funds from, say HSBC and Fidelity, and get on with life?

What's the downside to this approach from an investment perspective (not the 'missing the fun of managing a portfolio' aspects) and does any of it outweigh just doing it...?


You are right and there is no downside. Its very very easy to get good returns relative to all other investors with similar asset profiles by simply buying a multi assset fund (such as Vanguard LS ). If however you want excellent returns its difficult because every step you take to achieve this could also produce poor returns. Its very easy to produce very poor returns trying to produce excellent returns.


No downside?
VLS 40 Inc has done +0.8% annualised last 5 years.
Paying an income of 2%.
That doesn't include drawing down any capital.

Would you have been happy retiring 5 years ago on that,
+ the prospect of rates nudging upward for another few years?

If your pot was v large, like xxd09, maybe...maybe.
If not, potential for much downside, mental health for one.
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Henry Smith on 23/01/2025(UTC)
ANDREW FOSTER
Posted: 22 January 2025 20:10:11(UTC)
#71

Joined: 23/07/2019(UTC)
Posts: 8,102
Quote:

With OEICs of OEICs (e.g Lifestrategy) the OCFs of the sub-funds have to be "rolled up" into the headline OCF. That's there in black and white in the PRIIPs regulations somewhere if you look for it, and you can see the calculation in the Lifestrategy annual report (the "wrapper" charge is only about half of the 0.22% OCF, with the rest being the contribution of the sub-funds' own OCFs).


Thus it seems there is indeed a "wrapper" charge PLUS the OCF's of the constituents.

Well....I'm out.

If I wanted LS40 I'd duplicate it's top ten and same some money. It would give 93% correlation with LS40
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Jed Mires
Posted: 22 January 2025 20:30:10(UTC)
#74

Joined: 04/04/2023(UTC)
Posts: 338
SF100;331956 wrote:
Jed Mires;331947 wrote:
Rory Barr;331916 wrote:

But once you're in your 60s, have worked hard to build some wealth which you'll depend upon for the rest of your days (in SIPPs, ISAs and GIAs), why not just go with one or two 60:40 funds from, say HSBC and Fidelity, and get on with life?

What's the downside to this approach from an investment perspective (not the 'missing the fun of managing a portfolio' aspects) and does any of it outweigh just doing it...?


You are right and there is no downside. Its very very easy to get good returns relative to all other investors with similar asset profiles by simply buying a multi assset fund (such as Vanguard LS ). If however you want excellent returns its difficult because every step you take to achieve this could also produce poor returns. Its very easy to produce very poor returns trying to produce excellent returns.


No downside?
VLS 40 Inc has done +0.8% annualised last 5 years.
Paying an income of 2%.
That doesn't include drawing down any capital.

Would you have been happy retiring 5 years ago on that,
+ the prospect of rates nudging upward for another few years?

If your pot was v large, like xxd09, maybe...maybe.
If not, potential for much downside, mental health for one.



If that was the asset profile you choose, bond heavy then you returns would be in line with similar asset profiles.
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Thrugelmir
Posted: 22 January 2025 20:40:51(UTC)
#82

Joined: 01/06/2012(UTC)
Posts: 5,317
Jed Mires;331963 wrote:
SF100;331956 wrote:
Jed Mires;331947 wrote:
Rory Barr;331916 wrote:

But once you're in your 60s, have worked hard to build some wealth which you'll depend upon for the rest of your days (in SIPPs, ISAs and GIAs), why not just go with one or two 60:40 funds from, say HSBC and Fidelity, and get on with life?

What's the downside to this approach from an investment perspective (not the 'missing the fun of managing a portfolio' aspects) and does any of it outweigh just doing it...?


You are right and there is no downside. Its very very easy to get good returns relative to all other investors with similar asset profiles by simply buying a multi assset fund (such as Vanguard LS ). If however you want excellent returns its difficult because every step you take to achieve this could also produce poor returns. Its very easy to produce very poor returns trying to produce excellent returns.


No downside?
VLS 40 Inc has done +0.8% annualised last 5 years.
Paying an income of 2%.
That doesn't include drawing down any capital.

Would you have been happy retiring 5 years ago on that,
+ the prospect of rates nudging upward for another few years?

If your pot was v large, like xxd09, maybe...maybe.
If not, potential for much downside, mental health for one.



If that was the asset profile you choose, bond heavy then you returns would be in line with similar asset profiles.


Don't recall many people discussing or investing in bond heavy funds 5 years ago. No one was discussing Microsoft in 2010 when it was on a P/E of 10 either. Hindsight is a wonderful thing, but foresight is better.
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SF100
Posted: 22 January 2025 21:40:42(UTC)
#75

Joined: 08/02/2020(UTC)
Posts: 2,254

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Jed Mires;331963 wrote:
SF100;331956 wrote:
Jed Mires;331947 wrote:
Rory Barr;331916 wrote:

But once you're in your 60s, have worked hard to build some wealth which you'll depend upon for the rest of your days (in SIPPs, ISAs and GIAs), why not just go with one or two 60:40 funds from, say HSBC and Fidelity, and get on with life?

What's the downside to this approach from an investment perspective (not the 'missing the fun of managing a portfolio' aspects) and does any of it outweigh just doing it...?


You are right and there is no downside. Its very very easy to get good returns relative to all other investors with similar asset profiles by simply buying a multi assset fund (such as Vanguard LS ). If however you want excellent returns its difficult because every step you take to achieve this could also produce poor returns. Its very easy to produce very poor returns trying to produce excellent returns.


No downside?
VLS 40 Inc has done +0.8% annualised last 5 years.
Paying an income of 2%.
That doesn't include drawing down any capital.

Would you have been happy retiring 5 years ago on that,
+ the prospect of rates nudging upward for another few years?

If your pot was v large, like xxd09, maybe...maybe.
If not, potential for much downside, mental health for one.



If that was the asset profile you choose, bond heavy then you returns would be in line with similar asset profiles.

Would they? Based on what?
Define 'similar asset profiles'
And what if we end up back at zirp,
still no downside and we should just adopt a 60:40 MAF anyway?
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Jed Mires on 23/01/2025(UTC)
ben ski
Posted: 22 January 2025 23:48:03(UTC)
#76

Joined: 15/01/2016(UTC)
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SF100;331977 wrote:

Would they? Based on what?
Define 'similar asset profiles'
And what if we end up back at zirp,
still no downside and we should just adopt a 60:40 MAF anyway?


I think in principle, MAFs should be no-brainers. They could do everything SJP charge you 2-3% for..

But I think they're too undefined for real investors. There's an argument that long duration bonds are really for institutionals (insurance, endowments, etc.) – they can have 40, 50 year liabilities to match. For a typical saver, it doesn't make much sense to have capital tied up that long. So LifeStrategy did its job, of tracking the market. But was the market's exposure to bonds really right for a saver?

I think the same with real assets. These MAFs are all-in on financial assets. And in the real economy, real assets are much bigger market than stocks. The 1970s would've been a bad time for most these MAFs.
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Helen L on 23/01/2025(UTC), SF100 on 23/01/2025(UTC)
Thrugelmir
Posted: 23 January 2025 01:26:54(UTC)
#79

Joined: 01/06/2012(UTC)
Posts: 5,317
ben ski;331984 wrote:
But was the market's exposure to bonds really right for a saver?



Isn't the question were bonds the right exposure for savers ?

The normality of interest rates was always going to happen. Though the speed. As market corrections often are. Extremely quick. Though the full consequences are years away still from being felt.
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