Vanguard Life Strategy

bowlhead99

nyruz wrote: »

I'm would be using Charles Stanley as they are the cheapest and it would allow the fund to be in a s&s isa wrapper. However I don't understand how much he they charge as it says on their website that they charge 0.25% but the vanguard 60% fund has a AMC/TER of 0.29%? So what would I be charged? Also is the compound interval for the fund on a daily basis?

Basically, the fund charges you 0.29% which covers the managers running the fund, deploying the money into investments, producing audited accounts etc. These overall costs get paid out of the fund's assets over the course of a year and as such get shared between all the investors - it works out to 29p per £100 of value per year but you don't pay it explicitly, it is just taken from the fund's assets so that the reported return is lower than it would have been off those costs could have somehow been avoided.

Separately, Charles Stanley offer you access to the fund through their platform, administer a dedicated account for you and customer service, a tax wrapper etc and give you and HMRC the periodic reporting you both want. They charge a quarter of a percent per year, calculated by looking at the value of your holdings every so often (because your portfolio value will change over time), and charging you accordingly. That fee is taken by the platform not the fund, although I guess I'd you don't have any uninvested cash sitting on the platform when the fees are due, they might need to sell some of your holdings to get the money. Easy enough to cover this out of your monthly incoming £600s, our out of dividend income.

Not sure what you mean by compound interval, sorry. Your money generally stays invested in the underlying equity and bond index funds all through the year. Every so often when dividends and interest income has built in the fund, they will kick it out investors, who could reinvest it right away if wanted, and I suppose the returns would start to compound, if you want call it that. Alternatively if you buy the "accumulation" version of the fund, on the official dividend payment date they will take the dividend amount and reinvest it back into underlying funds, with the result that you don't see the dividend, the remaining fund assets don't fall because they never pay it out, and the money goes right back to work in the fund's investments.

JohnRo

nyruz wrote: »

I'm would be using Charles Stanley as they are the cheapest and it would allow the fund to be in a s&s isa wrapper. However I don't understand how much he they charge as it says on their website that they charge 0.25%

Your funds account is debited monthly in arrears (ie. taking payment for the previous month) an amount equivalent to approx. one twelfth of the annual 0.25% charge on the currently invested balance of your account. The reason I say approx. is because I'm not sure if they calculate this fee on a days in the month basis or simply PCM.

Over the course of one year these monthly payments will equate to 0.25% of the average (invested in funds) account balance during that period. There is no charge for cash held on the account and any cash held will earn 0.1% interest p.a.

SnowMan

The Vanguard Life Stategy dilution levy has been reduced from 1st July 2014 to 0.1% for the 20%, 40%,60%, 80% and 100% funds.

Full list of reductions and details are on the Vanguard website

https://www.vanguard.co.uk/uk/portal/articles/vanguard-news/vanguard-reduces-pdl-on-11-funds.jsp

lentrix92

good stuff

Reue

A question for those of you more in the know.

I've been drip feeding into the fund and have purchased £1000 worth. The value of this is showing as slightly up however recently the 'cost' of these is actually showing as slightly less (about £985ish). This is then showing my 'profit' as being slightly higher then what it actually is.

Where did this reduction in cost of purchase come from? I have only purchased the fund in whole 100s. If that makes sense?

TCA

Reue wrote: »

Where did this reduction in cost of purchase come from? I have only purchased the fund in whole 100s. If that makes sense?

It's the dilution levy. See Snowman's link from his post this morning and subsequent link on that page for more info.

https://www.vanguard.co.uk/documents/portal/literature/pdl-q-and-a-uk-sites.pdf

Reue

TCA wrote: »

It's the dilution levy. See Snowman's link from his post this morning and subsequent link on that page for more info.

https://www.vanguard.co.uk/documents/portal/literature/pdl-q-and-a-uk-sites.pdf

Are you sure? This appeared several weeks ago. Plus why would a reduction in dilution levy affect the percieved cost of previous purchases? Would it not just mean I get slightly more of the fund for my future monthly £100?

TCA

Reue wrote: »

Are you sure? This appeared several weeks ago. Plus why would a reduction in dilution levy affect the percieved cost of previous purchases? Would it not just mean I get slightly more of the fund for my future monthly £100?

The dilution levy has always existed, so you'd never have received your £100/£1000 worth. I highlighted the news article because I presumed you didn't know about it at all. So yes, the reduction in the levy will now mean you get more for your monthly purchase. But still not 100%.

Reue

TCA wrote: »

The dilution levy has always existed, so you'd never have received your £100/£1000 worth. I highlighted the news article because I presumed you didn't know about it at all. So yes, the reduction in the levy will now mean you get more for your monthly purchase. But still not 100%.

But I've been buying these for almost a year now and the 'cost' has always shown as exactly 100, 200, 300 etc (even though I was only getting slightly less). Why has this suddenly changed last month?

le_loup

Reue wrote: »

Where did this reduction in cost of purchase come from? I have only purchased the fund in whole 100s. If that makes sense?

It's something called "equalisation". You get part dividend and part equalisation if you have not held the fund for the full period when dividends have been earned. Because they are paying some capital as a result of this the amount you "invested" has reduced.