Vanguard Life Strategy

Gadfium

In contrast, my VLS 100% (purchased Feb 2015) is down 0.4%. Which probably shows thats it's all about time in the market and not timing the market.

jamesd

Just shows that your market timing was poor.

The UK stock market is at a somewhat higher than average cyclically adjusted price/earnings ratio so expected future returns for investments now are lower than average. Not as much lower as for the US market which is a good deal more above its average.

There's no requirement to invest in a particular market at a bad time for that market.

MadMat

I've been drip feeding into VLS100 for about 18 months now inside a SIPP, I'm showing an overall gain of just over 8.1%

Amount going in each month has varied a little as I tinker with the balance between this and other funds. but I'm pretty happy with that.

Mat

Gadfium

jamesd wrote: »

The UK stock market is at a somewhat higher than average cyclically adjusted price/earnings ratio so expected future returns for investments now are lower than average. .

You are Ryan Futuristics and I claim my £10. :D:D

[Deleted User]

VLS80, up 7.1% since Sep 15, combination of lump sum & drip feeding.

bowlhead99

Not wishing to stifle everyone who has yet to report, but I guess there's not much point everybody listing how much their holdings in the fund went up or down. Anyone invested or interested in investing can see the charts and use their imagination to determine what the other forum members might have got if they invested in the different sub-funds at different times or drip-fed their investment over different periods.

The important thing is did it do what it was expected - continue to use trackers in broadly static proportions to achieve exposure to the major (debt and equity) markets?

To me, that's a bit of yes and no, as the funds have been running since 2011 but in 2014 reduced their equities weighting to UK from 35% to 25% in favour of other regions, and on the bond side introduced a larger proportion of global bonds rather than domestic UK bonds. Both these changes were (imho) likely to be for the better - but if you were using as part of a wider portfolio (core and satellite approach) you would have perhaps wanted to revisit your overall allocations depending what you were aiming for.

But it's cheap and cheerful so easy to get broad exposure at low cost. I have it in one of my portfolios and my Dad has it in his ISA among other things. Of course, whether static allocations and a capitalisation-weighted tracker strategy for the major markets will serve you better than more active asset allocation or a managed approach or differently-weighted index within the markets, will always be up for debate -as you can see from some of the previous 1300-1400 posts and the other threads on which it's mentioned.

Cheap broad exposure to rising markets is quite nice; though when markets are not rising, people would rather not have broad exposure to the losses and picking a static tracker results in you tracking things that fall floorwards. But avoiding that likely requires a lot of research and a sixth sense on where things might go next, which requires time and effort and fees, without guaranteed results. So for many people, buying and holding something like this on the cheapest platform available, and adding when cash is available, will suit them for the long term.

jamesd

Gadfium wrote: »

You are Ryan Futuristics and I claim my £10. :D:D

I suppose that name means something to someone but I was referring to the work that led to Robert Shiller getting the 2013 Nobel Prize for economics.

jamesd

bowlhead99 wrote: »

Cheap broad exposure to rising markets is quite nice; though when markets are not rising, people would rather not have broad exposure to the losses and picking a static tracker results in you tracking things that fall floorwards. But avoiding that likely requires a lot of research and a sixth sense on where things might go next, which requires time and effort and fees, without guaranteed results.

Reports of Shiller's work results and current updates isn't that hard to find and to date it has been found to apply to every stock market examined.

I'm personally quite conscious that I only really started investing in 2008 so all of my own investing has in effect happened in a single stock market bull cycle. Makes it much easier to do well. Whether my measures to avoid a loss in a bear market have been sufficient and have done so without harming returns unduly will be an interesting thing to watch.

grey_gym_sock

2 issues with using valuation measures, such as CAPE:

1) it's only much use at extreme (high or low) valuations.

if a market is at an extremely elevated valuation, it does make sense to avoid it, because low returns are likely to follow; and if it's at a very cheap valuation, to pile in, in the expectation of high returns.

but in between the extremes, valuations are little use. suppose a market is moderately overvalued; should you expect returns to be a little on the low side? not really. generally, in a bull market, valuations tend to go from low to fair to high; if you pull out as soon as they are a bit on the high side, you'll tend to miss a large part of the bull market. the predictive power of valuation measures turns out not to be useful in improving your returns, except at those extremes.

2) there are a number of compelling reasons why CAPE should be higher today than its average value over the last 100-odd years, viz.:

a) accounting changes (from c. 2000), relating to how goodwill on acquisitions is written down, and to how the cost of employee share options is calculated, have reduced reported earnings in more recent years. regardless of whether or not this has been an improvement in accounting, it means that earnings in recent years have not been reported in the same way as earlier years, so the "fair" value of CAPE is higher.

b) companies have made increasing use of share buybacks over the last few decades. buybacks are functionally equivalent to higher dividends (except that they may reduce the tax paid by shareholders, and that they increase the value of executive share options), but using buybacks instead of higher dividends has the effect of increasing CAPE.

this is because buybacks reduce the number of shares and correspondingly increase the share price; current PE is unaffected, since there is an increase in earnings per share, which cancels out the effect of the increase in the share price; but the ratio of the (increased) share price to the the earnings per share in the earlier years of the 10-year period (when there were more shares in existence) rises, increasing CAPE.

putting these effects together, the US does not appear to be very overvalued at the moment. also see http://www.advisorperspectives.com/articles/2015/06/16/are-grantham-and-hussman-correct-about-valuations

jamesd

grey_gym_sock wrote: »

2 issues with using valuation measures, such as CAPE:

1) it's only much use at extreme (high or low) valuations.

That is not what the research found. It found a consistent increase or decrease as CAPE increased or decreased.