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bearcub
Posted: 03 January 2025 17:46:09(UTC)
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Rob B;329966 wrote:

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?

Coming back to the original post, I guess the idea of a "one stop shop" multi-asset fund is very attractive, but experience suggests that it can't be that simple.

It smacks of searching for a Holy Grail, like the 60:40 portfolio, or the manager at one AGM I attended who suggested that all you needed were two IT's: Personal Assets and Scottish Mortgage. Who knows, those might have been the best answer to your returns/ risk/ volatility profile at a certain time – but not all the time?

A MAF may give you diversification within the fund - but none to combat manager risk. So you might be wise to spread your money across several MAF's, just in case, which complicates your simple life.

It's guaranteed that something else will always be performing better than the MAF at any given time, and from a behavioural economics standpoint that isn't great. Whereas if you have a diversified portfolio, at least one of the constituents will hopefully be doing well, so that makes you feel better about the dogs - hence less inclined to sell up at a bad time.

AFAIK, MAF fees are generally higher than those of trackers, and on the principle that there's no free lunch, you're paying a premium to let someone else make your life simpler, and by definition your returns will likely be lower than otherwise.
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Sara G on 03/01/2025(UTC)
Cm258
Posted: 03 January 2025 17:52:30(UTC)
#30

Joined: 30/07/2022(UTC)
Posts: 458
Cm258;330002 wrote:
Assuming one is comfortable with the risk of a 60/40 portfolio, simply splitting your assets over a few multi asset funds does make a lot of sense.

Be interesting to see what equal 25% allocations to the below, would have done over the last 10 years...


  • Fidelity Multi Asset Allocator Growth
  • Vanguard LifeStrategy 60
  • HSBC Global Strategy Balanced
  • Troy Trojan X


Okay, I've done it. A portfolio with 25% each of th above, versus it's component parts...

Pros and cons of something like this? Reduces single fund manager risk, and has a 25% allocation to something 'active'. Thoughts?





Each of these MAFs have OCFs of <30bps. And the active Troy Trojan is 80bps. Not bad. But agree with the above post about having multiple funds to invest into and balance.
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Tom 123
Posted: 03 January 2025 18:54:19(UTC)
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Cm258;330042 wrote:
[quote=Cm258;330002]

Each of these MAFs have OCFs of <30bps. And the active Troy Trojan is 80bps. Not bad. But agree with the above post about having multiple funds to invest into and balance.


The correlation of these funds looks so close, what's the benefit of diversifying across all 4?

I would rather diversify with a completely uncorrelated asset like gold.

Gold (ishares Physical Gold ETC) is correlated at 0.15 to Fidelity Multi Asset Allocator Growth and 0.22 to Vanguard LS60 (from Trustnet comparison)

I've yet to find a more uncorrelated asset than physical gold to broad equities and bonds. If anyone knows of one, please let me know.
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Sara G on 03/01/2025(UTC), Guest on 03/01/2025(UTC), Cm258 on 03/01/2025(UTC), Dexi on 04/01/2025(UTC)
Cm258
Posted: 03 January 2025 20:01:06(UTC)
#32

Joined: 30/07/2022(UTC)
Posts: 458
Tom 123;330047 wrote:
Cm258;330042 wrote:
[quote=Cm258;330002]

Each of these MAFs have OCFs of <30bps. And the active Troy Trojan is 80bps. Not bad. But agree with the above post about having multiple funds to invest into and balance.


The correlation of these funds looks so close, what's the benefit of diversifying across all 4?

I would rather diversify with a completely uncorrelated asset like gold.

Gold (ishares Physical Gold ETC) is correlated at 0.15 to Fidelity Multi Asset Allocator Growth and 0.22 to Vanguard LS60 (from Trustnet comparison)

I've yet to find a more uncorrelated asset than physical gold to broad equities and bonds. If anyone knows of one, please let me know.


Primarily to protect against manager risk. The Trojan X is about 11% gold and actively managed, whereas the other 3 are actively managed but deploy passive funds/ETF to reach the desired allocations. Spreading across 4 MAFs isn't in my mind for any other reason than to diversify across big names and management approach.
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SF100 on 03/01/2025(UTC)
Raj K
Posted: 04 January 2025 10:06:38(UTC)
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Jed Mires;329970 wrote:
A really simple 50% MSCI world and 50% MMF returned 13.26% year to date. If you are not gettings this return then you need to have a good think about your portfolio.


I see you point but i am not sure that it is valid over such a short timeframe. Outperformance comparison to simpler index/cash portfolios needs to be done over 5 years and more. The very nature of having your own active choice (particularly buy and hold types) means that it is likely to perform differently to an index or a simpler portfolio. A person may not have got 13.26% this year but may have beaten the comparator over 5 or 10 years etc. Of course there comes a point that you have consistently not beaten a simpler index/cash portfolio you need to question why not.
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Keith Cobby on 04/01/2025(UTC), Big boy on 04/01/2025(UTC), Jed Mires on 04/01/2025(UTC)
Big boy
Posted: 04 January 2025 11:53:07(UTC)
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If you find an "optimum" value for a stock you should be able to say they are under or overvalued every day.

