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  • FIRST POST
    • samiam85
    • By samiam85 3rd Aug 16, 4:28 PM
    • 40Posts
    • 38Thanks
    samiam85
    Vanguard Life strategy post brexit
    • #1
    • 3rd Aug 16, 4:28 PM
    Vanguard Life strategy post brexit 3rd Aug 16 at 4:28 PM
    I am completely bought into passive investing and have a chunk of money in Vanguard Lifestrategy.
    I have just come in to some money and would like to invest more ~£100k.
    The problem is that after brexit the price is up significantly which I can only assume is due to the conversion into the poor pound.

    It feels wrong buying at this price. I don't think I am trying to time the stock market in saying that but I am probably timing the currency market.
    How can i mitigate the poor pound?
    e.g Is there a way that I can purchase part of the underlying shares that are not affected by the currency so partially seal my position while waiting patiently for the pound to increase before buying the rest or selling what I have and buying vanguard?
    What other ways are there to hedge against the pound strengthening in the future?
    Or is there some other passive and diversified index fund that I could invest in that would hedge against this issue?
    What would you do?
    Last edited by samiam85; 03-08-2016 at 4:38 PM.
Page 2
    • hutman
    • By hutman 5th Aug 16, 8:37 AM
    • 45 Posts
    • 15 Thanks
    hutman
    Stop looking at it.

    An economic cycle is around 10 years. It will move an awful lot in that time in both directions. A couple of days is nothing.
    Originally posted by dunstonh
    Very hard to stop the monitoring syndrome, even though my horizon might be stretched as you say!

    You're trying to time the market. Forget about that and just invest and let it sit there.


    You are assuming that you can time the market with enough skill to outweigh the gains made by being in the market for a longer duration. How are you going to do this???

    I invested in 2013 in the LS80% ACC. At that time the buy price was £119 per unit. Since then it's increased by approx 35% n value. I dropped another £1K in today at a buy price of about £160 (or whatever it will be when the trade goes through in the next few days). On the face of it I am buying at a peak, but who's to say that in another 3 years today's purchase won't have increased by another 30+%? Now I could wait until the price drops, but then again it may not and I would lose the growth that I would have gained from when sitting on the sidelines.
    Last year I was buying at about £143 per unit, which was a lot more expensive than 2013's prices. Now, should I have waited for the "equity plunge"? If I had, then I would have missed out on the growth that I have had.....the units I bought last year are now up on average 14%.

    As long as you have your appetite for risk correct and you are prepared to buy and forget it for a decade, then just buy it now.
    Originally posted by Gadfium
    Have to say you've touched on the many points the retail investor considers before taking hitting buy/sell, and in short I don't have that foresight, only a lingering doubt to prevent me from taking risk. Only thing to mention is that VGLS performance record seems to add little downside to the timing of investments into it, drip feeding is a solution but has its negatives as well. I suppose an alternative is switch to other similar performing but cheaper passive funds to get more bang for your buck.
    • MadMat
    • By MadMat 5th Aug 16, 9:33 AM
    • 222 Posts
    • 106 Thanks
    MadMat
    You've probably missed the boat - yesterdays interest rate cut and subsequent drop in Stirling has given my VLS a nice boost!!

    Mat
    • ajdj
    • By ajdj 5th Aug 16, 9:47 AM
    • 564 Posts
    • 1,222 Thanks
    ajdj
    I suppose an alternative is switch to other similar performing but cheaper passive funds to get more bang for your buck.
    Originally posted by hutman
    Such as? I've not come across anything with the fixed style allocations of VGLS that is cheaper.
    Save in 2016 #14 £4,710.01 / £12,000 target
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    Saved 2013 £5,905 / Saved 2014 £9,995 / Saved 2015 £11,235.63
    • samiam85
    • By samiam85 15th Oct 16, 11:57 AM
    • 40 Posts
    • 38 Thanks
    samiam85
    Clearly my hesitation hasn't helped since I started this thread with VGLS rocketing due to the falling pound.
    I feel I do need to jump in ASAP but see future currency corrections as a worry.
    Is there a way I can hedge the currency risk of the pound recovering in the future (such as shorting the pound) which I can buy for the long term with minimal cost? What options are open to me?

    Thanks!
    • Snakey
    • By Snakey 15th Oct 16, 12:46 PM
    • 884 Posts
    • 1,085 Thanks
    Snakey
    Out of interest, where has your £100k been sitting in the meantime? Did you hedge against the pound dropping?

    No investment advice here obviously, but really, just settle on a long-term strategy and put the wheels in motion and stop being a wimp. This is coming from somebody who dithered and dithered... once I made the decision and stuffed it all in there, I was a lot happier in myself as I could forget about it and stop worrying.
    • Ray Singh-Blue
    • By Ray Singh-Blue 15th Oct 16, 2:04 PM
    • 147 Posts
    • 172 Thanks
    Ray Singh-Blue
    just settle on a long-term strategy and put the wheels in motion and stop being a wimp.
    Originally posted by Snakey
    Yes - but this strategy could include a nod to unusual market conditions. Such as, invest no new money when whatever market is within 10% of all time high.

