Why doesn't everyone just buy Vanguard LifeStrategy?

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  • grandst
    grandst Posts: 38 Forumite
    Lifestrategy has a high effective duration for its bonds, probably not the type of bonds you want to invest in at this time.
  • Audaxer
    Audaxer Posts: 3,506
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    dunstonh wrote: »
    Look at the spread at the fixed interest between the two. Then look at the areas of fixed interest that are doing well and badly (not down to picking but just where we are at this time in the cycle). VLS doesnt invest in the spread required to pick up some of those areas beyond their general catchall funds. L&G will use more focused funds to increase weightings in the various areas.

    Broadly speaking, when you look at the comparative funds for risk, you generally find VLS is better with equities and L&GMI is better at fixed interest. If you compare various periods when bonds are stronger than equities or vice versa, you can see the differences.

    Hence, if you are looking to use a multi-asset fund for fixed interest, the L&GMI would be a better option. (although I wouldnt use either for that).
    I also like the look of HSBC Global Strategy funds. Do you know how they compare to VLS and L&GMI for bonds and equity risk?
  • aroominyork
    aroominyork Posts: 2,802
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    grandst wrote: »
    Lifestrategy has a high effective duration for its bonds, probably not the type of bonds you want to invest in at this time.
    Since both funds are meant to replicate the market - albeit with different methods for doing so - is L&G's going to be, and is it, much different?
    dunstonh wrote: »
    Look at the spread at the fixed interest between the two. Then look at the areas of fixed interest that are doing well and badly (not down to picking but just where we are at this time in the cycle). VLS doesnt invest in the spread required to pick up some of those areas beyond their general catchall funds. L&G will use more focused funds to increase weightings in the various areas.

    Broadly speaking, when you look at the comparative funds for risk, you generally find VLS is better with equities and L&GMI is better at fixed interest. If you compare various periods when bonds are stronger than equities or vice versa, you can see the differences.

    Hence, if you are looking to use a multi-asset fund for fixed interest, the L&GMI would be a better option. (although I wouldnt use either for that).
    I’m not drilling into the bonds – I couldn’t do it accurately – but comparing five year performance VLS does well enough for me not to question my holding in it: VLS80 (currently 77% equities) rose 75% compared to L&GMI 7 (75% equities) rising 49%; VLS20 (19.5% equities) rose 32% compared to L&GMI 3 (16% equities) rising 28%.
  • BLB53
    BLB53 Posts: 1,583 Forumite
    I think to provide an income of 4% indefinitely you need your fund/portfolio to grow at more than 4% per annum, so it keeps up with inflation. Maybe if you need to take out 4% per annum it would be best to grow at an average of say 6% per annum?
    I am working on the assumption my VLS 60 fund will grow at an average of 6% p.a. long term so plenty of safety margin with my withdrawn income of 4%.

    Of course, if inflation were to exceed 4% I would hope for a corresponding uplift in returns from my Vanguard fund as I expect the long term returns to always be above inflation.
  • Linton
    Linton Posts: 17,066
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    Since both funds are meant to replicate the market - albeit with different methods for doing so - is L&G's going to be, and is it, much different?

    I’m not drilling into the bonds – I couldn’t do it accurately – but comparing five year performance VLS does well enough for me not to question my holding in it: VLS80 (currently 77% equities) rose 75% compared to L&GMI 7 (75% equities) rising 49%; VLS20 (19.5% equities) rose 32% compared to L&GMI 3 (16% equities) rising 28%.

    Trustnet tells me that the LGMI funds have only been running since august 2013
  • Linton
    Linton Posts: 17,066
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    And again according to Trustnet the 3 year performance figure shows lgmi 3 slightly ahead of vls20.

    However one doesn't invest in these type of funds to maximise performance. A rather more relevant figure would be the performance during the bad economic times.
  • atush
    atush Posts: 18,719
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    I'm fairly new to this investing thing and have a fair amount of cash invested in Vanguard LifeStrategy funds. In the three weeks or so that I have had them they seem to have gone up nearly 2%.

    Yes, you e very new. To be making such conclusions that you have over very little experience/facts.
  • aroominyork
    aroominyork Posts: 2,802
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    Linton wrote: »
    And again according to Trustnet the 3 year performance figure shows lgmi 3 slightly ahead of vls20.
    My mistake. I looked at HL's five year chart tab and didn't see it began August 2013. Thanks for correcting.
  • bostonerimus
    bostonerimus Posts: 5,617
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    Most people will be perfectly well served for most of the time by something like one of the Vanguard Life Strategy funds. People can always then discuss the relative merits of various sector, duration and geographical allocations in multi-asset funds....that's what keeps a lot of the financial industry and forums ticking along, for what ever that's worth.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • chucknorris
    chucknorris Posts: 10,785
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    edited 9 October 2017 at 7:01AM
    A_T wrote: »
    I try to minimise my exposure to that index due to it's mediocre performance compared to a world index.

    That's exactly the way that we felt about shares generally for the last 20 years, there is no way that we would be worth what we are today if we had simply invested in shares. But saying that, the money has been made from our property now, and the time to sell has started. Since I invested in the ftse 100 it has gone up over 30% (about 2 years ago) and is paying a dividend of over 5% on the price paid, so I have no complaints, but it isn't where I want my wealth stored long term.

    EDIT: I think the best years for property are behind us now, and I also need to concentrate on wealth preservation, not making more, but is is hard for a leopard to change its spots, but I am aware that I do need to change my approach, and accept that I am at the 'job done' stage.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
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