Vanguard Life Strategy

brasso

Can someone enlighten me as to how and (how often) the rebalancing is done?

Take the 80% Equity Fund. Appreciate that the 80% will have to be maintained, so the rebalancing there is straightforward. But a) how often?

And b) what about the constituent parts? Is it that the fund's equity component is predetermined e.g. 50% US, 30% Europe, 20% Emerging, and every once in a while they rebalance to achieve these proportions? Or do these proportions themselves change to reflect the balance of the world economy?

Thanks for any information.

guitarman001

Thanks to you for a good thread!

Unluckily for you... you should know that whenever I put my money into something, it usually tanks soon after... I gambled away £18k or so on risky AIM stocks that have never recovered... I stayed out of housebuilders and the banks when they started to rise after the crash as I thought it was insanity - but I lost a lot by not getting into that, and then when I did put money in, they started to fall somewhat again! I tried to put spreadbets on to cover potential price reversals when news was expected, but it always ended up costing me lots of money. I'd say I've lost in the region of £20k to date! I could have paid my student loan off with that! (and I should know better, I've friends in finance and I've read about 20 books on investing - when the cost of a home is so high you feel you need to gamble - but that was it.. my one big gamble).

This is much better... regular feeding of funds with little cost, lots of diversity. Only putting in 20-25% of savings, though. The rest is cash for now in the eventuality of the FTSE falling (and also because it's money I need for house deposit, though there's risk holding sterling when it's being de-valued so much...!).

First State has lower fees than Aberdeen, and performance is similar, so I thought it was a no-brainer. Wow, that Aberdeen small cap fund is really performing, isn't it? Will think on that.

It's funny how we've gone for similar fund choices. Especially the 60% equity option for Vanguard (good mix of bonds and equities - I've a mid-range timespan so didn't want to go higher than 60% equities, although saying that, the 80% fund is beating the pants off it)... I also opted for their American Equity tracker as I wanted more AMerican exposure, especially as the dollar is strengthening - hope I don't regret that.

I've put about £1.4k on First State market leaders, £1k Vanguard American Equity, £1k Vanguard 60%... and have £2k to play with... will then fill up next year's allowance by drip-feeding (I fear I put too much in at highs but the tax year is running out and I don't want it sitting there too long without getting interest). The fees for Vanguard DO add up the lower amount you have invested, so I did think about just putting even more into the Vanguard 60%. Or at least let the money lie in my account and put in £1k per month to pound-cost average.

markettrader81

As discussed earlier here I am planing to put £1000 a month in ISA . I am now thinking to leave first state emerging and put £700 a month in aberdeen small cap asian fund and £300 or £200 in either cazenova small cap fund or Standard Life UK Equity Unconstrained fund. Any suggestion which fund I should go for?

brasso

markettrader81 wrote: »

As discussed earlier here I am planing to put £1000 a month in ISA . I am now thinking to leave first state emerging and put £700 a month in aberdeen small cap asian fund and £300 or £200 in either cazenova small cap fund or Standard Life UK Equity Unconstrained fund. Any suggestion which fund I should go for?

You might want to start a new thread with this question in the ISA or Savings/Investment forum as this is one is mainly about the Vanguard LifeStrategy Fund in particular.

takesyourchances

guitarman001 wrote: »

Thanks to you for a good thread!

Unluckily for you... you should know that whenever I put my money into something, it usually tanks soon after... I gambled away £18k or so on risky AIM stocks that have never recovered... I stayed out of housebuilders and the banks when they started to rise after the crash as I thought it was insanity - but I lost a lot by not getting into that, and then when I did put money in, they started to fall somewhat again! I tried to put spreadbets on to cover potential price reversals when news was expected, but it always ended up costing me lots of money. I'd say I've lost in the region of £20k to date! I could have paid my student loan off with that! (and I should know better, I've friends in finance and I've read about 20 books on investing - when the cost of a home is so high you feel you need to gamble - but that was it.. my one big gamble).

This is much better... regular feeding of funds with little cost, lots of diversity. Only putting in 20-25% of savings, though. The rest is cash for now in the eventuality of the FTSE falling (and also because it's money I need for house deposit, though there's risk holding sterling when it's being de-valued so much...!).

First State has lower fees than Aberdeen, and performance is similar, so I thought it was a no-brainer. Wow, that Aberdeen small cap fund is really performing, isn't it? Will think on that.

