Active to Passive - Buffets solution

[EssDeeAitch]

I currently manage all investments for spouse and self but in the event of my predeceasing my spouse, I would like to ensure that the PF is as easy as possible for my spouse to manage/harvest. I know that Buffet has said to put everything into a tracker(s?) on his death, but which trackers would forum members recommend for inclusion in this limited PF?

One or two global; three or four regional? Global plus regional? The objectives are simplification and at least inflation proofed growth

[paulnumbers]

As you’re probably aware Buffett recommends S&P500, but I’ve never heard him say why that particular US one.

You might consider Vanguard FTSE global all cap, if you wish to have the blandest possible no opinion portfolio. I cant help but feel over the long run buffett will be correct, and the american market will outperform the world market.

[xxd09]

It is a problem and often discussed
Vanguard has Lifestrategy funds -you could have one fund only -very simple for spouse to manage
Equities and Bonds set at your chosen allocation
Just sell shares/units as required and leave the rest to grow
If you have children you could instruct a younger person to help if not run the Portfolio
xxd09

[EssDeeAitch]

Many thanks, I think that S&P 500 will certainly be a candidate and a FTSE Global fund would seem to make sense except for the overlap. But in truth, I think one can always start picking the fly s*** out of the pepper (takes ages to no discernible benefit).

[tikunetih]

I currently manage all investments for spouse and self but in the event of my predeceasing my spouse, I would like to ensure that the PF is as easy as possible for my spouse to manage/harvest. I know that Buffet has said to put everything into a tracker(s?) on his death, but which trackers would forum members recommend for inclusion in this limited PF?

One or two global; three or four regional? Global plus regional? The objectives are simplification and at least inflation proofed growth

If the goal is ultimate simplicity this points to using a single, diversified multi asset "fund", to which all portfolio management decisions would be outsourced. Your spouse would harvest any income generated and top this up by selling "a few percent" of the fund each year*.

There are a number of ITs that attempt to provide someone's whole portfolio in a single fund. These are not passive in the sense of using index funds, but they tend to have low-turnover portfolios and require no input from the holder.

Alternatively, the most cost-effective and diversified (by asset class and geography) funds are probably the multi-asset OEIC fund ranges that have emerged in more recent years, from a range of providers including Vanguard (LifeStrategy range) mentioned previously, but also from others including but not limited to Blackrock (Consensus range), HSBC (Global Strategy range) and L&G (Multi Index range). These ranges largely or wholly construct their portfolios using passive underlying vehicles in order to really minimise costs. Be aware that being OEICs they may attract broker platform fees but are still likely ("certain") to be lower cost than traditional IT alternatives.

Since you'd no longer be overseeing the portfolio you'd need to carefully consider your spouse's risk/volatility tolerance if this is something they've not previously had much exposure to, so as to select a suitable fund (suitable fund within an OEIC provider's fund range). And, consider their financial goals, since there's little point in taking on more risk than you need to, while also being realistic about how long the investment horizon could actually be if they lived to a very ripe old age.

I wouldn't discount the traditional ITs, but top of my list for consideration would be something from the low-cost multi-asset OEIC fund ranges, such as HSBC's Global Strategy range. My view is that it's not just investors aiming to simplify their affairs late in life who'd benefit from using funds such as these, but actually a majority of investors or would-be investors.


*NB don't underestimate how something even as simple sounding as this to an experienced investor could become a major burden to operate effectively for someone with no experience and/or losing faculties. Backup plans for an IFA or trusted family member to get involved might still be required at some point.

[EssDeeAitch]

I currently manage all investments for spouse and self but in the event of my predeceasing my spouse, I would like to ensure that the PF is as easy as possible for my spouse to manage/harvest. I know that Buffet has said to put everything into a tracker(s?) on his death, but which trackers would forum members recommend for inclusion in this limited PF?

One or two global; three or four regional? Global plus regional? The objectives are simplification and at least inflation proofed growth

If the goal is ultimate simplicity this points to using a single, diversified multi asset "fund", to which all portfolio management decisions would be outsourced. Your spouse would harvest any income generated and top this up by selling "a few percent" of the fund each year*.

