Vanguard Life Strategy

latecomer

minimumcost wrote: »

It's just a bit scary having only one fund (VGLS) to do that in the UK. There are others, but they're only available through IFA's who charge fees that depress your portfolio value.

I dont think thats true - i'm sure there are others (which IIRC are mentioned somewhere in this thread).

Rollinghome

minimumcost wrote: »

Latecommer and Rollinghome... thanks of the replies. Very useful. I spoke to Tim Hale... (very very nice man) and I've just read The Random Walk Down Wall Street. It would seem to me that as passive investing gathers pace the charges (inc HL's) should come down rather than up. If we agree with the 'passive' experts I can't understand why the average investor would not go for pure index tracking of a representative global portfolio.

Furthermore, it seems like putting all your money into and single portfolio fund rather than a portfolio of individual trackers has a cost advantage that outweighs any advantage you might get from alternative asset allocation.

It's just a bit scary having only one fund (VGLS) to do that in the UK. There are others, but they're only available through IFA's who charge fees that depress your portfolio value.

I don't really know much about VGLS MC. The majority of my investments are in direct holdings but only because there weren't any trackers when I started. Active managed funds had even sillier costs then than now but I jumped at the first L&G trackers when they arrived in the early 90s. If I were starting today it's likely I'd go almost entire passive and avoid a heap of hassle.

Unfortunately I'm not so sure that the cost of holding trackers will fall. Under RDR2 from April platforms will be required to make the same platform charges for both passive and active funds, which on some platforms might double or treble the previous net cost depending on various factors. That's not to say they won't still offer the best value but the gap could close a bit.

On tax, I'm not sure how VGLS funds work within an ISA. As you'll know, where funds pay interest, such with bond funds, the tax element can be reclaimed by the ISA manager. When dividends are paid, for equity funds, the tax credit can't be reclaimed. Normally when a fund contains less than 50% of bonds then returns are paid as dividends but I haven't seen anyone mention it in relation to VGLS funds or how they deal with it.

ColdIron

Rollinghome wrote: »

Normally when a fund contains less than 50% of bonds then returns are paid as dividends but I haven't seen anyone mention it in relation to VGLS funds or how they deal with it.

The 100/80/60 pay dividend, the 40/20 pay interest

A_Flock_Of_Sheep

What I don't like about these Life Strategy all in one investment contraptions is that you don't know the value of each individual component or fund it is cobbled together with.

So if you wanted to sell part of the "bond" section or the USA section you can't. You have to sell part of the whole lot - even if it means making a loss when in fact part of it might be upside but you can't see it because other bits are dragging the overall "fund" price down. Coupled with a poor Dividend it seems a very inflexible and gimmicky set up to me and one I will avoid.

I think its wax lyricalled on here far too much as almost a stock response to anyone thinking about or new to investing.

TCA

A_Flock_Of_Sheep wrote: »

So if you wanted to sell part of the "bond" section or the USA section you can't. You have to sell part of the whole lot.

That's the whole point of the product. It's a self-rebalancing strategy with a specific asset allocation. It's designed for those who don't want to tinker.

gterr

ColdIron wrote: »

The 100/80/60 pay dividend, the 40/20 pay interest

According to Trustnet it's just the 20% Equity fund that pays interest. The others, including the 40% Equity, pay dividends.
(Does seem surprising, admittedly).

minimumcost

A Flock of Sheep and TCA, I've been investing for a long time and I've been in the trading and risk management business for many years. The investment market is one of the most analised systems in the history of mankind. The evidence is overwhelming that passive investment has an higher probability of making more money that active over the average life cycle of a typical investor. Kahnaman and Tversky does a good job explaining why and won the noble prize for it.

The implication is that if you continually tinker with your asset allocation you'll lose out. Hence the extra value potential in the investment strategy VGLS supports....nee almost enforces.

A_Flock_Of_Sheep

minimumcost wrote: »

A Flock of Sheep and TCA, I've been investing for a long time and I've been in the trading and risk management business for many years. The investment market is one of the most analised systems in the history of mankind. The evidence is overwhelming that passive investment has an higher probability of making more money that active over the average life cycle of a typical investor. Kahnaman and Tversky does a good job explaining why and won the noble prize for it.

The implication is that if you continually tinker with your asset allocation you'll lose out. Hence the extra value potential in the investment strategy VGLS supports....nee almost enforces.

So why aren't all the traders simply investing in VGLS and stop trading on shares, buying and selling like there's no tomorrow? Maybe they are just total ninnies.

minimumcost

Most 'traders' are very very smart. Most trades are executed by 'agents' on behalf of investors. The agent takes a cut of the trade irrespective of the quality of the investment. They have very cleverly convinced most investors that investing through them is a smart thing for the investor to do. The base rate data for the market for the last 50 years at least clearly says it's not. They aren't ninnies at all.

mark55man

because then they wouldn't have jobs