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Blackrock Consensus 85 and diversifying
MunchyLee
Posted: 18 April 2017 15:22:49(UTC)
#1

Joined: 18/04/2017(UTC)
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I am a newbie investor. I want to have a balance of say 3 funds containing indexes and bonds and avoid the charges and risks associated with managed funds. However, Im struggling to get a clear idea of the Blackrock Consensus fund 85 and what to do next.

Looking at the factsheet it seems to comprise a number of indexed/ trackers within it and isnt a managed fund per se. It appears to be 75 % stock indexes and another 25% bond indexes, with some 39% UK and 22% USA and the rest, well the rest of the world.

I called Blackrock now to confirm the above the customer services person didnt know and has to get back to me. (Oops!?)

My question is- what else should I do if this fund already appears balanced?

I was looking perhaps at the Vanguard Life Strategy 100% but that seems to be a very similar fund.

or even the Vanguard Global Bond index but why buy more bonds if they are already in Blackrock (although I want a higher % than 25%)

I am investing in the above via a Hargreaves and Landsdown SIPP

Thanks for any advice
Julian Wang
Posted: 20 April 2017 15:26:36(UTC)
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Joined: 11/01/2013(UTC)
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If you just want an all in one simple index fund, its hard to beat Vanguard life strategy.

If you have a long horizon, 10+ years, go with either 80% or 100% equity. Higher the equity content, higher the long term expected return provided you can stomach the short term volatility. In fact if you invest regularly, you get to buy more with your contribution when the market is down.

Alternatively choose a Vanguard target retirement fund.

A SIMPLE index fund will do just fine! My default passive index fund company is Vanguard because it has a good culture of giving its customers a fair deal!

If you just starting out, go with Cavendishonline which has lower charges than HL. Every penny count.

Once you go over fifty K, you might want to move to a flat charge plate form such as Alliance trust.



Julian
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MunchyLee on 20/04/2017(UTC)
King Lodos
Posted: 20 April 2017 17:02:43(UTC)
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I'd go with Vanguard, and I like how well thought out their LifeStrategy funds are.

Vanguard's one of these firms whose active funds (like Wellington, Wellesley) still consistently beat their passives, and go back to 1929 .. So if you want a firm who can run funds well making conservative decisions.

Ben Graham said never more than 75% Stocks .. I'd you're going to be paying in regularly, then you can afford to be aggressive with Stocks (if you're buy-and-hold, and already prepared for 50% market drawdowns) .. Otherwise, I wouldn't put a large lump sum in a single asset class.

A risk-balanced portfolio would probably be no more than 40% Stocks.

Some, like Ray Dalio, would say you're not really balanced unless you've got 5-10% in Gold too. Some decades – like the 70s – Commodities are the only things that go up. So you could say just Stocks and Bonds don't really diversify you enough.



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MunchyLee on 20/04/2017(UTC)
markus
Posted: 20 April 2017 18:25:57(UTC)
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I'm saving regularly into the Vanguard LS 80% & have looked at the BR Consensus 85 in the past. Mulled over running both together as a pair...but not done that so far.

Was under the impression that the Vanguard LS funds are pretty fixed asset allocation wise but does include the periodic rebalancing. i.e. if you buy th 80% version then give or take the odd percentage point it will always have 80% in equity.

Whereas the BR Consensus 85 will hold between 45-85% stock depending upon how it sees things panning out. So there is some active management going on.

BR Consensus via HL looks to be rebated down to 0.09% + platform fee...struggle to get something as cheap as that!
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MunchyLee on 20/04/2017(UTC)
Julian Wang
Posted: 20 April 2017 19:53:47(UTC)
#6

Joined: 11/01/2013(UTC)
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HL plateform fee: 0.45%, BR discounted fee 0.09%; total 0.54%

Cavendishonline plateform fee: 0.25%, VG LS fund fee 0.22%; total 0.49%


Get great service from HL, but you pay for it!


In investing, you get what you do NOT pay for. Buy your Kellog corn flakes from LIdl and NOT Watrose.



Julian

2 users thanked Julian Wang for this post.
tom_b on 20/04/2017(UTC), MunchyLee on 20/04/2017(UTC)
MunchyLee
Posted: 20 April 2017 20:31:07(UTC)
#7

Joined: 18/04/2017(UTC)
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Hi all

Thanks so much for amazing replies.

I have had my head in the sand for years after losing money in property during the 2008 crisis, and believing that it was the only way to have a pension - via property.

Only recently have I dusted off 2 old pensions I had with former employers. One was with L&G but an expensive managed pension fund and with awful customer service every time I call them, I have moved the money over to the second pension with HL. The HL pension is with Blackrock Consensus 85 and looks like its enjoyed good growth. Now what to do with the second lump of cash. I was looking at the Vanguard World Index tracker before I read about the V Life Strategy here.

However, if I was to buy a few more bonds (I am 45 so need something less risky but happy to commit for 20 years) should I buy into a UK Bond index? Vanguard seems to offer a UK bond tracker. Seems risky with current political instability. International bond tracker better?

Although the Blackrock fund seems to contain 25% Bonds
King Lodos
Posted: 20 April 2017 21:35:30(UTC)
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markus;46013 wrote:
Whereas the BR Consensus 85 will hold between 45-85% stock depending upon how it sees things panning out. So there is some active management going on.


That's why I'd go with Vanguard.

I think if you're going to go with active, you really need to know who's making the decisions and why.

With Vanguard, you're buying the market, although they do make very small changes when markets get overvalued – which I quite like.
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MunchyLee on 20/04/2017(UTC)
King Lodos
Posted: 20 April 2017 21:51:58(UTC)
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MunchyLee;46020 wrote:
Hi all

Thanks so much for amazing replies.

I have had my head in the sand for years after losing money in property during the 2008 crisis, and believing that it was the only way to have a pension - via property.

Only recently have I dusted off 2 old pensions I had with former employers. One was with L&G but an expensive managed pension fund and with awful customer service every time I call them, I have moved the money over to the second pension with HL. The HL pension is with Blackrock Consensus 85 and looks like its enjoyed good growth. Now what to do with the second lump of cash. I was looking at the Vanguard World Index tracker before I read about the V Life Strategy here.

However, if I was to buy a few more bonds (I am 45 so need something less risky but happy to commit for 20 years) should I buy into a UK Bond index? Vanguard seems to offer a UK bond tracker. Seems risky with current political instability. International bond tracker better?

Although the Blackrock fund seems to contain 25% Bonds


Well Government bonds look terrible at the moment .. I don't think they've ever been more expensive (Gov Bonds are just over half the Global Bond fund).

They got nearly this expensive around the end of WW2, then spent most of the rest of the century having their returns decimated by inflation.

So I think if you held a broad bond fund, going forwards, it might seem like a waste of time .. The advantage of having Bonds in a fund like LifeStrategy is they at least negatively correlate with Stocks, so with the automatic rebalancing the fund will do, a 20% weighting to bonds should do a reasonable job of smoothing out volatility and cushioning the worst the Stock Market can throw at you.


1 user thanked King Lodos for this post.
MunchyLee on 20/04/2017(UTC)
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