Stocks & Shares ISAs

dunstonh

Which Vanguard Life Strategy Fund are most people using? 20, 40, 60, 80, 100% Equity?

Does it matter what other people do?
However, the answer is all of them. There are people paying into every VLS fund. If there were not, then Vanguard would stop offering them.

Ideally I'd like to funnel £800 into each and see how they get on whilst I continue learning...

That would not achieve anything useful. The riskier ones will go up more in growth periods and down more in negative periods. You already know that. So, putting amounts in each is pointless.

Response 2 - As it happens, reading through all the threads, it is something people have done and do do...

Yes. There are plenty of people that do not know what they are doing. And other lemmings may well follow them.

It seems however each would need its own attendant £100 direct debit?

not correct.

Since I don't want 5 x £100 direct debits, and of course, each of the five funds will charge its own 0.22% fund manager fee, what are peoples' thoughts on Equities at 60%?

VLS charges are higher than 0.22%. The OCF is 0.22% but the transaction charge is around 0.11% (varies with each version).

Again, what other people have to think about 60% equity doesnt matter.

When you invest, it should be right for you. Not what is right for other people.

You talk about paying into all versions of the VLS. In general, VLS is not bad for a basic option at the higher end of the risk scale but VLS is not strong at the lower end of the scale with better alternatives available.

If you put money into all versions of VLS then you are just averaging out and you may as well go in VLS60. Although I wouldn't.

Nardge

ColdIron wrote: »

But you appear not to have understood it

Usually by those who have little knowledge of investing and specifically the differences between those products. Investing in all 5 is, frankly, bonkers

eskbanker gave you good advice, but it's your money ...

I had understood it, the first query was in the context of a whole post, as you discerned...
I was concurrently trying to fathom why many people were opening all five together.

Nardge

dunstonh wrote: »

Does it matter what other people do?
However, the answer is all of them. There are people paying into every VLS fund. If there were not, then Vanguard would stop offering them.


That would not achieve anything useful. The riskier ones will go up more in growth periods and down more in negative periods. You already know that. So, putting amounts in each is pointless.



Yes. There are plenty of people that do not know what they are doing. And other lemmings may well follow them.



not correct.



VLS charges are higher than 0.22%. The OCF is 0.22% but the transaction charge is around 0.11% (varies with each version).

Again, what other people have to think about 60% equity doesnt matter.

When you invest, it should be right for you. Not what is right for other people.

You talk about paying into all versions of the VLS. In general, VLS is not bad for a basic option at the higher end of the risk scale but VLS is not strong at the lower end of the scale with better alternatives available.

If you put money into all versions of VLS then you are just averaging out and you may as well go in VLS60. Although I wouldn't.

Thanks for that!

It's very much the kind of response I was hoping for today

"not correct"

- The website appears to require a dd set-up for each in order to progress the application
A moot point anyhow now as I'll only be investing in one...

"VLS charges are higher than 0.22%.

- The OCF is 0.22% but the transaction charge is around 0.11% (varies with each version)"
If you have a moment could you elaborate on this as I thought it was 0.22% and am unfamiliar with the 'OCF' acronym? Evidently I can work it out myself though you might be able to write a brief answer if you have a moment.

You even answered questions that haven't cropped up, but would likely do so at a later date...

Thinking out loud then, since as outlined I can afford to take quite a lot of risk in this, and since you seem to say Vanguard competes better for higher risk products, I'm going to go for 80% Equities... 100% could be a bit too bonkers I imagine. Fingers-crossed!

With Kind regards

ColdIron

Nardge wrote: »

I had understood it, the first query was in the context of a whole post, as you discerned...
I was concurrently trying to fathom why many people were opening all five together.

