Last year I was helping a friend to construct a
diversified multi-asset portfolio. She wanted a low volatility, low cost, diversified asset mix and decided on a blend of Vanguard Lifestrategy (20 &
40) as a core of the portfolio with a smaller allocation between Personal Assets
Trust, HSBC Global Strategy Cautious and Royal London Sustainable Managed
Growth.
I have followed the fortunes of this portfolio. I already hold the Lifestrategy funds - 40 & 60, however I have been impressed with the RL fund in particular and decided to add it to my own portfolio
earlier this month. The decision was prompted by the Coventry BS cutting my savings rate this month...just two months after they increased it.
This is another 'Steady Eddie' fund which is listed
in the IA Mixed Investments 0 - 35% Equity category. The breakdown of asset mix
is :
Fixed Investments 71%
UK Equities 12%
US Equities 5%
Euro Equities 4%
Cash & Other 8%
Top 10 holdings include Amazon, Microsoft and
Alphabet (Google) which have probably helped to boost returns over the past few
years.
Performance
The fund has delivered a return of 8.3% in 2017 and 35%
over the past 5 years which works out at an annualised average of 6.4% p.a. The fund is ranked top out of 39
funds in the sector over this period. By comparison, the Vanguard Lifestrategy
20 fund has returned 25% over the past 5 years and is ranked 10th/39.
 |
| 5 Yr Comparison v VLS20 (click to enlarge) |
The fund has paid out 3.6p in dividends over the past year which at the current price translates to a yield of 2.6% paid quarterly and has ongoing charges of 0.69%.
Ethical
This fund is part of a range of ethical options
which were previously managed by the Co-operative Asset Management Group and
which were taken over by RL in 2013.
The sustainable range of funds may be attractive to
the more ethical-minded investor as the investment process involves screening for
environmental, social and governance issues.
The funds will try to avoid holdings involved in
animal testing, arms trade, pornography, tobacco and nuclear power for example
and there will be many investors who share these ethical considerations and who
do not want to be a part of exploitative industries.
All funds in the range have a good track record for
investor returns. For example in 2017, returns were :
RL Sustainable World 18.0% (40 - 85% shares sector)
RL Sustainable Diversified 12.9% (20 - 60% shares sector)
RL Sustainable Managed Growth 8.3% (0 - 35% shares sector)
So, I can get a reasonable return and invest with a
clear conscience with these funds.
If you have views or dilemas about ethical investing feel
free to share them and leave a comment below.
Finally, this
article is a record of my personal investment thoughts/decisions and is not a
recommendation - as always, please DYOR.
Thanks for your blog and e-books, very useful for an inexperienced investor like me!
ReplyDeleteI'm waiting on my DC pension transfer to a SIPP but I too have decided on a mix of VLS 20% and 40% as the core of the portfolio and I'm looking at a few funds/trusts as further diversification. Thanks for the info about the RL (and HSBC) funds, look interesting. I've been modelling a few portfolio ideas on morningstar and I was surprised that they rate the RL as 'high' in their risk classification given it's 0-35% shares, multi asset etc. They also have vanguard LS 20% as 'above average'. I had a look at how they arrive at classications but it was a bit beyond me!
Thanks and good to hear you are finding the books useful. I agree with your observation on the Morningstar rating. Better to rely upon your own research and assessment.
DeleteGood luck with the transfer and future investment plans.