    If you invest a lump sum now, you are facing two potential corrections: world stock markets are near an all time high, and the pound is at a long time low. No harm in waiting, if your long-term strategy allows it.
    • Linton
    • By Linton 15th Oct 16, 3:17 PM
    • 6,944 Posts
    • 6,537 Thanks
    Linton
    Yes - but this strategy could include a nod to unusual market conditions. Such as, invest no new money when whatever market is within 10% of all time high.
    Originally posted by Ray Singh-Blue
    Why? What if the price continues to increase? And then you eventually buy in a dip, having missed out on dividends, at a higher price than you could have paid if you had bought immediately.
    • Ray Singh-Blue
    • By Ray Singh-Blue 15th Oct 16, 5:05 PM
    • 147 Posts
    • 172 Thanks
    Ray Singh-Blue
    Why?.
    Originally posted by Linton
    Taking a view, balance of probabilities. Reasons given above. May be wrong, absolutely.
    • enthusiasticsaver
    • By enthusiasticsaver 15th Oct 16, 6:06 PM
    • 2,554 Posts
    • 4,372 Thanks
    enthusiasticsaver
    We will have a similar situation in a months time when we receive OHs TFLS on retirement. We have a lot in VGLS60 and will be doubling our holdings. I am not going to worry about the short term highs and lows of it as we are sticking it away for 10 years so it will move a lot in that time.
    Debt and mortgage free and saving for early retirement
    • darkidoe
    • By darkidoe 15th Oct 16, 8:15 PM
    • 645 Posts
    • 701 Thanks
    darkidoe
    If that was the case, people would be jumping from commodities to bio to tech to financials or whatever.

    Suitability is about having what is right. That means being able to stomach the downside when it comes as well as being happy with the upside.



    I focus a lot on the downside in my discussion. After all, the FOS always say that complaints increase when the markets go down. So, I would be silly not to consider it. So, you are right, that it is in my head when I have the discussions. However, the discussions are to provide knowledge and understanding. It is that which prevents complaints as someone who knows and understand that a drop of x% will occur at some point is not going to complain when that comes alone. Investing below their risk profile doesn't serve a purpose. Although from what I see on the board and what I see via advice for myself and the advisers that work for me is that the advised cases tend to be lower risk than the typical DIY investor.

    DIY investors can do whatever they like. That is what DIY is about. But we know from this section that we do see fashion investors, those that invest above their risk profile and capacity for loss and those that really dont have a clue what they are investing in.
    Originally posted by dunstonh
    Just curious, but how does an IFA assess a client's risk profile other than just asking them some questions from a questionaire on how they tolerate loss of capital etc?? Is that any valid tool to assess that or is it more of an art??

    @OP
    There is a school of thought in the FI community that the focus can be less on returns and more on generating an income from that portfolio. By focusing on the income, you will probably be less bothered by the fluctuations of prices.
    Last edited by darkidoe; 15-10-2016 at 8:21 PM.
    Save 12K in 2016 # 8 £16 253.55/12 000 (135.45%) Achieved!
    • Chickereeeee
    • By Chickereeeee 16th Oct 16, 10:59 AM
    • 377 Posts
    • 228 Thanks
    Chickereeeee
    That said, if my portfolio consisted entirely of a chunk of money in LifeStrategy, I would be aiming to diversify away from that in order to not have almost half my money in the US.
    Originally posted by Malthusian
    Actually, VGLS (well the 80 one anyway) is only 35% USA.

    It has a heavy UK bias (19%) compared to a true representation of the global market.

    C
    • bowlhead99
    • By bowlhead99 16th Oct 16, 11:34 AM
    • 5,116 Posts
    • 9,041 Thanks
    bowlhead99
    That said, if my portfolio consisted entirely of a chunk of money in LifeStrategy, I would be aiming to diversify away from that in order to not have almost half my money in the US.
    Originally posted by Malthusian
    Actually, VGLS (well the 80 one anyway) is only 35% USA.

    It has a heavy UK bias (19%) compared to a true representation of the global market.
    Originally posted by Chickereeeee
    You are right it has a UK tilt. However, it is 36% US equities out of 80% total equities. That is 45% of the equities, which still sounds like "almost half in the US", for the portion of the fund which is designed to deliver most of the growth over your investing timeline.

    The US allocations, together with other countries' allocations, have been lowered from the natural global free float equity split to make room for 25% of the equities (20% of the fund) being UK listed to cater for the target of their marketing: UK investors who like home bias to their investing.

    On the bond side, only 33% of the 'global bond' component is US.

    So overall if you are looking specifically at the 80% equity version, it would perhaps be more accurate to say that "over 40%", rather than "almost half" of the fund is US, because there's an even larger weighting to UK in the bond component.

    But even with the inbuilt UK bias, the equity component of all the VLS funds is still up close to half, at 45% USA - whether you're looking at VLS20 and saying it's 9% US equities, or VLS80 and saying it's 36% US equities, or VLS100 and saying it's 45% equities.
    • roxy28
    • By roxy28 16th Oct 16, 3:40 PM
    • 568 Posts
    • 57 Thanks
    roxy28
    I think its just us newish investors who are hesitant, i have £2000 ( not a lot for some) which i was planning to put in my VLS60 on monday, then i see this thread again and i start to think should i drip feed £500 at a time, and so it goes on back and forth.
    But as of this minute i will put £2000 in at once, until i sleep on it and change my mind... lol.
    • dunstonh
    • By dunstonh 16th Oct 16, 5:39 PM
    • 85,111 Posts
    • 50,130 Thanks
    dunstonh
    Just curious, but how does an IFA assess a client's risk profile other than just asking them some questions from a questionaire on how they tolerate loss of capital etc?? Is that any valid tool to assess that or is it more of an art??
    It is part art and experience as different people could ask the same question and get different answers depending on how it was presented. Discussion is the best way. Finding out about knowledge and experience, giving examples in money terms (as many dont understand percentages) and capacity for loss. Questionnaires are a starting point to which the rest is added.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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