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  • FIRST POST
    • catoutthebag
    • By catoutthebag 29th Nov 17, 1:54 PM
    • 2,182Posts
    • 478Thanks
    catoutthebag
    Vanguard life strategy - return
    • #1
    • 29th Nov 17, 1:54 PM
    Vanguard life strategy - return 29th Nov 17 at 1:54 PM
    Hi I opened my vls 60 via Charles Stanley direct 2 and a half years ago with 1000 pounds. It's up about 25% since with dividends reinvested.

    Would you this be considered a good return, so far?
Page 4
    • foreversummer
    • By foreversummer 28th Dec 17, 4:00 PM
    • 799 Posts
    • 351 Thanks
    foreversummer
    Hope you don't mind me jumping in here as a novice. I have Vanguard LS and I notice that they are weighed towards the US. This bothers me slightly because of Trump.

    Would Vanguard change the asset allocation if they though fit? Or would we just go down with the Americans if they have another crash? I've read today that Japan could be a better risk than US. Do we need to even worry about these things if we have Vanguard LS I guess is what I am asking.

    Foreversummer
    • dunstonh
    • By dunstonh 28th Dec 17, 4:47 PM
    • 90,321 Posts
    • 57,103 Thanks
    dunstonh
    Would Vanguard change the asset allocation if they though fit?
    Vanguard are very slow at changing the allocations and ignore short term issues. L&GMI is more reactive to economic cycle.
    Or would we just go down with the Americans if they have another crash?
    Stockmarkets are more globally minded nowadays. It is just the degree of losses/gains that largely varies now.

    I've read today that Japan could be a better risk than US.
    Ignore that sort of article.

    Do we need to even worry about these things if we have Vanguard LS I guess is what I am asking.
    The point of using multi-asset funds is that you are passing the decision making to others.
    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 an Independent Financial Adviser local to you.
    • roxy28
    • By roxy28 5th Jan 18, 2:44 PM
    • 628 Posts
    • 58 Thanks
    roxy28
    I was just on the Vanguard website regarding the VLS range and looking at the risk score out of 7 for each one.
    The VLS 20 is 3
    The VLS 40/60/80 all have the same risk score of 4 out of seven, i thought there may be a little diffrence.
    • bowlhead99
    • By bowlhead99 5th Jan 18, 6:57 PM
    • 7,116 Posts
    • 12,919 Thanks
    bowlhead99
    I was just on the Vanguard website regarding the VLS range and looking at the risk score out of 7 for each one.
    The VLS 20 is 3
    The VLS 40/60/80 all have the same risk score of 4 out of seven, i thought there may be a little diffrence.
    Originally posted by roxy28
    Unfortunately the boundaries for each category that you get in a KIID are set by regulations and some categories can be quite broad. The score that the fund gets is based on its historic volatility, over a defined recent period.

    When markets are nice and positive and both equities and bonds are rising in unison with no major dips and drops, a fund can have a pretty benign risk score. A fund like VLS80 will be going up faster than VLS40 in a bull market but if they are both following a relatively smooth path (just one is going up faster than the other, but it's not doubling every year or zig zagging and crashing), they might both squeeze into the same risk category, using the volatility criteria on which those categories are drawn up.

    For example, if you calculate the annualised return for the last five years, one's a little under 12% and the other's a little under 8% and neither have had a major scare, so 'they' have just been able to say they're both within tolerance for that category.

    However, you can see that VLS80 has gone up about 75% in five years while VLS40 went up 45% in the same time period. If you assume that over the next couple of years the global equities indexes used by VLS drop 50% in sterling terms at the same time as the bonds they use fall 10%, the VLS80 fund would have lost 42% of its current value, while VLS60 lost only 26%.

    If you were someone who can handle losing about a quarter of their value over the course of a year or two but would freak out at losing over 40% with no end in sight, you might be ok with VLS40 in that situation while feeling suicidal if you had VLS80.

    So, the risk categories you see on key investor information documents have some grounding in rules and comparability across products but really, you can't base serious investment decisions on them.
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