I'm aware that some discretionary wealth management and advisor types use the WMA private investor indices as a benchmark and as a guideline for asset allocation. (Update: that link is now broken/locked up; however there's a wayback machine scrape of it from shortly before I posted this question here).

I'm interested in what the simplest, lowest cost way of reproducing the "income index" of that group is. At time of writing, the allocation and sub-indices comprising it are:

* UK Equities              35.0% - FTSE All-Share Index
* International Equities   17.5% - FTSE All World Ex-UK Index
* Bonds                    27.5% - FTSE Gilts All Stocks index
* Cash                      5.0% - 7-Day LIBOR –1% (London Interbank Offer Rate)
* Commercial Property       5.0% - FTSE All UK Property Index
* Hedge funds/Alternatives 10.0% - WMA Custom Hedge Index

Therefore what I think I'm looking for is something like:

  • A single fund or trust (or ETF even) - presumably some sort of multi-asset/multi-strategy type thing - which explicitly claims this index as a benchmark.
  • A combination of a few such things achieving the same overall allocation.
  • No more than 6 (ideally passive, in the interest of costs) investments which reproduce it directly.

I'm aiming for low cost and simplicity. Anything which helps the portfolio "self rebalance" is good (for example I quite like Vanguards' Lifestrategy funds, although they're not obviously a good fit to what I'm trying to do here). Basically the idea is to come up with something which might be called "off the shelf discretionary wealth management" or even "passive discretionary wealth management" achieving much the same exposure and returns but without the additional fees normally associated with DWM.

A slight complicating factor is the information on the page linked above that the "WMA Custom Hedge Index" has been obsoleted and temporarily replaced with a somewhat unsatisfactory 50/50 UK equities/gilts split (in other words... "more of the same"). I'd actually rather substitute that with some absolute-return/private equity type component to the overall portfolio as presumably more in keeping with what this allocation is trying to achieve.

Update 2018-02-22: The WMA private investor indices now seem to be in MSCI's domain. I couldn't find a direct link to the asset allocation there, but google finds a 2017 PDF with:

Asset Class                    Asset Class Proxy Index
International Equities  22.5%  MSCI All Country World (ACWI) ex-UK 
UK Equities             30.0%  MSCI United Kingdom IMI
Government Bonds         5.0%  Markit iboxx GBP Gilts
Corporate Bonds         17.5%  Markit iboxx GBP Corporates
Inflation-Linked Bonds   2.5%  Markit iboxx UK Gilt Infl-Linked
Cash                     5.0%  Cash Equivalent (GBP 1W Libor-1%)
Real Estate              5.0%  MSCI UK IMI Liquid Real Estate
Alternatives            12.5%  MSCI World Diversified Multi-Factor 50% + 1w LIBOR (GBP) 50%

I note the move to include corporate bonds explicitly may well make it more directly comparable with multi-asset funds (for example Vanguard's Lifestrategy/L&G's multi-index/Blackrock Concensus), but haven't yet looked into how well it matches in any more detail myself.


1 Answer 1


L&G's multi-index 5 or 6 seems not too bad a fit (although I'm not sure what if anything it claims as a benchmark), and these days many would no doubt regard the main discrepancy (tilting away from UK equities to international) as a positive feature. Asset allocation in latest factsheet is:

                        WMA      L&G 6    L&G 5
International Equities  22.5%    50.6%    39.5%
UK Equities             30.0%    19.2%    13.8%
Government Bonds         5.0%     2.0%     3.0%
Corporate Bonds         17.5%    16.3%    26.9%
Inflation-Linked Bonds   2.5%     3.0%     6.3%
Cash                     5.0%     0.2%     2.3%
Real Estate              5.0%     5.9%     7.1%
Alternatives            12.5%     2.8%     2.1%

That's counting infrastructure as an alternative and assuming the allocation to small caps the factsheet mentions is UK small caps. A better fit could probably be achieved by simply holding a small additional allocation to cash and alternatives alongside a core L&G multi-index holding.

OCF (institutional units) claims to be 0.3% so certainly cheaper than what you'd expect to pay the sort of advisers who use the WMA indices as benchmarks to manage a portfolio for you.

One caveat: the L&G multi-index funds modify asset allocation to achieve a target volatility level and may well drift away from the WMA's allocation (although the WMA obviously do make changes too from time to time, given their asset allocation now is different from a couple of years ago - see original question).

Another (cheap, 0.22% OCF) option might be Vanguard Lifestrategy ("60" seems the closest"). As with the L&G funds it doesn't match the WMA's strong "home bias", and it also doesn't have any allocation to alternatives at all.

                        WMA      VLS60
International Equities  22.5%    44.6%
UK Equities             30.0%    15.0%
Government Bonds         5.0%    10.8%
Corporate Bonds         17.5%    25.8%
Inflation-Linked Bonds   2.5%     3.8%
Cash                     5.0%     0.0%
Real Estate              5.0%     0.0%
Alternatives            12.5%     0.0%

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