There are a number of ITs that attempt to provide someone's whole portfolio in a single fund. These are not passive in the sense of using index funds, but they tend to have low-turnover portfolios and require no input from the holder.

Alternatively, the most cost-effective and diversified (by asset class and geography) funds are probably the multi-asset OEIC fund ranges that have emerged in more recent years, from a range of providers including Vanguard (LifeStrategy range) mentioned previously, but also from others including but not limited to Blackrock (Consensus range), HSBC (Global Strategy range) and L&G (Multi Index range). These ranges largely or wholly construct their portfolios using passive underlying vehicles in order to really minimise costs. Be aware that being OEICs they may attract broker platform fees but are still likely ("certain") to be lower cost than traditional IT alternatives.

Since you'd no longer be overseeing the portfolio you'd need to carefully consider your spouse's risk/volatility tolerance if this is something they've not previously had much exposure to, so as to select a suitable fund (suitable fund within an OEIC provider's fund range). And, consider their financial goals, since there's little point in taking on more risk than you need to, while also being realistic about how long the investment horizon could actually be if they lived to a very ripe old age.

I wouldn't discount the traditional ITs, but top of my list for consideration would be something from the low-cost multi-asset OEIC fund ranges, such as HSBC's Global Strategy range. My view is that it's not just investors aiming to simplify their affairs late in life who'd benefit from using funds such as these, but actually a majority of investors or would-be investors.


*NB don't underestimate how something even as simple sounding as this to an experienced investor could become a major burden to operate effectively for someone with no experience and/or losing faculties. Backup plans for an IFA or trusted family member to get involved might still be required at some point.

Very useful information and thanks. I will look at the HSBC range (and similar). I have two executors who are pretty smart when it comes to matters finance and investing so no worries on that score (and this is purely precautionary, there is no knowledge of impeding clog popping as yet).

[paulnumbers]

Also might be of interest, blackrock is launching a multi-asset fund at 0.17bps that is a fair bit cheaper the Vanguard LS

https://citywire.co.uk/wealth-manager/n ... e/a1233367

[richfool]

I know that Buffet has said to put everything into a tracker(s?) on his death, but which trackers would forum members recommend for inclusion in this limited PF?

This video, recommended to me by monabri, may be useful. It discusses/suggest which ETF's to use:

https://youtu.be/tHvlU1WGjpU

[tikunetih]

Also might be of interest, blackrock is launching a multi-asset fund at 0.17bps that is a fair bit cheaper the Vanguard LS

https://citywire.co.uk/wealth-manager/n ... e/a1233367

Good spot.

Blackrock already has its low-cost multi-asset "Consensus" fund range, but similarly to Vanguard's LifeStrategy range Consensus has a large UK home bias, which I don't believe to be ideal - I'm not alone in this as home bias is increasingly going out of fashion in favour of more globally-appropriate weightings.

Hopefully, the new Blackrock MyMap range will eschew much or any home bias, akin to what HSBC's Global Strategy range is already doing, and it is to be volatility targeted vs. fixed equity weightings, again akin to HSBC's range. It's HSBC's non-home-bias, volatility targeting vs. fixed equity allocations, and very low costs (eg. 19 bps OCF for the Global Strategy Balanced fund; a touch lower for the more cautious funds), which make me prefer that range currently. WIth luck, MyMap will be a good alternative.

Vanguard did play a marketing blinder in the naming of their LifeStrategy range; maybe BlackRock were aiming for a similarly snappy name but "MyMap" sounds a bit crap - probably focus grouped!

[EssDeeAitch]

I know that Buffet has said to put everything into a tracker(s?) on his death, but which trackers would forum members recommend for inclusion in this limited PF?

This video, recommended to me by monabri, may be useful. It discusses/suggest which ETF's to use:

https://youtu.be/tHvlU1WGjpU

Good video, thanks for posting. I have seen other videos by Ramin, I like the chap, great delivery style.