Vantage Life Strategy 20%

Surreyboy

Hi all,

I was wondering if any one knew about the tracking error for the Vantage Life Strategy 20% fund (or how to find out the tracking error?). I have already have a few other funds & investment trusts, most of which are equity funds, and I was trying to diversify it a bit by having more fixed interest. Many people are talking about a bear market in bonds & I thought I could reduce my risks by having a fund which has some shares (like this one) & by investing monthly.

But I did read somewhere that bonds might not be that suitable for a tracker fund; I think the point was that there are so many bonds out there that it is difficult to track them all.

I was wondering what people's views on the Vantage Life Strategy funds was generally?

Thanks!

Matt

Totton

Hi,
There are lots of threads covering the Vanguard Life Strategy finds, for example https://forums.moneysavingexpert.com/discussion/4392271

Overall they are a decent holding that can form a core holding.

masonic

First of all, you can't take a multi-asset fund of funds like this one and generate a meaningful tracking error because it isn't simply tracking an index (well, technically it is tracking the "Vanguard LifeStrategy 20% Equity Composite Index", which you can find data for in the fund fact sheet). You could look to the tracking errors of the underlying fund constituents, which do track a specific index, such as the Vanguard Global Bond Index Fund and Vanguard UK Government Bond Index Fund, etc.

I'm not sure I understand your argument for choosing VLS 20% in view of the potential issues with bonds. This fund can't reduce its % allocation to bonds, so if they start falling you won't be any better off than you would with a self-constructed 80:20 split between bonds and equities. If you want a multi-asset fund that can move between equities and bonds depending on market conditions, then you will need to look at active funds.

Regarding the point about the number of bonds out there being a problem, it will of course depend on the size of the indices being tracked. For example, for UK Government Bonds one index has 60 constituents, which is very manageable; for UK corporate bonds it's closer to 1000, which is only one and a half times the size of the FTSE All-share. Presumably the situation will be similar for other countries, so bonds don't look much more difficult than equities and they tend to be less volatile, so rebalancing may be easier.

Surreyboy

Thanks for the advice.