Many new investors do not know what they are doing. There are quite a few people on these boards with a high level of investing knowledge that you would benefit from listening to. You are making a classic newbie mistake by spaffingyour money across all five (to misquote Boris Johnson). Forum regulars will typically try to dissuade inexperienced posters from this course of action. There is a world of difference between the VLS 100 anf the VLS 20. If one of these was suitable for a particular investor.objective the other would be unsuitable. If you have a large pot there is some merit in trying to fine tune by achieving a balance across, say, the VLS 60 and VLS 80 to produce 70% equity level but on smaller amounts it won't make any significant difference. I can think of literally no circumstance where whizzing up all five in a blender would be a good plan

Make a start by looking at these links
https://monevator.com/using-vanguard-lifestrategy-funds-life/
https://www.vanguard.co.uk/adviser/adv/investments/about-funds/lifestrategy-funds?lang=en

At the very least, at a bare minimum, read and understand the factsheets of the funds to discover how they are constructed and what objective they are designed to achieve. Perhaps start with the VLS 60 and compare it to some of the others

With any luck it should become apparent to you which one is the closest match to your own investment objectives and risk tolerance

AnotherJoe

Nardge wrote: »

Good Morning

Which Vanguard Life Strategy Fund are most people using? 20, 40, 60, 80, 100% Equity?


People are using all of them. Though not usually more than two. There is in fact no point having more than two.

Ideally I'd like to funnel £800 into each and see how they get on whilst I continue learning...
That makes no sense at all on multiple levels.

You can see how they have "got on" by looking at historical records, because thats all you'd be doing if you bought now and looked in say a years time.
Second, the fact they had various rises or falls in that past year would tell you literally nothing about what their performance would be in subsequent years.
Third, the fact you are looking at getting all five and then after a period deciding which is "best" shows a fundamental lack of understanding about what they are for. They are about addressing different risk levels. How much risk can you take, what size of a drop could you tolerate? Massive difference between 20 and 100. In an up year the 100 would rise far more than 20, in a down year it will fall massively more. You dont need to buy them to know that.

It seems however each would need its own attendant £100 direct debit?

I'd only likely want to pay in £200 per month, split between the five...

Initially £4000 are going in (what's left of my ISA allowance 2018/19), and:

• I will not need the money in an emergency
  
  
• Losing the money whilst annoying, would not destroy me
• You wont lose "the" money if by that you mean all of it, you might lose some though eventually you should recoup it and more if you wait long long enough. Because if you didnt think that, there would be no point investing.
  
  
• The aim is to invest long-term, exactly how long I don't know, possibly into retirement
  
  
• The sum may be used for e.g. funding an Independent (Private) School place, University Tuition Fees, or may never be used at all as I've yet to start a family
  
  
• I might take a relatively small amount out now and then, for whatever random reason
  
  

Since I don't want 5 x £100 direct debits, and of course, each of the five funds will charge its own 0.22% fund manager fee, what are peoples' thoughts on Equities at 60%?

With Kind Regards

Take a look at the graphs of past performance. Decide which you could live with in terms of falls, which would make you panic and sell. Then just buy the version whose falls so far wouldn't make you panic, and stop looking at how its doing on a regular basis. If you are going to look at prices weekly and decide whether to change strategy, open a post office savings account instead

AnotherJoe

Nardge wrote: »

I was concurrently trying to fathom why many people were opening all five together.

I very much doubt many are. But if so, the answer would be, there are many clueless people.
Because to buy all of them averages out to simply buying VLS60 so just do that.

As I said earlier, theres no point holding more than two since with any two in appropriate proportions you can get any VLSxx you want (as long as its above 20). Fancy VLS75 or 57m or 42? Easy.

dunstonh

"VLS charges are higher than 0.22%.

- The OCF is 0.22% but the transaction charge is around 0.11% (varies with each version)"
If you have a moment could you elaborate on this as I thought it was 0.22% and am unfamiliar with the 'OCF' acronym? Evidently I can work it out myself though you might be able to write a brief answer if you have a moment.

As if January 2018, a new EU directive came into effect called MIFIDII. It introduced a new charging disclosure requirement. Effectively a new measure of working out the total charges of the fund.

There have been attempts to get full disclosure previously. In the old days you have AMC (annual management charge). Later came TER ( total expense ratio). Then came OCF (ongoing charges figure). MIFIDII introduced two bolt ons to that called transaction charges and other/incidental charges.

