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A couple of interesting docs from Vanguard
gadgetmind
Posts: 11,130 Forumite
I found these two interesting.
First is this one, which clearly belongs in the "well, they would say that" stable were it can enjoy rubbing shoulders with Bernstein, Hale, etc.
https://www.vanguard.co.uk/documents/literature/pdfs_for_literature/EDguide_Core_Satellite_FINAL_190510.pdf
Figure three and the analysis beneath is interesting. Do you feel lucky, punk?
The second explains why Vanguard have constructed their LifeStrategy funds as they have regards bonds/UK/global, but sadly doesn't hint as to why they over-weight US, Europe, Japan and Pacific in the higher equity portfolios.
https://www.vanguard.co.uk/documents/adv/literature/target-allocation-appproach.pdf
Enjoy.
First is this one, which clearly belongs in the "well, they would say that" stable were it can enjoy rubbing shoulders with Bernstein, Hale, etc.
https://www.vanguard.co.uk/documents/literature/pdfs_for_literature/EDguide_Core_Satellite_FINAL_190510.pdf
Figure three and the analysis beneath is interesting. Do you feel lucky, punk?
The second explains why Vanguard have constructed their LifeStrategy funds as they have regards bonds/UK/global, but sadly doesn't hint as to why they over-weight US, Europe, Japan and Pacific in the higher equity portfolios.
https://www.vanguard.co.uk/documents/adv/literature/target-allocation-appproach.pdf
Enjoy.
I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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Comments
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But no explanation why their US offerings can be 50% cheaper than their UK offerings, perhaps everyone wants to rip the UK consumer off :-)0
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But no explanation why their US offerings can be 50% cheaper than their UK offerings, perhaps everyone wants to rip the UK consumer off :-)
Trackers are far more mature in the US, and competition is king. My own mix of UK Vantage trackers etc. will have a TER of 0.25%, which makes the 1.5% of my previous (IFA selected) managed funds look a rather expensive option for an investment expert to have advised, but I guess that serves me right to have taken so long to extend my DIY skills to investing.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
The second document sets out a good summary of points to consider for almost anyone building an investment portfolio.
However, although these formulaic asset allocations might make sense based on long-term historical data, there is a very strong argument that it is madness to be investing in government bonds at present. Interest rates in most Western economies are close to rock bottom, so it is inevitable that sooner or later they must rise (as there is only one way to go), at which point the value of the bonds will definitely plummet. Government bonds are like a time bomb waiting to explode. There are of course some countries, like Greece and Italy, that are paying higher rates of interest on their bonds, but these are different kind of time bomb. For the foreseeable future, I would not want to buy any product that does not have the flexibility to vary its asset allocations in response to events.koru0 -
However, although these formulaic asset allocations might make sense based on long-term historical data, there is a very strong argument that it is madness to be investing in government bonds at present.
I tend to agree. I'll be using some index linked gilts, some corporate bonds, a little steady-eddy property such as HICL, and also cash. I know that cash rots in a SIPP, but it will hopefully only be there for 6-12 months.For the foreseeable future, I would not want to buy any product that does not have the flexibility to vary its asset allocations in response to events.
But how much variation is the right amount and how good have fund managers shown themselves to be a such macro enomic prediction? Those who shunned bonds 12-18 months ago (including me!) have lost out, so history again tells us that dynamic rebalancing is all well and good, but you need upper and lower bounds for what percentage of each asset to hold rather than always chasing what looks cheap.
I doubt there is a single right answer.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
In general, I would agree with you, but there are a few occasions when there really is no doubt and in my view this is one of them. Government bonds where the interest rate is the lowest it has been for centuries will definitely crash in value. The only doubt is when this will happen, so unless you think you can get out just before it happens the only sensible decision is to steer clear.gadgetmind wrote: »But how much variation is the right amount and how good have fund managers shown themselves to be a such macro enomic prediction? Those who shunned bonds 12-18 months ago (including me!) have lost out, so history again tells us that dynamic rebalancing is all well and good, but you need upper and lower bounds for what percentage of each asset to hold rather than always chasing what looks cheap.
I doubt there is a single right answer.koru0 -
In general, I would agree with you, but there are a few occasions when there really is no doubt
Purely by coincidence, I spent an hour or so last night looking at the fixed interest holdings of the cautious and defensive funds. They seem to be helping linked gilts and TIPS, so it doesn't look like their feet are totally cold just yet.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
In general, I would agree with you, but there are a few occasions when there really is no doubt and in my view this is one of them. Government bonds where the interest rate is the lowest it has been for centuries will definitely crash in value. The only doubt is when this will happen, so unless you think you can get out just before it happens the only sensible decision is to steer clear.
I agree that bonds look like a bubble, but surely the reason that they haven't crashed already is that investors fear other things will crash first, or worse. If the worst happens, the winner will be the person who loses least.0 -
saveonarola wrote: »I agree that bonds look like a bubble, but surely the reason that they haven't crashed already is that investors fear other things will crash first, or worse. If the worst happens, the winner will be the person who loses least.
They do say that the smart guys were out of the market in 1929 and avoided the Wall Street Crash, which meant they didn't get wiped out until 1930 and 1931.
Don't think that I haven't hesitated a few times during my "bargain" hunting!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »They do say that the smart guys were out of the market in 1929 and avoided the Wall Street Crash, which meant they didn't get wiped out until 1930 and 1931.
Don't think that I haven't hesitated a few times during my "bargain" hunting!
This is why I love the ideas behind passive investing. You may get wiped out, but you'll die in your sleep...0 -
saveonarola wrote: »This is why I love the ideas behind passive investing. You may get wiped out, but you'll die in your sleep...
One of the ITs I hold once said something like "Our investors might die of boredom, but they won't die in poverty." Monevator also had a good one a while ago when they said that Vanguard LifeStrategy trackers gave you a portfolio that needed "as much maintenance as an Easter Island statue."I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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