Vanguard Life Strategy

Ark_Welder

gadgetmind wrote: »

The passive will reduce your fees while the active will still give you the excitement of seeing how long it is before the "outperforming" fund you carefully chose 1) features in BestInvest's "Spot the dog", 2) Changes its investment strategy, 3) Dumps its manager, 4) Changes name, 5) Is quietly closed.

6) The active will increase your fees whilst, if you believe in points 1-5, guaranteeing a lower return than that provided by the tracker.

gadgetmind

Ark_Welder wrote: »

6) The active will increase your fees whilst, if you believe in points 1-5, guaranteeing a lower return than that provided by the tracker.

Of course, it might also be that you get lucky with the active fund, and some people like (perhaps even need!) the element of chance.

takesyourchances

bowlhead99 wrote: »

I would hope you would be happy with it as it has made a great percentage over a year and outperformed the tracker over 3 months, 6 months, 12 months. But you have held it in a rising market ; would they have outperformed or underperformed in a falling market?

Why can you see the point of passive and managed together in the same sector? Other than each of them could make money and you can't decide which way to go? You will end up with a pound in each of a thousand funds at that rate.

No offence intended, but you are a young newbie investor who has not been in the game long. A lot of funds you like the sound of, looks interesting, am tempted by, etc. This is fine because a lot of them do indeed look fine and could make money. But there is a limit to how much value you can get by listening to others about what they would buy. There is no silver bullet solution that just makes you a perfect portfolio. Clearly £100m+ worth of people think each of the two funds (Vanguard global smallcap and SL global smallcap) are useful, but most will not hold both.

SLI think they can get a better return by investing in their favourite 57 opportunities and that people will pay for that, and they do. Vanguard think people will pay to passively hold trackers, and they do. You think a global smallcap fund can complement a global largecap fund, which it can. But for me, you haven't explained why you think a global active smallcap fund will complement a global passive smallcap fund.

The careful focus on the 57 companies will either drag up the performance of the diversified basket of 4200 because they're good picks over a particular time period, or it will drag them down. And similarly, by using two funds together the performance of the 4200 dilutes the profits or the losses of the 57. If you don't think the 57 will get as good global exposure as the 4200 or perform better than 4200, why pick them at all? If you do think that the 57 will do better than the average of the others over the next year like it did over the last, why buy the other 4143 at all?

Sure, you might say it might be better or worse or it might not so you'll buy both.... May I introduce you to F&Cs global smallcap, or the Inv Perp one? They also might get better or worse returns than SLI or Vanguard- why not buy those too and really hedge your bets further. And so on. This is a game you don't really win more by buying more funds in the same sector. Find one that is satisfactory and buy it. If you buy lots of funds that are doing the same things (i.e. constructing a portfolio of smallcap equities around the globe) you will only be storing up a costly headache for when you want to transfer all your holdings to another platform when the platforms shake up their pricing to reflect the admin costs of holding more funds.

They will produce different results but they are both trying to do the same thing: give their investors a global portfolio of smallcaps - because they know some people are going to want a dedicated smallcap fund with international exposure. SLI's intention is to deliver a return that people want to contine to pay for. Vanguard's is to deliver the index result well enough at low enough cost that people will buy it rather than look for a rival whose results might be worth paying for.

Thanks again for replying, yes so far I could only be happy with how the SLI Global Small Cap fund has performed as you said it has been opened during a rising market and it may not always beat the tracker index but at the time of opening it the Vanguard tracker for Global Small Cap was not an option for me to open on HL or I think I would have opened it at that time to go with the VLS. The Global Small Cap was one of the first side funds I opened.

In my previous post I have worded wrong the "I can see however the point of passive and managed together in the same sector." I meant that I can see the point you made about the reasons explained why having passive and managed together covering the same sector was not a good approach etc. I kind of delved a bit deeper in asking when comparing the large tracker holding size to the small managed fund size which you have explained in great detail in your reply which makes sense to me.

For sure I am new at investing and young, so I am willing to learn and debate and discuss ideas. Going the DIY approach I know ultimately it is down to my decisions how I go about it and what I open, each fund I have opened I have only done when I am comfortable that I understand the fund and what it covers and the reasons why I am opening it.