Clearly the markets are inefficient every day and this is confirmed by the swings in 12 month high/lows.

The optimum value must travel a less volatile line during the 12 month period and using Funds/passives we have no way of finding an optimum value and this also applies to direct equities. This also can lead to the Woodford effect.

I gather Warren B trades regularly in Apple and adds value to core holding so I presume they can value the Company daily.

I find its only possible to have a daily optimum value using IT/ICs as all the rest is speculating and gambling unless someone knows differently.

I have found the markets very inefficient as the majority move in a similar way and I give 2 experiences from the pass which may interest others.

1st. The market decided that UK Smaller had no future and the only sector to be in was Global Equities. The sector then saw large declines in SPs as the majority moved but also in addition the UK Smaller Trusts fell to 25% discounts ie a double whammy on down side.

6 months late we had the Tech Boom and this reversed everything ie SPs recovered and discounts narrowed ......(as greed showed its face clearly it was time to sell.)

2nd. In the midst of the Far EastAsian financial crisis we saw the underly SPs crash and then discounts fell to 25%...........About 6 months later the Investment houses become excited by the value and started a large issuance..
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Micawber on 04/01/2025(UTC), Sheerman on 04/01/2025(UTC)
You have to change your life
Posted: 04 January 2025 12:00:45(UTC)
#40

Joined: 17/11/2021(UTC)
Posts: 2,194
/\ Buy low .. sell high. /\

Simple
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Micawber
Posted: 04 January 2025 12:05:02(UTC)
#41

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On minimalist portfolios the eggs-and-baskets question assumes more significance. Not that we expect the likes of Vanguard to go belly up or have its servers and backup hacked, but every year of my life I've seen some headlines I never thought possible,
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Big boy on 04/01/2025(UTC), bearcub on 04/01/2025(UTC)
Wave Action
Posted: 04 January 2025 12:06:33(UTC)
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Raj K;330067 wrote:
Jed Mires;329970 wrote:
A really simple 50% MSCI world and 50% MMF returned 13.26% year to date. If you are not gettings this return then you need to have a good think about your portfolio.


I see you point but i am not sure that it is valid over such a short timeframe. Outperformance comparison to simpler index/cash portfolios needs to be done over 5 years and more. The very nature of having your own active choice (particularly buy and hold types) means that it is likely to perform differently to an index or a simpler portfolio. A person may not have got 13.26% this year but may have beaten the comparator over 5 or 10 years etc. Of course there comes a point that you have consistently not beaten a simpler index/cash portfolio you need to question why not.


2024 was the best SP 500 year since 1995 . Very few amateur investors have the time or experience to research and monitor markets. Hundreds of funds to consider so it becomes confusing. Then why not the simple portfolio. ? Could be cash , bonds / gilts and global tracker ? A drop of Gold 5/10% ?
From the Trustnet link I've managed to show period 1999 to 2011. This highlights a decade of disaster for global equity after the dotcom boom and GFC. MSCI WORLD INDEX ( A ) slumps as much as 40% . CASH ( B ) and M&G GILT FUND ( C ) are running together within reason until 2008. Then comes the GFC and lower rates. Gilts are riding high. IF you're an expert at timing situations then Gilts were the game. 99% of investors aren't experts including myself. We usually end up with bit of this and that . Back to the simple portfolio if you don't need the challenge. ?



From the Trustnet link hit the Annualised Performance tab . Cash or gilts take your pick. Gilts can be volatile there's another problem ? Note the Royal Life STMMF has a short history so is suffering with lower rates. Now delivering 5% pa so improved situation.

https://www2.trustnet.co...0,F0ZDP,NBG05,O_FRLCASH

Same again with the fund managers hit the Annualised Performance tab.

https://www2.trustnet.co...NB:AFIA,NB:AFIB,NB:AFIC

VLS 60 and 40 . Year 2020 both down during pandemic . Down in 2022 . There's nowhere to hide unless you're nimble and make the correct calls.

https://www2.trustnet.co...ode=NM990100,FACDO,FACDQ
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Raj K on 04/01/2025(UTC)
m.c.f
Posted: 04 January 2025 12:14:28(UTC)
#42

Joined: 17/12/2011(UTC)
Posts: 1
It's easy/but it isn't heres my tuppence can you name all your holdings do your fumds/its overlap do your top porformers all hold a variation of the same stocks .Do they out perform their sector average. Do you have the time/enjoy managing your money . When to sell is more important than when or what to buy.
active v. passive is a pointless argument both are valid.
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