Vanguard Life Strategy

grey_gym_sock

Linton wrote: »

The final problem seems to be one of access to Global Trackers.

vanguard's VWRL - an ETF, not a fund - would probably fit your criteria.

but not everybody wants the entire world in proportion to market capitalization.

you could call using any other weightings not really passive. but most of the arguments against active management don't apply to using 100% passive funds with not-exactly-market-cap weightings.

gadgetmind

The only reason why cap weighting works better over the long term is because it keep trading costs to a minimum.

I did once start to model whether my separate Vanguard holdings with my own allocations and rebalancing had lower long-term fees than LS but I gave up. LS has a higher TER, but my rebalancing will add costs due to the up front fee.

I gave up because I didn't think my historical data sources were good enough, and because I decided to rebalance infrequently, but mainly because I found something else to exercise my over-active curiosity!

nicknameless

gadgetmind wrote: »

The passive investor needs to have zero faith as they are using an evidence-based approach rather than putting their faith in a "super investor".



Why would you ignore this whether using an active or passive approach? You let the evidence steer your hand and tilt your portfolio accordingly.



That's an asset allocation issues rather than a matter of what vehicles you use to gain exposure to those asset classes and territories.

But any asset allocation decisions (region or sector) are active management decisions based on prediction, all of which the empirical evidence presented by passive proponents argues against.

I think Linton is pointing out that 'passive' investors can't have their cake and eat it.

Ultimately the problem here is the psychology of investing - passive theory is arguing that there is a 'cause and effect' illusion flowing from choice of fund / sector / region, and that the financial services industry flourishes as a result of the psychological intoxification of this illusion, using marketing as a tool.

Theory aside how good are the VLS funds at replicating the global equity market for a UK investor (as far as is possible)? Isn't that the crux of the matter for this thread once you've decided active or passive?

adewalton

Quick question on H & L charges for Vanguard LS Fund 60/40?
Never used H & L before and just trying to understand if I have their charges correct?

This is for 5K lump invested.

Initial Charge 0.24% = £12
Fund Managers Charge 0.31% = £15.50
Platform Fee = £24

So total cost will be £51.50 right?
If so its about a 1% overall cost right?

I understand you don't see this as a charge its wrote into the amount of units / unit cost?

Sorry for the questions just want to be sure before I dive in?

Thank You.

gadgetmind

nicknameless wrote: »

But any asset allocation decisions (region or sector) are active management decisions based on prediction, all of which the empirical evidence presented by passive proponents argues against.

I suggest you read a copy of "Smarter Investing" to find out what passive investing is all about.

passive theory is arguing that there is a 'cause and effect' illusion flowing from choice of fund / sector / region

To a certain extent, but the main thrust is to not try and outguess the market, diversify widely, rebalance occasionally, and keep costs down at all times.

You can then look at any investment styles that have shown historically that they can provide additional return. Again, Smarter Investing covers this, and this is why I added value, smaller cap, and slightly EM tilts.

Note that there are psychological reasons why some prefer more home bias to their portfolios. I generally don't.

Theory aside how good are the VLS funds at replicating the global equity market for a UK investor (as far as is possible)? Isn't that the crux of the matter for this thread once you've decided active or passive?

See page 10 of this, which also addresses the issues raised above.

https://www.vanguard.co.uk/documents/adv/literature/target-allocation-appproach.pdf

grey_gym_sock

adewalton wrote: »

So total cost will be £51.50 right?
If so its about a 1% overall cost right?

in the first year, yes.

in subsequent years, there's no initial charge, so it falls to £39.50 or about 0.8%.

ozzage

and hopefully less, because if it grows the £24 will be a lower %

And that's all assuming you don't add more £ yourself which would drop it further...

nicknameless

gadgetmind wrote: »

I suggest you read a copy of "Smarter Investing" to find out what passive investing is all about.

To a certain extent, but the main thrust is to not try and outguess the market, diversify widely, rebalance occasionally, and keep costs down at all times.

You can then look at any investment styles that have shown historically that they can provide additional return. Again, Smarter Investing covers this, and this is why I added value, smaller cap, and slightly EM tilts.

Note that there are psychological reasons why some prefer more home bias to their portfolios. I generally don't.

See page 10 of this, which also addresses the issues raised above.

https://www.vanguard.co.uk/documents/adv/literature/target-allocation-appproach.pdf

Have read smarter investing but thanks for the suggestion anyway.

The vanguard lit is actually explaining why they're diverting from theory with their UK allocations, isn't it? Translation - to cater for the UK market?

gadgetmind

nicknameless wrote: »

The vanguard lit is actually explaining why they're diverting from theory with their UK allocations, isn't it? Translation - to cater for the UK market?

ISTR they explain that backtesting suggests the best mix has quite a large range of different periods, so they picked a number that reduces volatility and won't disturb people too much. I think Smarter Investing touched on the issue of people seeing their portfolio behaving markedly differently to the market they are most exposed to in the news flow.

I couldn't care less, hence my own Vanguard mix in my own SIPP and me also adding some Blackrock global ex UK alongside the main fund in my Group Personal Pension because I regarded its UK bias as too large.

In my wife's SIPP she just hold LS and some bonds as I really don't think it's a big deal.

adewalton

If I add more money later say an extra £1k etc what costs would be applied?
Would it just be 0.31%
Thanks