Vanguard Life Strategy

takesyourchances

gadgetmind wrote: »

Yes, but I wouldn't overweight.

I'm currently upping exposure to EM, resources and (to a lesser extent) Europe, but this is really just rebalancing++.

Thanks for the reply gadgemind, I am siding with the First State Infrastructure opening as the last fund in the ISA in April for the new tax year, it would be a 5% holding idea in my portfolio.

Although the US Small Cap is a strong consideration I feel I maybe have enough small cap exposure in my funds.

I will also be adding to my EM fund, once I get clarification on adding to the First State EM I have, also will be adding to my Asian holdings to buy some value during this dip.

I know you like to buy into the out of flavor like your Europe buys you mentioned before so I take it is the same with EM's, resources etc at the moment? :)

Thanks.

gadgetmind

takesyourchances wrote: »

I know you like to buy into the out of flavor like your Europe buys you mentioned before so I take it is the same with EM's, resources etc at the moment? :)

Yes, but I don't go mad. I do some rebalancing, give an extra nudge towards anything that looks like screaming value, and also sniff around for Investment Trusts in these areas that are on big discounts.

principa

I've been drip-investing into LS100 for a few years and am quite happy with the fund in comparison with active funds - the low charges regardless of underlying performance are becoming quite apparent.

However, I plotted the performance of the 20,40,60,80 & 100 over the last two years and now realise that they all pretty much move in the same direction - LS100 has greater volatility than LS20 obviously with the others between these extremes. But, the performance of all the funds in the medium term appears to be similar.

Given this is a long term investment, I am beginning to wonder whether the LS20 would have been a better choice. Anybody else had similar thoughts?

bowlhead99

principa wrote: »

However, I plotted the performance of the 20,40,60,80 & 100 over the last two years and now realise that they all pretty much move in the same direction - LS100 has greater volatility than LS20 obviously with the others between these extremes. But, the performance of all the funds in the medium term appears to be similar.

Given this is a long term investment, I am beginning to wonder whether the LS20 would have been a better choice. Anybody else had similar thoughts?

As mentioned in other threads, the funds have only existed for two and a half years - this is not even medium term let alone the long term you're aiming for.

When you say the performance is similar... well since launch, the entirely-equities one is up 25.7% and the LS20 one is up 18.2% .

If you had invested something approaching a year's S&S ISA allowance at launch, split as £5500 in both, the debt-heavy one would be up by £1000 and the equities one up by £1400 since mid 2011.

If you had deferred investing until 1 October instead of 1 July that first year, you would be up by less than £1000 in the debt-heavy one but over £2600 in the equities one. Sure, conversely there are periods when the debt one did better than the equities one, because the equities one is volatile, but if you are holding for the long long term you don't need to worry about volatility and should be more focussed on whether corporate profits will outstrip the interest returns on lower risk fixed-interest corporate and government bonds.

Over any 20-30 year timescale you cherry pick from the last century, they do. This leads you to get the 80% or 100% version unless you are very cautious and trying to time the market in terms of when to 'buy in' to equities investing.

But bottom line, there is no point comparing small periods of anything. For example a chocolate bar goes up from RRP 60p to 65p in a weekend while the stock market opened down 2%. Should you extrapolate those weekend returns to say that after one year the chocolate bar will cost £40 and the FTSE will have lost two thirds of its value?

Thinking that the exceptional return from bond funds in the last 5 years would be able to compound up and do the same again for the next 5 is also flawed because of how bonds are priced in terms of capital and yield.

So long story short, I would not look at the chart below in any great detail as all you are comparing is a snapshot of equity volatility overlaid on relatively more stable but inherently lower bond returns. Once you get that concept into your head you can decide whether you want to shoot for growth or stability. As you've mentioned long term investing I presume you want the former but everyone's definition of the long term is different and indexes can of course take a long time to recover if they crash.




* edit*
Of course one caveat is if you already have plenty of existing equity funds (like your existing LS100, plus perhaps others) it wouldn't hurt to have some debt exposure with your new contributions going in. You can then rebalance between the high equities funds and the low equity funds every so often.

However personally I wouldn't use a LS20 tracker as my debt fund when there are a myriad of strategic bond funds out there or other actively-managed low-equity funds which may navigate better through the QE unwinding, compared to a tracker which just sinks with the general market.

principa

bowlhead99 wrote: »

you don't need to worry about volatility and should be more focussed on whether corporate profits will outstrip the interest returns on lower risk fixed-interest corporate and government bonds.

Over any 20-30 year timescale you cherry pick from the last century, they do.

wow - thanks for such a detailed reply - in particular the above nugget. I had it in my head that the LS20 is simply acting as a "smoothed" version of LS100 but, as you say, this is over a very short period and they are very different beasts.

musashi10

I think this fund looks great, but I think that my pension does a fairly similar thing in terms of coverage, even though it might not perform as well.

2010

Can anyone tell me who is the most cost effective broker to buy and hold the Vanguard Lifestrategy 40% Equity Fund Acc. through an S&S ISA in the new tax year.
I understand that fees/charges are changing or have already changed.
Is there a level playing field yet to make comparisons?

laughingboy

I noticed there is a dilution levy applied to investments. Does this apply to only the LifeStrategy funds or does it include all Vanguard funds?

A_Flock_Of_Sheep

2010 wrote: »

Can anyone tell me who is the most cost effective broker to buy and hold the Vanguard Lifestrategy 40% Equity Fund Acc. through an S&S ISA in the new tax year.
I understand that fees/charges are changing or have already changed.
Is there a level playing field yet to make comparisons?

I am with Halifax and they charge £12.50 per year to hold my ISA and provide the full range of VLS funds. They only had 100% Equity which is what I hold but now I am considering changing to the 60% Equity 40% Bonds fund as I have no bond exposure.

Dealing fees will be £12.50 but they run £2 regular dealing several times a month which you can use one off. Currently there are no dealing fees for VLS funds.

TCA

2010 wrote: »

Can anyone tell me who is the most cost effective broker to buy and hold the Vanguard Lifestrategy 40% Equity Fund Acc. through an S&S ISA in the new tax year. I understand that fees/charges are changing or have already changed. Is there a level playing field yet to make comparisons?

It depends on many things. Try here:

http://monevator.com/compare-uk-cheapest-online-brokers/

laughingboy wrote: »

I noticed there is a dilution levy applied to investments. Does this apply to only the LifeStrategy funds or does it include all Vanguard funds?

No, but it applies to a few more:

https://www.vanguard.co.uk/uk/mvc/investments/mutualfunds#mf_fundstab