Ollie
Smith:
Now
Morningstar’s
fund
research
team
has
the
tricky
task
of
deciding
which
fund
strategies
are
worthy
of
Morningstar
analyst
coverage.
Here
to
discuss
one
such
strategy,
which
earned
coverage
in
January
this
year,
is
Senior
Manager
Research
Analyst,
Tom
Mills,
who
joins
me
now.
Tom,
thanks
for
your
time.
Why
did
BlackRock’s
MyMap
fund
strategy
range
earn
Morningstar
coverage
and
what
does
it
do?
Tom
Mills:
So,
we
picked
up
coverage
of
the
MyMap
range
earlier
this
year
and
awarded
it
a
Silver
rating
for
the
clean
share
classes.
What
it
does
is
it
provides
active
asset
allocation
at
a
low
cost.
So,
this
is
a
range
of
four
multi-asset
funds
that
each
have
a
different
risk
target
and
what
that
enables
is
for
each
fund
to
be
suitable
for
a
different
client
risk
profile.
OS:
Sure.
And
it’s
a
sort
of
close
competitor
of
L&G’s
own
range.
So,
how
do
they
differ
in
terms
of
approach
and
investment
holdings?
TM:
Yeah.
So,
the
range
that
you
mentioned
is
L&G
Multi-Index,
which
is
another
multi-asset
range
of
risk
targeted
funds.
This
one
has
five
different
risk
levels.
There’s
similarities
in
the
fact
that
they
both
offer
active
asset
allocation
and
use
passive
holdings.
L&G
is
primarily
passive.
It
does
use
a
little
bit
of
active
management
in
areas
like
direct
property,
for
example,
and
in
some
fixed
income
sectors.
Both
strategies
have
some
alternatives
allocation.
So,
BlackRock,
for
example,
has
gold
and
commodities
and
quite
a
small
allocation
to
alts,
whereas
the
L&G
Multi-Index
funds
have
a
little
bit
more
in
alternatives,
and
they
have
other
elements
in
the
alternative
sleeve,
including
direct
property,
for
example,
which
I
mentioned.
But
essentially,
they
are
similar
in
the
sense
that
they
provide
that
dynamic
asset
allocation
to
investors
at
low
cost
using
primarily
passive
underlying
building
blocks.
OS:
Cool.
And
it
would
be
remiss
not
to
mention
the
big
brand
in
this
space,
which
is
Vanguard
and
its
LifeStrategy
range.
How
does
LifeStrategy
compare
to
those
two
offerings?
TM:
So,
the
main
difference
is
the
fact
that
the
Vanguard
LifeStrategy
range
keeps
that
proportion
between
equities
and
bonds
fixed,
whereas
the
MyMap
and
the
L&G
Multi-Index
funds,
they
use
dynamic
asset
allocation.
They
will
shift
their
asset
allocation
in
order
to
meet
their
risk
objectives.
So,
they
have
a
long-term
asset
allocation,
but
there’s
also
a
medium-term
dynamic
element
there,
and
they’re
focused
on
meeting
their
risk
targets.
OS:
Cool.
Tom,
thanks
so
much.
For
more
on
fund
research
and
Tom’s
work,
check
out
Morningstar.co.uk
where
you
can
read
our
regular
fund
strategy
updates.
Until
next
time,
I’ve
been
Ollie
Smith
for
Morningstar.
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