Posted inHead To Head, News, Research

HEAD-TO-HEAD: HSBC vs Vanguard

FSA compares two UK passive funds: the HSBC FTSE 100 Index Fund and the Vanguard FTSE UK All Share Index Unit Trust Accumulation Fund.
by Francis Nikolai Acosta
Conclusion

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The HSBC fund receives a Morningstar analyst rating of Neutral and a three-star rating, while the Vanguard fund receives a Silver analyst rating and a three-star rating.

Morningstar’s analyst rating is a forward-looking analysis of a fund, while the star rating looks at historical risk-adjusted performance.

Bioy prefers the Vanguard fund because she believes it is more representative of the UK market.

“[The FTSE All Share Index] is more representative of the opportunity set that is available to active managers in the UK,” Bioy said.

With the FTSE 100, by comparison, active managers have tended to beat this index by avoiding resource-related companies, such as energy and mining, which dominate the index and were negatively affected when commodity prices slowed in 2014, she said.

She added that Morningstar may never upgrade the HSBC fund’s Neutral rating because it offers too narrow of an exposure for a long-term investor.

However, she said that the HSBC fund may be more suitable for investors who have a more granular approach in their asset allocation and would just want to have exposure specifically to large-cap UK companies.

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