It's funny how we've gone for similar fund choices. Especially the 60% equity option for Vanguard (good mix of bonds and equities - I've a mid-range timespan so didn't want to go higher than 60% equities, although saying that, the 80% fund is beating the pants off it)... I also opted for their American Equity tracker as I wanted more AMerican exposure, especially as the dollar is strengthening - hope I don't regret that.

I've put about £1.4k on First State market leaders, £1k Vanguard American Equity, £1k Vanguard 60%... and have £2k to play with... will then fill up next year's allowance by drip-feeding (I fear I put too much in at highs but the tax year is running out and I don't want it sitting there too long without getting interest). The fees for Vanguard DO add up the lower amount you have invested, so I did think about just putting even more into the Vanguard 60%. Or at least let the money lie in my account and put in £1k per month to pound-cost average.

I have Capri to thank for this thread and recently I seemed to have high-jacked it :rotfl: I am finding it interesting learning and actually doing this I have to say.

Lets hope your unlucky runs previous don't tank now!:) :beer: that is a rough ride with the AIM Stocks and the loss's.

With the banks and house builders you just never know when the horizon's will change with them. Some type of investing was in my mind for a while, asides cash saving I was buying overseas property which was also why I was a lot cash based, so I know all about risks from putting money down buying something that is not even there yet - off plan in emerging countries, thankfully I have them and not like some of the horror stories.

The last year or so I done a virtual Halifax share portfolio were you have the virtual 10K, I selected a range of stocks and watched it go up and down and I log in now and then to see how it is and actually did today and it was up well. Personally for me for real, I thought it would take to much money to get involved in individual stocks and carried higher risk putting so much into one company and the amount needed for several and still didn't fancy the risk of it. So virtual is the way that will stay for me

Certainly there is next to nothing returning on cash, house prices are high and I am sure you learnt from the AIM stock loss's which has brought you to this, so best of luck to you and lets hope for a good outcome

At the moment I still have a fair lot in my cash ISA, but still need access to cash if something comes up and for various things in the medium term. Although I know the rates are terrible and it bugs me, I still will need to retain cash as well, but I am working on building the S&S ISA up and would like to have 10K reached invested just after next tax year as a goal and like you I will be drip feeding now every month, I will see when this bond comes in October were I will put it.

I was reading the Aberdeen EM topic and read about the fee increase, its seems that there is so much invested in that fund now. As I was looking for an EM fund the First State seemed the best to me after looking through the various EM funds on HL.

How long have you had the First State EM running? mine has appeared on my account, it would only have been dealt Monday, but I am not sure if it is live on the market today or not even though it has appeared as there is no loss or gain, just zeros in that section.

Yes it is very interesting we have two of the same funds, VL 60% and the First State EM, I thought I was on my own with this mix so great to see you have them. You had better not tank this time :rotfl:

The Vanguard funds do carry a monthly fee, I think it is worth having a reasonable investment pot in them to make the £2 per month fee worth it, I think the US Vanguard fund you have will be fine over time and drip feeding and its has performed well so far. There is some good exposure in that fund as well into major companies without the risk of buying one stock to get it.

The Standard life Global Small Cap would bring some small cap exposure mainly in the USA and UK which is another direction I am thinking.

It is very difficult to turn quick money around, the risk is high and it is a gamble and a lot of luck as well. I like this slow and steady approach and I am prepared to give it time.

The Aberdeen Small Cap fund as Linton put it on here is a niche fund, I agree it is niche and I picked that fund as I like the Asian exposure, Singapore etc and I feel that region has long term growth potential and felt that with growth, smaller companies have the potential to expend and grow along with that growth. this was why I liked this fund and went with it. I know things can go down as fast as up, so I don't like to get a false sense when things are rising but I like this fund exposure for these reasons.

After all of the loses you had in AIM stocks etc it still takes bottle to invest in anything, I am sure there would be people who would stay cash ISA after that.

This is better and you can globally diverse, diverse sectors etc and spread your risk.

Keep us posted on what you decide to do with your 2K, you have options alright with your present funds and maybe a smaller opening of another, personally I would be thinking as well of the Vanguard monthly fees and would be wanting them to be worth while, good luck with whatever you decide and keep us posted and I will update as well how I am getting along.

