Vanguard Life Strategy

Shaolin_Monkey

According to the simplified prospectus which sets out the charges, "TER has been estimated as these unit classes launched on 13 July 2012. For each unit class, the estimate is based on and incorporates the expense structure of the unit class, as well as the TER, net of any rebates, for the units in the BlackRock Collective Investment Funds, the underlying funds in which the Funds invest or will invest upon launch." It's good to read the prospectus before investing anyway.

As I understand it, actual TER's can only be calculated accurately historically after a full year, which is the reason they are using estimated figures. But I read it as the TER of 0.65% includes charges in the underlying funds. I doubt they are actually investing in retail class units internally.

gterr

Totton wrote: »

I do agree that holding more than one Vanguard fund is a little daft, you just need to decide on your risk appetite and then select the best one that fits.

HTH,
Mickey

Hi there,

Just thought I'd come back on this and explain my rationale for holding two VGLS funds at the same time. I'll use an example.

Suppose I decided that I wanted a split of, say, 50:50 bonds to equities, with at least a little exposure to Asia, Pacific, Japan. I could do this by holding VGLS100% and also investing separately in a range of corporate bonds and gilts to bring the portfolio back to 50:50, or I could buy the VGLS40% and buy side funds in Asia, Japan etc. and perhaps some other equities, again to bring the split back to 50:50. I would have low costs for holding the VGLS, but would also have charges, probably higher, for each of the side funds. If I decided later on that I wanted to move to a lower-risk strategy I might be faced with selling exisiting funds in their entirety and buying others - with obvious costs involved.

The alternative approach (my rationale) would be to invest 83% of my money in VGLS40% and 17% of my money in VGLS100%. That would give me a 50:50 split between bonds and equities, plus exposure to all the sectors I wanted. The fees would be low, rebalancing a doddle, and if I decided later to move to a lower-risk holding I could just move part of my VGLS100% holding over to the VGLS40%. Of course, by holding two VGLS funds I will be duplicating many holdings, but that's a known and desired feature, not an error. I'm interested in the total holding, not in whether this comes from one or more than one fund.

If I were looking for a lower risk portfolio initially, and perhaps one where the risk declined over a longer period of time I might consider holding the VGLS20% plus the VGLS100% and, again, gradually rebalancing towards the VGLS20% over time.

This may be an unusual way of using the VGLS funds, but it's not without precedent. As a novice I've been reading and reading over the last 6 months or so, and one of the first articles I read about the VGLS funds included a table to show how to mix two VGLS funds to give your desired split between bonds and equities. I don't have the reference to hand but could probably find it with a bit of Googling.

I am in the early stages of learning about S&S, staring from absolutely no knowledge, and I've been given a lot of help here. I will not be investing my big lump sum until November, so I've got plenty of time still to do more research, and to be corrected by folk here if you think I've misunderstood something or (as with recent replies to my posts) lost my marbles completely!

Many thanks for your time.

westy22

gterr wrote: »

and one of the first articles I read about the VGLS funds included a table to show how to mix two VGLS funds to give your desired split between bonds and equities. I don't have the reference to hand but could probably find it with a bit of Googling.

I think this is the article you saw - it's on Monevator http://monevator.com/lifestyle-vanguard-lifestrategy-funds/

I think that an additional £24 per annum platform fee for holding 2 Vanguard LS funds is good value and does give you the flexibility that you have explained.

gterr

westy22 wrote: »

I think this is the article you saw - it's on Monevator http://monevator.com/lifestyle-vanguard-lifestrategy-funds/

I think that an additional £24 per annum platform fee for holding 2 Vanguard LS funds is good value and does give you the flexibility that you have explained.

Thanks, yes. Of course, if the total amount invested was small then holding two (or even one!) VGLS fund would be less cost-effective. You'd just need to do the sums.

takesyourchances

I have now took out the two side funds of interest mentioned over the weekend within this tax year to go with the VLS 60%.

I decided to add a bit more weight on the Standard Life Global Small Cap opening at £700 and I also opened the Aberdeen Japanese Small Cap fund with £500, this will help me get the weight I would like them around in the portfolio better as I drip feed through the year from April.

Now my portfolio consists of the following after these two new openings for this tax year:

VLS 60%
Standard Life Global Small Cap Fund - New
First State Emerging Markets
Aberdeen Asian Small Cap Fund
Aberdeen Japanese Small Cap Fund - New

Plenty to be getting on with now I will balance things out with the drip feeds, the higher amount to the VLS to increase the core up more with these two new openings and will maybe rotate the drip feeds to the side funds 2 one month, 2 the next month etc while I build the core up more.

From April it will be a good drip feeding run to balance the allocations out and will update as I go along with them and now I have got a drip feeding game plan to work on.

The First State Asian Pacific leaders may come in October from a lump sum coming and I have plenty of drip feeding plans now to get on with and keep the VLS the main each month.

Thanks.

JohnnyJet

Why have most people that choose the VLS fund gone for the 80% choice? Like the previous poster I was considering the 60%, but am I missing something? I wanted a fund to move some cash into which was fairly low risk and has the potential to grow by more than the 3% on offer in a cash ISA.

Carpi09

JohnnyJet wrote: »

Why have most people that choose the VLS fund gone for the 80% choice? Like the previous poster I was considering the 60%, but am I missing something? I wanted a fund to move some cash into which was fairly low risk and has the potential to grow by more than the 3% on offer in a cash ISA.

Some people believe bonds are in a bubble so people are moving into equities. Also, with interest rates so low at the moment and QE continuing, it can only go well for equities at the moment.

I think 60/40 would be fine for you if you only want to beat savings. It all depends on risk, if you plan on investing for several years, go with the higher equity option.

JohnnyJet

My plan is to invest for up to 20 years and I want this fund to be low risk. I invest though HL, can I transfer to different VLS funds without further charges? That way I could choose the 80% fund then later change to a lower risk VLS fund. Also should I go for the income fund or the accumulation fund?
I have other funds that are higher risk which are more actively managed, but I want to invest and leave with this one.

Carpi09

JohnnyJet wrote: »

My plan is to invest for up to 20 years and I want this fund to be low risk. I invest though HL, can I transfer to different VLS funds without further charges? That way I could choose the 80% fund then later change to a lower risk VLS fund. Also should I go for the income fund or the accumulation fund?
I have other funds that are higher risk which are more actively managed, but I want to invest and leave with this one.

As far as I am aware, you can move it to another VLS Fund. You are in the same position as me, I am planning on keeping this for 20 years, maybe longer, maybe less. Unless you need the income provided by the fund, I would go for the Acc fund. However, 80 is considered on the higher risk scale, if you want a low risk, maybe you should look at the 40 or 60 but with your time scale, I think you would be fine with the 80 and move it towards a less riskier when you come closer to needing the funds.

Blackdog

JohnnyJet wrote: »

My plan is to invest for up to 20 years and I want this fund to be low risk. I invest though HL, can I transfer to different VLS funds without further charges? That way I could choose the 80% fund then later change to a lower risk VLS fund. Also should I go for the income fund or the accumulation fund?
I have other funds that are higher risk which are more actively managed, but I want to invest and leave with this one.

With HL the only charge for swapping one VLS fund with another would be the 0.24% initial charge (or dilution cost) when you re-invest in the new fund. It is a one off charge and not really worth worrying about (works out as £24 if you were investing £10k!).