I am prepared to leave the VLS and any funds for the long term and during all weathers as I do not need to access the investments anytime soon as I have enough of a cash buffer in my cash ISA etc and overall I am still slightly cash heavy but I want to hold cash still as well so I do not need to think of going near my S&S ISA anytime soon as I have overseas property which only cost me running costs as paid for so I need to maintain cash for property related reasons etc.

I don't want to add a lot of funds for the sake of it or add wildly so hopefully my portfolio will not be that big in holdings it will affect the platform as it is close to being contributing only. I realize there is no perfect portfolio set up and as I have the VLS core and 5 side funds already giving me an extra tilt of coverage I really have only room for 1 or 2 more at the maximum if add more in the S&S ISA.

Thinking over the last few posts I realize with limited adding options now in this set up I would be doubling up in a global small cap sector if I added the Vanguard Tracker as I have the Global Small Cap managed fund which I want to continue to hold as I don't want to be fund jumping either for the sake of it.

It took a few postings and questions for me to see this fully and understand it, so thank you for your input and for putting up with replying to my posts

At the moment I am thinking to split up the 5 year bond I have maturing soon and top up my VLS as planned and as I have 5 managed funds already top each of them up a little more with an increase in my drip feed across them, as I don't want to have the matured bond sitting in cash and would prefer the cash from it to be invested long term and my cash ISA is filled for this year as well.

Out of the last few posts and reading the replies etc I think if I was to open another fund I would be now leaning towards a UK Small Cap fund to diverse from the UK large Cap in the VLS and go along with the Small Caps I already have. I would not want to add every small cap market I can think of and loads of Small Cap funds for sake of it. I have felt the UK coverage could add to what I have for a while.

So in short I think at the moment I will top up my VLS and the side funds I have already to bring them all in line together and keep my core around 65% to 70% and "if" I add 1 more fund at the moment I would be leaning towards UK Small Cap and the Cazenove fund has been on my HL watch list for several months.

Thanks again any input always helps to learn, it is appreciated and I know I must form my own decisions and I only ever open something when I understand it and I am willing to invest and put my cash into it.

badger09

Apologies if this has been asked before

I know the dealing time for the VLS is 10.00am but is this also the time the Fund price is updated? If not, does anyone know when that is?

Thanks

westy22

They are revalued at 9pm London time and the new price is published on their website overnight.

bowlhead99

The time the valuation is available to you depends on from where you choose to get your prices - the prospectus doesn't state a publication time but it does say if you ring them they'll give you the latest price they have available (they're open 9am-5pm)

Whatever the published price says, you won't be dealing at that price anyway. If you place an order to buy or sell before 10am to catch that cut-off time, the price for your trade isn't set until they've next valued their assets, which they won't be able to do until after 9pm that night because they'll be using asset prices as at that time to feed the valuation.

takesyourchances

I am adding to my account tonight for my VLS with a bit of a lump sum to raise my core level up which should bring it towards the high end of 60% and not far off 70% which is more were I would like it at the moment. .

Once it becomes live on my account I will see were my level is actually at percentage wise.

badger09

westy22 wrote: »

They are revalued at 9pm London time and the new price is published on their website overnight.

Thanks westy22

bowlhead99 wrote: »

The time the valuation is available to you depends on from where you choose to get your prices - the prospectus doesn't state a publication time but it does say if you ring them they'll give you the latest price they have available (they're open 9am-5pm)

Thanks bowlhead99.
I check on Trustnet & HL and was puzzled as they don't always show the same price, presumably depending on when they each update.

I'm not so keen to know that I'd want to ring them

bowlhead99 wrote: »

Whatever the published price says, you won't be dealing at that price anyway. If you place an order to buy or sell before 10am to catch that cut-off time, the price for your trade isn't set until they've next valued their assets, which they won't be able to do until after 9pm that night because they'll be using asset prices as at that time to feed the valuation.

Yes, I knew that.
Just trying to complete the jigsaw

westy22

I check on Trustnet & HL and was puzzled as they don't always show the same price, presumably depending on when they each update.

I am an early riser and often look at Trustnet at 06.00 - the price quoted there is usually the same as the latest Vanguard website price so I presume they update overnight.

HL, however, does not seem to show the latest price until after about 10am and doesn't update the Thursday night closing price until after the weekend.

takesyourchances

I put through £700 last night to my VLS through HL, was intending to anyway so was not timing the market or anything and I see that there was a bit of a dip so hopefully it will catch a bit of value. Will be drip feeding as normal on the 7th and maybe do another bit of a lump at the end of the month.