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  • FIRST POST
    • mgarl10024
    • By mgarl10024 30th Nov 17, 6:01 PM
    • 604Posts
    • 419Thanks
    mgarl10024
    ETF equivalent of LifeStrategy
    • #1
    • 30th Nov 17, 6:01 PM
    ETF equivalent of LifeStrategy 30th Nov 17 at 6:01 PM
    Hi,

    I'm with HL for a SIPP, and have been investing in Vanguard's 100% LifeStrategy and would like to continue.

    However, http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates has an uncapped 0.45% charge on funds, but a £200 cap on ETFs.

    As the value of the SIPP goes over about £44k it occurred to me that I'd be better to swap the 100% LifeStrategy out for a combination of ETFs.

    I cannot leave HL as my employer has chosen them as their pension provider under a group SIPP deal.

    https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-100-equity-fund-accumulation-shares/portfolio-data shows what the LifeStrategy is investing in underneath, and I can't just replicate that because even that isn't made up of just ETFs.

    I've been reading up on investment but am still at early stages. Most books I'm reading say that if you don't know what you're doing (me) then passive index and Vanguard, so I'd need a good reason to move away from them. I'm happy with 100% equities as I'm young enough to weather shocks.

    I'm just not sure what combination of ETFs would replicate what I already have, or even if this is a sensible plan.

    Any thoughts?
Page 1
    • bowlhead99
    • By bowlhead99 30th Nov 17, 6:17 PM
    • 6,985 Posts
    • 12,574 Thanks
    bowlhead99
    • #2
    • 30th Nov 17, 6:17 PM
    • #2
    • 30th Nov 17, 6:17 PM
    You could literally just look at the fund factsheet for the vanguard lifestrategy fund you picked and see what index funds it holds in what proportion - eg a FTSE UK all share fund, a US index fund, Japan fund, emerging markets fund, Europe-excluding UK fund etc etc.

    There are individual ETFs from a range of providers - including vanguard themselves - for all those regional market indexes. You could just buy 10 different ETFs and "build your own" portfolio instead of buying an off-the-shelf portfolio fund.

    The practical issue is that each time the US grows a bit compared to emerging markets or Europe grows a bit relative to the UK, you have to decide if you are happy with that new mix, and if not, what are you going to buy and sell to 'replicate' what vanguard would have done in their fund.

    Example, on the last factsheet, the UK equities represent 25% of all the equities in total. However, since October the pound has strengthened against both Euro and dollar. So you might find that at end of November you are over 25% allocated to companies listed on the UK stock exchange, with comparatively less allocated to continental Europe or North America. Are you going to sell a bit of your UK ETF (paying a £12.50 dealing fee) and buy more of the US, Europe, Japanese, Asia-exJap, and EM ETFs and pay all the feeling fees on those? Or just let it ride with a higher concentration in UK listed companies than you started out at?

    Vanguard will rebalance internally to their model for free.
    Last edited by bowlhead99; 30-11-2017 at 6:19 PM.
    • Audaxer
    • By Audaxer 30th Nov 17, 10:42 PM
    • 630 Posts
    • 278 Thanks
    Audaxer
    • #3
    • 30th Nov 17, 10:42 PM
    • #3
    • 30th Nov 17, 10:42 PM
    https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-100-equity-fund-accumulation-shares/portfolio-data shows what the LifeStrategy is investing in underneath, and I can't just replicate that because even that isn't made up of just ETFs.
    Originally posted by mgarl10024
    I was surprised to see from the link above that the VLS100 includes some ETFs, as I thought all the VLS funds were made up just of index tracker funds.

    As to the question, it would be impractical and very costly to try and replicate the VLS100 with a bunch of ETFs as you would have to rebalance just about every day, or at least on a regular basis, as that happens automatically with the VLS funds.
    • cloud_dog
    • By cloud_dog 1st Dec 17, 12:39 AM
    • 3,302 Posts
    • 1,861 Thanks
    cloud_dog
    • #4
    • 1st Dec 17, 12:39 AM
    • #4
    • 1st Dec 17, 12:39 AM
    But surely the OP could buy two ETFs; all world equity and all world bond (or similar).

    It is highly unlikely that the OP would be able to mirror the breakdown percentages exactly for the VLS XX but in all likelihood it would be similar.

    I think the main question that would need to be considered is that VLS XX holds a far higher proportion in the UK than any 'all world' fund is likely to hold, i.e. VLS XX 25% (ish) and a all world ETF 6% (ish). For me that's not a deal breaker but it may be for the OP/others.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • bostonerimus
    • By bostonerimus 1st Dec 17, 1:14 AM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    • #5
    • 1st Dec 17, 1:14 AM
    • #5
    • 1st Dec 17, 1:14 AM
    I was surprised to see from the link above that the VLS100 includes some ETFs, as I thought all the VLS funds were made up just of index tracker funds.

    As to the question, it would be impractical and very costly to try and replicate the VLS100 with a bunch of ETFs as you would have to rebalance just about every day, or at least on a regular basis, as that happens automatically with the VLS funds.
    Originally posted by Audaxer
    The ETF structure can be used for index tracker funds too.
    Misanthrope in search of similar for mutual loathing
    • dales1
    • By dales1 1st Dec 17, 7:13 PM
    • 29 Posts
    • 24 Thanks
    dales1
    • #6
    • 1st Dec 17, 7:13 PM
    • #6
    • 1st Dec 17, 7:13 PM
    cloud_dog mentions that all-world ETF (ie VWRL).
    Looking at it on HL, the last trade of the day (today) was a buy of £1m at a price 33% above the going rate.
    Somebody's employer isn't going to be too pleased.

    Dales.
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