Vanguard Life Strategy

bigadaj

mike88 wrote: »

VLS is definitely too heavily skewed to the USA (46%) in my view but OK for the UK at 25%. Your suggestions looks OK as a portfolio which you can leave but, as mentioned on an earlier thread, I would prefer to beef up my portfolio with a few active funds while keeping VLS as a core holding.

If savings are long term why hold the VLS 80 fund and not not VLS 100 as a few bonds is neither conducive to growth nor downside protection given the small percentage held?

Everyone has a different view but mine would differ to yours.

In terms of allocation then the vanguard us attribution is a fair reflection of global weight whereas the uk allocation is massively overweight. I think a comment stating that you don't agree with vanguard passive approach would be more helpful, and that a personal determined allocation of active funds would be your preference.

Recommending a multi asset, or mono asset, tracker with rebalancing whilst then fiddling around the edges doesn't seem sensible to me. Vls with some flavour funds on the side makes sense, the alternative is a personal portfolio of funds with your own rebalancing.

LookingToTheFuture_2

Thanks for your comments mike88 and bigadaj.

I have thought about active funds but the Monevator website has convinced me that index trackers are the best thing for me at the moment. However that may well change over the next 15+ years!

Your point about bonds is a good one Mike. I did consider that adding extra equity funds will mess up the 80/20 VLS allocation and I was wondering whether I should change to VLS60. But not many people have a good word to say about bonds at the moment so maybe the VLS100 would make more sense as all the money I'm putting into my S&S ISA is definitely very long term (not to be touched before retirement)

ColdIron

The VLS 80 US/UK weightings are more like 27/43 (the high UK due to gilts no doubt) with the VLS 100 at 33/28

If you're youngish I'd question using the VLS 80 with bonds, most people's pension will contain no bonds until they reach 60

Personally I think Emerging Markets and especially Small Caps are better served by active funds due to the high number of choices which would benefit from careful stock selection

As for Europe and Asia the VLS already has these so unless you are particularly bullish about them or think Vanguard have got it wrong I wouldn't go for these myself

But it's all about opinion

mike88

bigadaj wrote: »

Everyone has a different view but mine would differ to yours.

I think a comment stating that you don't agree with vanguard passive approach would be more helpful, and that a personal determined allocation of active funds would be your preference.

But the point is that I have absolutely no problem with passive funds as I think they could be excellent core holdings as mentioned in my earlier response.

LookingToTheFuture_2

ColdIron wrote: »

If you're youngish I'd question using the VLS 80 with bonds, most people's pension will contain no bonds until they reach 60

I'm 47 so not youngish! I have a workplace pension as well as the ISA and I have increased my AVC payments too but I feel that the ISA will give me a bit more flexibility and scope for retiring slightly earlier (early 60s hopefully).

I get your point about active funds being better for EM and Small Caps but that relies on me choosing the 'right' active fund and not one of the ones that underperforms. Maybe I've taken the passive investing argument too much to heart but I feel very wary of making the wrong choices with active funds.

The Europe and Asia trackers were because VLS80 seemed quite low in those areas but I'll take another look. Like I said in my earlier post, a lot of my reading on this was done in the early hours so I'm not sure of my own judgement in this!

bigadaj

mike88 wrote: »

[/I]

But the point is that I have absolutely no problem with passive funds as I think they could be excellent core holdings as mentioned in my earlier response.

Yes, but there's always an active element behind the make up of the passive portfolio so we're again back to personal preference and opinion. My point is that if you disagree with the composite funds like vanguard lifestrategy or blackrock consensus then it would make more sense not to use them. Why not compile your own core of trackers from hsbc funds for example.

bigadaj

ColdIron wrote: »

The VLS 80 US/UK weightings are more like 27/43 (the high UK due to gilts no doubt) with the VLS 100 at 33/28

If you're youngish I'd question using the VLS 80 with bonds, most people's pension will contain no bonds until they reach 60

Personally I think Emerging Markets and especially Small Caps are better served by active funds due to the high number of choices which would benefit from careful stock selection

As for Europe and Asia the VLS already has these so unless you are particularly bullish about them or think Vanguard have got it wrong I wouldn't go for these myself

But it's all about opinion

I know the theory about active funds with smaller companies and emerging markets but I'm fascinated to see some evidence. The vanguard global smaller companies fund now provides a useful basis, if there are sufficient active comparators as most smaller companies funds seem to be local. It seems to have performed reasonably well to date, and I need to look into it in a bit more detail as to how they implement their approach is something I find interesting.

masonic

bigadaj wrote: »

I know the theory about active funds with smaller companies and emerging markets but I'm fascinated to see some evidence. The vanguard global smaller companies fund now provides a useful basis, if there are sufficient active comparators as most smaller companies funds seem to be local. It seems to have performed reasonably well to date, and I need to look into it in a bit more detail as to how they implement their approach is something I find interesting.

We've had FTSE 250 trackers for a number of years and I've not regretted my decision to go active for my UK small cap allocation so far. However, the global tracker is a different kettle of fish. It is mostly US, as one would expect, and I think the case for going passive there is much stronger, even for smaller companies funds.

ColdIron

bigadaj wrote: »

I know the theory about active funds with smaller companies and emerging markets but I'm fascinated to see some evidence. The vanguard global smaller companies fund now provides a useful basis, if there are sufficient active comparators as most smaller companies funds seem to be local. It seems to have performed reasonably well to date, and I need to look into it in a bit more detail as to how they implement their approach is something I find interesting.

I have to admit I was thinking of more geographically focussed funds, Cazenove (now Schroders), Marlborough Micro Cap or Aberdeen Asian Smaller Cos etc as I doubt any Fund Manager's ability with so much choice globally. A quick look around shows the Vanguard Global Smaller Companies not to have performed significantly different to actively managed funds but then it's not much different to the Lifestrategy either

mike88

bigadaj wrote: »

Yes, but there's always an active element behind the make up of the passive portfolio so we're again back to personal preference and opinion. My point is that if you disagree with the composite funds like vanguard lifestrategy or blackrock consensus then it would make more sense not to use them. Why not compile your own core of trackers from hsbc funds for example.

When did I say I disagreed with composite funds. I've already said that:

"I would prefer to beef up my portfolio with a few active funds while keeping VLS as a core holding."