So, today you see charges split into those three areas. In the majority of cases the other/incidental charges are zero on UT/OEIC funds. You already know the OCF is 0.22% for VLS. However, VLS60 has a Transaction Cost Ex-Ante of 0.05% (recently reduced from 0.11%). This makes the total charge 0.27%

Some consider the transaction charge figure unreliable. Indeed, back in 2016 when proposals were being assessed, it was pointed out that the figure calculation incorporates the potential for profit and loss to be declared as a charge. Now, profit or loss should never be treated as a charge. However, it wasnt changed and that still exists. Also, there are two methods to work out transaction charges and it is also reliant on data aggregation rather than a physical charge. So, some people are disgrading it.

What is interesting is that the advice side of the market is meeting the disclosure well. A few platforms not as far ahead as others but all are giving the data. Yet the DIY side of things seems to be ignoring the TC figure or not quite as advanced in showing it clearly and fully.

For example: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-60-equity-accumulation

Here there is mention of the 0.22% OCF but nothing on the 0.07% TC unless you click on the costs tab. There is a mention in monetary terms but not in percentage terms until the total. I wonder how many dont go any further than the first tab for looking at charges.

Anyway, the bottom line is that charges are platform + fund OCF + TC + other. Not just the OCF.

Nardge

Whilst what and how I wrote today's post may have been open to interpretation (poor construction and wording - for which I apologise), this was the result of writing in haste, as I really want to open it today. At the time I thought the outline I gave of my circumstances might help in gauging what it was I wanted/needed to know.

It was in the hope that "Forum Regulars" (or Big Guns as I call them) would voice their knowledge, wisdom, and experience that I posted, also evitating the need to trawl through countless MSE S&S Threads.

I apologise to 'Eskbanker' if we 'got off on the wrong foot', and am grateful to all contributions as essentially my objective of having all my questions answered today has been achieved, with great clarity and focus, with some useful suggestions for further reading.

I will peruse those links, though think I'll head for and open the 80% equities today

With Kind Regards

eskbanker

Nardge wrote: »

I apologise to 'Eskbanker' if we 'got off on the wrong foot'

Accepted but no apology needed as far as I'm concerned! My post was somewhat more brusque than the more expansive replies you were seeking (and have had from the others), so likewise apologies if my abruptness irritated.

Nardge wrote: »

I will peruse those links, though think I'll head for and open the 80% equities today

Not sure I see the need for such haste - it's definitely better to do the research first but if you're trying to get the money invested before the end of the tax year there shouldn't be any need to rush headlong into it today!

bowlhead99

Nardge wrote: »

Whilst what and how I wrote today's post may have been open to interpretation (poor construction and wording - for which I apologise), this was the result of writing in haste, as I really want to open it today.

I will peruse those links, though think I'll head for and open the 80% equities today

When you are considering investing money into a product which can lose 40-50% over the course of a year, and you have several more weeks before the end of the tax year, there is really no need to be hasty and open it today just because you have some self imposed deadline.

For example, your hasty review of what people were saying on forums led you to think that many investors would invest in five vanguard lifestrategy products at the same time, while the reality is that if you scoured the archives you would be unlikely to find more than three or four usernames claiming they had invested in five lifestrategy funds concurrentlly - while by contrast you'd find dozens or hundreds of people who have invested or advocated investing in *one* of this type of mixed asset fund.

Now you're going to consider looking at links provided but have pretty much made your mind up, even though it's a change of mind from what you were thinking first thing this morning. Maybe you would change your mind again if you slept on it.

If you are putting in an initial few thousand to use up your allowance but know you can change it later - and will be paying in several thousand a year going forward anyway - it doesn't really matter which of the funds you pick in the short term. But you might as well get it right, if you're embarking on a long term plan. So there probably isn't any reason for you to rush to open an account on some random rainy Thursday in the middle of March unless you're really happy with your decision.

Good luck with your investing journey.