VLS80% plus what (if anything)?

Catapult

I've got a SIPP with £37K in Vanguard LS 80% and £7K cash. Is it worth me actually investing the £7K in another fund or just top-up the VLS? Vanguard know what they are doing better than me. The only area that the VLS might be a bit thin on is Smaller Cos, but I'm no expert. Is there a fund generally considered to be a good accompaniment to VLS? I've 20 years to go...

edinburgher

Vanguard know what they are doing better than me

That's how I feel, I'd just whack the rest in VLS80.

Ryan_Futuristics

Just personal preference, but for me the no-brainer long-term investment is Neil Woodford's new equity income fund

VLS is very conservatively (very steadily) run - so a fine core holding ... But rather than thinking of covering more cap bases, Woodford's could give you diversification of management styles (which is worth pondering)

Neil Woodford's got a 20+ year track record of delivering 12% average annual returns - it's also a high dividend payer (meaning considerable compound interest over 20 years) - so while there's always the chance his approach won't be as successful again, there's a decent enough chance (in my opinion) that even a small investment with Woodford could realistically outgrow your VLS fund over that time period ... Despite this I wouldn't call it any more risky (it's 80% UK, which is very fair value at the moment, and is unlikely to underperform the UK market) ... It will also give you more small and mid-cap exposure, and good private equity exposure

dunstonh

but I'm no expert.

Which is why you shouldnt break the asset allocation of a multi-asset fund

Is there a fund generally considered to be a good accompaniment to VLS?

The point of VLS is to use by itself or use with other multi-asset funds, such as the L&G multi-index.

colesy

dunstonh wrote: »

The point of VLS is to use by itself or use with other multi-asset funds, such as the L&G multi-index.

Just as a matter of interest, how would L&G multi-index complement VLS80?

TheTracker

colesy wrote: »

Just as a matter of interest, how would L&G multi-index complement VLS80?

I'm also fascinated to learn the answer to this one. Surely it is one or the other if you want to go down the fund of funds path.

TCA

Ryan_Futuristics wrote: »

Just personal preference, but for me the no-brainer long-term investment is Neil Woodford's new equity income fund

With a price/book ratio of 3.6 according to Morningstar. How does that sit with your value-based approach?

I hold EDIN so far too much overlap for me to consider his new fund.

Ryan_Futuristics

TCA wrote: »

With a price/book ratio of 3.6 according to Morningstar. How does that sit with your value-based approach?

I hold EDIN so far too much overlap for me to consider his new fund.

It's compartmentalised WELL away from my value portfolio

- Firstly that's only the top-10 holdings - which are all high income payers (and of course, with people avoiding bonds now, dividend stocks are trading on high valuations, which are likely to stay high for years in a rising rates environment) - Woodford's also got a lot of interesting, smaller, undervalued companies driving performance at the moment

Also, companies like AstraZeneca (with strong intellectual property) may be difficult to value on these metrics, and may still be significantly undervalued

- The other part is the 'Woodford effect' - which is actually what made me decide to invest ...

As soon as Neil published his holdings, articles sprang up with investors trying to build their own 'Woodford' funds - popular UK income funds top holdings all followed suit

The biggest drag on active management is investors all piling into the same stocks - yet I knew UK large caps were a sector I wanted to be invested in ... So it simply comes down to: be with the shepherd, not the sheep (be with the guy who's buying before valuations get pushed up ... which I predicted would explain the fund's runaway early performance)


I think Woodford (and Mark Barnett, at Edinburgh) are some of the few UK fund managers actually worth their salt - my value portfolio is very management agnostic (and based purely on metrics)

PS - interestingly, Woodford and Edinburgh's recent performance has been quite noticeably different (despite having most of the same top holdings) ... Woodford's was much better cushioned against the market drop, but Mark's had benefitted more aggressively from the recovery ... I'd be happy to hold both 50:50 (one more defensive and one more aggressive - I think both will continue to do well)

dunstonh

colesy wrote: »

Just as a matter of interest, how would L&G multi-index complement VLS80?

It has a wider diversification (particularly property) and whilst it uses index trackers, the allocations are more fluid than Vanguard. There is a bit of active management in allocations. So, its a similar make up but with a slightly different investment strategy.

With small amounts, it may as well be one or the other. However, as the amounts get bigger, and if you dont want a bespoke portfolio, then using multiple multi-asset funds with different strategies can be effective. I could have plucked any number of multi-asset funds out of the air really but just picked L&G given its similarity (in using trackers).

TheTracker

I suspect creating your own portfolio of index trackers would be most people's action when the sum became large enough or if you wished to adjust away from a fund of funds own strategy. Having two and only two seems quite odd. Each to their own however.

collingbone614

I'm in a similar position, holding the VLS 80%, but with a smaller amount. I had considered getting into the Blackrock property tracker, but I thought I'd better off just building up what I've got with my existing product and not trying to dilute things or tinker. Whenever I look at the numerous underlying funds in the VLS I'm reminded that there is plenty going on in there already.

If and when I'm in a position to require something else, I'd be tempted by the L&G Multi-Index funds. But in reality I'd probably get another fund-of-funds so that I can 'lifestyle' my VLS 80. For this purpose I could just get a VLS 20, or the Blackrock Consensus 35, then adjust the ratios between the two funds accordingly.