Which fund would you choose? Why?

skillboy

Hi All

I am an investment newbie and am thinking about investing in one of two funds.

Either Vanguard Life Strategy 100% equity

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-100-equity-accumulation

or HSBC FTSE 250 tracker

https://www.fidelity.co.uk/investor/research-funds/fund-supermarket/factsheet/performance.page?idtype=ISIN&fundid=GB00B80QG052&UserChannel=Direct

Both seem to have performed pretty well and have low dealing costs.

I guess I would put around 400 - 500 pounds per month into the fund.

I was wondering if it was up to you, which fund would you choose and why?

Any feedback greatly appreciated.

Thanks

Ian

westy22

You really can't compare the two as they are drastically different.

The Vanguard LS 100% is a global fund covering all the major markets in the world and therefore gives exposure to equity growth wherever it may come from. Its holdings of individual companies must run into thousands.

The FTSE 250 is just the 250 mid-sized companies listed in the UK FTSE.

Do you believe that the best future growth will come just from 250 smallish UK companies?

skillboy

Honestly speaking I was going to go for a FTSE 250 tracker as my first ever fund as it seems like a reasonable way to start.

However the Vanguard LS was mentioned several times as a potentially better fund so even though the funds are different, I would be interested to know given the choice of the 2, which one people would choose...

skillboy

this is based on the assumption that the only goal is for growth ... and money tucked away for 15 years +

Blackdog

I would hedge my bets and invest in both!

ChopperST

No point investing in both as you would significant overlap.

Also on a 15 year timescale 100% equity would be relatively high risk.

As a very general rule of thumb own 4% equities for each year of your investing timescale with the rest in high quality bonds / guilts and rebalancing every year.

So you should be looking at a 60 / 40 split.

If your timescale is 15 years exactly then I'd go for the lifestrategy 60 if its 20 years go for the 80.

A_Flock_Of_Sheep

I just wanted to say that I have a 250 tracker but an ETF called MIDD. But just over a week ago I purchased into the Vanguard LS 100%. I am with Halifax and there is no dealing cost and no monthly platform fee either.

Halifax don't yet do the LS products with bond and gilt mixed yet though.

So as another poster said I have hedged and got both.

A_Flock_Of_Sheep

Where does the 4% equity for each year of your investing timescale come from. Never heard that before. All blurb I have read says five years minimum. But you can invest for as long or short as you choose.

A lot of Royal Mail investors invested only for a few weeks in a single share. Very very risky???

A_Flock_Of_Sheep

Anyway according to HL investing has gone sour today ahead of key important data.

In fact just recently I can't remember a week going by where some form of imminent data wasn't pulling the market down.

It seems to have run out of steam.

Linton

As others have said they are 2 very different products.

The Vanguard fund invests mainly in the largest companies scattered across the world. For someone starting investing its a reasonable long term first investment. Its not going to provide the highest returns but they wont be the worst either.

The FTSE250 tracker invests in mid sized UK companies. Many of the company names you will see every day are included, Smiths, Halfords, the major house builders and a good range of specialist companies well known in their field. In both the past 2 years since VGLS100 started the FTSE250 tracker returned 50% more. This high performance compared with large company funds has been in evidence for most of the past 10 years. But there is the downside that it is purely UK based, with many companies with relatively small international business. So if the UK markets run into problems the FTSE250 tracker would be very much more affected than VGLS100. What will the markets do for example should the UK vote to leave the EU in 2-3 years time?

If you are only going to invest in one fund, and you are investing with money that matters to you, then VGLS100 is the more obvious choice. However the FTSE250 tracker could be a very lucrative part of a more diversified portfolio.

As to what I would do in my situation....

The FTSE250 tracker every time! I am happier with that sort of investment, can accept that it will do poorly in the bad times, and own a wide range of other funds and shares.

skillboy

Interesting opinions and thanks a lot to everyone for your feedback.