Best regards.

guitarman001

Wow, long post! But I like that - unfortunately only have time to write a short reply.

Yes - it's scary putting money back in here after the big losses. I think I did the right thing with Vanguard 60% - that way if indices tank we can fall back on bonds - it's 'safe' - and hey, if you'd invested ONLY in FTSE trackers the last couple of years, your return would be FLAT whereas if you'd been in bonds only you'd be UP. I'm considering putting the £2k into Aberdeen emerging markets knowing the fee will be introduced soon (should get a rise out of it!) but I think I'll plough it into Vanguard 60% to make the fees worthwhile, even if the returns are somewhat lower. The First State Asian Sustainability fund calls to me - really good returns.. but I must resist.

Just spent 4 hours going over fund choices for my pension at work:
Scottish Eq High Yield Corporate Bond
BAQ (Blackrock Aquilla) 50/50 Bond & Equity Index
M&G Corporate Bond
Baillie Gifford Managed
Scottish Eq Ethical
BAQ US Equity Index
Lazard European Smaller Companies (small holding just in case!)
Lazard Global Equity Income
M&G Global Dividend
Aberdeen Emerging Markets
First State Asia Pacific Leaders

Some of those have overlap - main thing was to keep fees low in general. Will see what my advisor says, and also will post this in the pension fund topic!

guitarman001

Quick question - brain not working... rather than drip-feed I'm probably going to just add when I can. I notice the initial charge for the 60% Vanguard is 0.24%. Is that ONLY on the first ever deposit?

I assume it's no cheaper to drip-feed than it is to add at any old random time...

I guess that's why Vanguard US Equity is good - no initial charge and only 0.2% (other than the £2 per month). Mind you with £1k in this, £24 a year is 2.4% alone! Yeah... that £2 per month REALLY makes a difference. Maybe I WOULD be better putting money into Aberdeen/First State even with apparently higher fees (though no £2 per month charge so cheaper in the short-medium term for lower amounts).

Stochasticity

brasso wrote: »

Can someone enlighten me as to how and (how often) the rebalancing is done?

Take the 80% Equity Fund. Appreciate that the 80% will have to be maintained, so the rebalancing there is straightforward. But a) how often?

And b) what about the constituent parts? Is it that the fund's equity component is predetermined e.g. 50% US, 30% Europe, 20% Emerging, and every once in a while they rebalance to achieve these proportions? Or do these proportions themselves change to reflect the balance of the world economy?

Thanks for any information.

Rebalanced daily through sales/purchases of the underlying Vanguard funds. The equity component is pre-determined (i.e. 20/40/60/80/100%), and within the equity component, the UK/non-UK balance is pre-determined as 35%/65% respectively. Everything else reflects market weightings and isn't rebalanced.

westy22

I notice the initial charge for the 60% Vanguard is 0.24%. Is that ONLY on the first ever deposit?

No, the 0.24% dilution levy is paid on each and every purchase, no matter how small or large. It is basically a contribution towards SDRT on UK shares and helps to keep the fund's trading costs lower. It is not kept by Vanguard as an investment company but paid into the fund, so in that respect it is better than a true 'initial charge'.

brasso

Stochasticity wrote: »

Rebalanced daily through sales/purchases of the underlying Vanguard funds. The equity component is pre-determined (i.e. 20/40/60/80/100%), and within the equity component, the UK/non-UK balance is pre-determined as 35%/65% respectively. Everything else reflects market weightings and isn't rebalanced.

Thanks for that, Mr S. That's good news for a passive investor, though I'm still thinking that the predetermined ratios of x market to y market, runs a little contrary to a true self-correcting reflection of the world economy.

So the emerging markets component, for instance, seems to be around 7-10% in the higher-ratio equity LifeStrategy funds, yet this is lower than I would consider as a true reflection of the current world picture when it comes to economic activity/potential. I wonder if these allocations are ever reconsidered? If, in x years time, Asia and US are equal in economic importance, with UK and Europe having shrunk right back, the LifeStrategy fund allocations would be way out of kilter.

Sure, an investor could simply buy separate emerging markets investments to balance up, but this isn't really in keeping with the buy-and-forget approach. Sound more like active management.

I will still buy the 80% or 100% equity LS, but just rolling a few thoughts around. Anyone care to comment?