We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

VLS80% plus what (if anything)?

24567

Comments

  • I'm not quite sure who's recommending these VLS funds - funds of funds don't have a great track record

    I'd wonder, if you want fairly conservative returns, whether you wouldn't have been better off with something like Royal London's Corporate Bond fund? Or if you want more adventurous, something like HSBC's FTSE 250 index

    If you mixed those two instead (for your bonds/equities allocation) you'd get almost-VLS100 performance from the bonds (with VLS20 volatility) along with the potential to actually make some real long-term capital gains on the equities ... (not that now's the perfect time to buy bonds, or mid-caps, but then that's me "marking timing" so you might want to ignore that)
  • TCA
    TCA Posts: 1,544 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I'd be happy to hold both 50:50 (one more defensive and one more aggressive - I think both will continue to do well)

    Recent good performance has made EDIN my best performing trust of all my six, not that they're similar in any way. Out of interest I used the Morningstar x-Ray tool to compare the overlap of EDIN and Woodford's Equity Income. Using an equal proportion of each, the overlaps would comprise about 50% of the total investment.

    Anyway, I digress. Back to topic.
  • 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

    Another vote for the new Woodford fund here.

    My portfolio is made up mostly of index funds many of which comprise the VLS80 but I just want that extra control over allocations. Be that good or bad :)

    Active funds like Woodfords and FS asia-pacific leaders have been added to increase returns.
  • I'm not quite sure who's recommending these VLS funds - funds of funds don't have a great track record

    I'd wonder, if you want fairly conservative returns, whether you wouldn't have been better off with something like Royal London's Corporate Bond fund? Or if you want more adventurous, something like HSBC's FTSE 250 index

    If you mixed those two instead (for your bonds/equities allocation) you'd get almost-VLS100 performance from the bonds (with VLS20 volatility) along with the potential to actually make some real long-term capital gains on the equities ... (not that now's the perfect time to buy bonds, or mid-caps, but then that's me "marking timing" so you might want to ignore that)

    These are not typical FoFs. They are a collection of index trackers in accordance with a published asset allocation (VLS) or allocation strategy (L&G). It could be natural to augment a holding with a heavier weighting in some areas (eg small cap, high yield, property) but unusual to buy into two separate strategies. It doesn't buy you diversity. They take away the 'hassle' of rebalancing. Anyway do as you please :)

    To answer the orig poster, perhaps look at commercial (blackrock tracker), value/growth funds, and weighing heavier toward EM if it suits. They'd go alongside vls80.
  • TCA wrote: »
    Recent good performance has made EDIN my best performing trust of all my six, not that they're similar in any way. Out of interest I used the Morningstar x-Ray tool to compare the overlap of EDIN and Woodford's Equity Income. Using an equal proportion of each, the overlaps would comprise about 50% of the total investment.

    Anyway, I digress. Back to topic.

    I'm quite happy to overlap - especially with active funds

    I kind of see a manager as a sort of asset class too (as well as an open vs closed fund) - so while I'm confident enough to make Woodford's fund my main UK holding, there is always a chance that fund could be positioned too defensively (you can never rule out the irrationality of the markets) so having a certain amount in Edinburgh too seems unlikely to negatively impact performance, but perhaps halves the risk of a bad call? (Plus, I imagine there's a bit of competition between the two now)

    I'm doing similar at the moment buying Lazard Emerging Markets and M&G Global Emerging ... Incredibly similar performance - both look very good value - but they've just taken a different stance over Eastern Europe ... So by balancing the two, I can avoid over-exposure to Eastern Europe (which I'm also investing in directly via JPM New Europe) ... All about keeping my CAPE ratios down and avoiding absurdly over-priced niche ETFs
  • TheTracker wrote: »
    These are not typical FoFs. They are a collection of index trackers in accordance with a published asset allocation (VLS) or allocation strategy (L&G). It could be natural to augment a holding with a heavier weighting in some areas (eg small cap, high yield, property) but unusual to buy into two separate strategies. It doesn't buy you diversity. They take away the 'hassle' of rebalancing. Anyway do as you please :)

    To answer the orig poster, perhaps look at commercial (blackrock tracker), value/growth funds, and weighing heavier toward EM if it suits. They'd go alongside vls80.

    I suppose I'm a little negative on VLS funds just because I think Vanguard's recent marketing drive has created a sense of religious-like devotion to certain investing principles which I don't think people are viewing in proportion

    A passive fund may save you money, but we're generally talking fractions of percentages (although Vanguard's own actives consistently outperform their passives) - these are still high risk assets

    This shouldn't be giving people a sense of false confidence in the returns they'll make in coming years - and I'm not sure the asset allocation decisions in VLS don't simply represent the state of the markets over the past 10 years ... If we'd just had 10 years of Chinese growth and US stagnation, how would the VLS funds look then? ... Hindsight isn't what I'd want my asset allocation strategy based on
  • masonic
    masonic Posts: 25,547 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    This shouldn't be giving people a sense of false confidence in the returns they'll make in coming years - and I'm not sure the asset allocation decisions in VLS don't simply represent the state of the markets over the past 10 years ... If we'd just had 10 years of Chinese growth and US stagnation, how would the VLS funds look then? ...
    VLS allocations are essentially global market cap weighted with a home bias, so I don't think past performance has very much to do with it. Also, they typically use a lot more than 10 years worth of data to backtest their approach.
    Hindsight isn't what I'd want my asset allocation strategy based on
    That seems like quite a change of heart. What's brought it on? I thought you were still a big advocate of buying assets that were undervalued compared with historic averages.
  • Can someone clear this up for me please?

    Vanguard LS 80 has an annual management charge of 0.24%. It is made up of other Vanguard fund (Vanguard U.S. Equity Index Fund 19.3%, Vanguard FTSE Developed World ex-U.K. Equity Index Fund 19.3%,Vanguard FTSE U.K. Equity Index Fund 14.9%, Vanguard Global Bond Index Fund 14% etc etc). These individual funds also have annual management charges, 0.15% in the case of the FTSE Developed World ex-UK fund for example.

    Do I pay twice?
  • ColdIron
    ColdIron Posts: 9,642 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    No you don't, just the 0.24% and the 0.1 initial dilution levy
  • TheTracker
    TheTracker Posts: 1,223 Forumite
    1,000 Posts Combo Breaker
    edited 22 November 2014 am30 11:43AM
    Just to add to that, you can probably get a slightly better AMC by buying these separately, but when you factor in trading costs for rebalancing you may not. eg UK Equity 0.08% , ex-UK Equity 0.15%, World Small Cap 0.38%, EM 0.25%. But it depends on how much you have invested, how often you rebalance, and your trading platform.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.3K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.2K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.