Vanguard LifeStrategy....

A_Flock_Of_Sheep

You're in the LifeStrategy club too aren't you Chopper?

Gadfium

Mine small VLS80% is up just over 15% over the last two years. Not spectacular, but a heck of a lot more than I would get if it was cash in the bank, without much more effort than cash in the bank. Its the Acc version, so it's bouyed up with the dividends being reinvested.
I've just added in another Vangard fund- the UK Inflation Linked Gilt to provide a bit of a counter to the equity-weighted LS80%. My aim is to have something like 25% domestic equity, 25% Developed world equity, 15% Emerging Markets, 15% Inflation Linked Gilts, 10% UK Long term Gilts. 5% UK property 5% commodities.

Dunno how it will work, but again I want mainly "fire and forget" for the next 10-15 years.

bowlhead99

masonic wrote: »

You'll have to pay another dilution levy if you sell one type of Lifestrategy fund to buy another. These aren't really suitable for chopping and changing each year.

It is true that the dilution levies shift the cost of trading to the investor who is doing the trading rather than the investors who are sitting there quietly. So, you're right that it's not very efficient to trade in and out. A 'life strategy' fund is designed to be something that you have as a long term core holding.

However, taking money off the table to put into another fund with lower volatility is not something you should avoid doing simply to avoid a charge of 0 point something percent. If the old fund loses 20% and the new one only 15% over your investment timescale, you will be happy you paid the fee.

A_Flock_Of_Sheep wrote: »

Seeing one or two posts here I am unsure if to invest any more in this L/Strat fund. I have even thought about lowering the risk scale a bit and changing to the 40% Equity 60% Bonds version.

What are people's view of this fund bearing in mind it has quite large exposure to the USA and UK?

There are oodles of discussions on this board about what people think about it. Literally thousands of posts in the last year and most people don't change their opinion it from one day to the next. Partly because it is designed to be a simple passive long term holding and its nature does not change from one day to the next, and partly because those people who adjust their sector allocations more frequently still don't change their global macroeconomic outlook from one day to the next.

So there is plenty of reading for you.

- It has a large exposure to the UK because you live in the UK.
- It has a large exposure to the USA because it's the largest developed market on the planet.
- Both the UK and US economies are doing well compared to many other economies we could mention.
- So there is nothing inherently wrong with keeping it as one of your holdings, even a large part of your holdings.
- Some would say the fact those economies are doing well means that if you like equity risk there may be more value by taking on more risk and picking an economy that is not doing well and waiting for it to do well, investing in equities in that country instead.
- Others would say that if the economies are doing well then why not buy smaller companies which have further to grow in positive cycles
- Others would say high equity risk when markets have 'had a good run' is dangerous, so cash out some of your mainstream largecap equities and buy bonds and other non-equities instead .
- Others would say that the fact that VLS allocates most of its money to the very biggest companies (and most overvalued) companies in the world is stupid, avoid dumb passive investments and buy something actively managed. While others would say paying money to active managers who statistically might not beat a tracker is stupid, buy a tracker and accept the VLS allocations if you can't think of better ones yourself.

So, there are lots of views no doubt. I would be surprised if a new one appeared on this thread that has not been on previous VLS threads.

I have checked this evening and it is still up by 11%. I looked at the purchase date and it was 3 March 2014 so not quite a year yet.

Doesn't seem like a bad return. That's more than you'd expect for a portfolio of largecap equities let alone a mix of equities and bonds (not sure what version you have) during an average year as part of a long term plan. Of course, some years you would get more and some very much less, depending on the market, and nobody knows what we'll get next year.

I have held the VLS100 for about 2 and a quarter years and the ACC unit price is up just over 37% since Sept 2012. I had a lump sum at that point which I added to and then took some money off the table in 2013 and 2014 and am no longer adding to it, at the moment. Nobody should kid themselves that it will give that average return every year nor that it couldn't lose that entire percentage in a single year. But my investment plan and goals will be completely different to yours. I hold some more volatile funds and some less volatile ones.

My Unicorn UK income has been a big disappointment and I may sack that off soon. It is at a slight loss at the moment. I had thought of just going full on for VLS in total.

I checked an India Investment Trust which was at a discount of 8+% earlier. A JP Morgan one.

Unicorn UK income is up 70% in the last 3 years (vs 50% sector average) and 140% in 5 (vs 70% sector average). So it seems they know their stuff when it comes to income investing and have an enviable reputation, if UK equity income is the sector you want to be invested in, going forwards. They did a bit worse than the sector in the depths of the credit crunch but that's to be expected given the nature of their approach.

Whereas what you seem to have done is look for the fund that has gone up the absolute most in the sector, pile in, and then as it levels off (down 2% in the last year) think to yourself "hmm, I could have done better with something else, should probably sack this one off". There are a great many investors who try to spot winners after they have already won, pile in at market highs and then get disappointed.

The JPM Indian trust (JII) is a decent one, I hold it. It has rebounded with the Indian market, new government etc and I think India has decent prospects.

You mention it is on a discount which it is: 585p is some 60p below NAV. But if you go back a year to 30 Jan 2014 instead of 2015, its price of 320p was some 50p below its NAV. So the discount has widened in pence but narrowed in percentage. But the key thing for you to spot is that the price is 80% higher than it was a year ago. That gives you an idea of the potential volatility when things go the other way.

Reading back ColdIron quite rightly points out my scepticism of the Vanguard LS funds earlier on. He may remember when I first came to investing and was a bit like Ryan Futuristics. Keen on market watching, timing and looking for that opportunity to double my stake.

We remember it well - you chopped and changed your investments like the weather based on tips from your sheepdog and didn't 'get' index funds. Then all of a sudden Tim Hale was your bible, then you're not sure.

Now you want to distance yourself from someone like Ryan (who indulges in a form of market timing while wanting to call it something more sophisticated than that) and thinking that you are not someone who wants to watch the market, time and get an easy win to quickly increase your stake.

If I read him right, Ryan does want to watch the market, perform massive overengineered analysis on part of it, and get a win to slowly increase his stake - he's not looking for quick wins. Apart from the part of his portfolio where he is (!). Basically having some 'momentum' holdings that follow the markets when they are going up, and some 'contrarian' holdings to buy all the cheap stuff which are not going up for maybe two decades. The best of all worlds. Good luck to him though I think some of his analysis is hokum but I guess he will know in 20 years if it worked.

But to my ears it sounds like despite wanting to distance yourself from timing or easy wins, you are still like that, looking for easy wins. You're not looking to do much in the way of sophisticated analysis, but just somehow end up holding the funds that do well. Nice dream, hard to implement. So perhaps instead of stellar returns and quickly doubling your stake, the passive route with acceptable returns - or even more hands off, paying for advice from someone other than a sheepdog - is better for you.

In the VLS you have a fund that is globally diversified and performing quite well. You are wondering about selling out and getting a version of that same fund with a lower equity component, fair enough.

But you are looking at another bit of your portfolio (UK equity income) which is traditionally a very popular sector for retirees looking for income, and usually holds up better than some other types of equities in a downturn, and you are thinking about dumping it. Any decision to dump something entirely in favour of something else should be considered long and hard because it is possible you made a mistake adding it in the first place or you are making a mistake removing it. And if you made a mistake in the past you can use it as an opportunity to learn from it.

Dropping a dedicated income fund is not necessarily a bad thing if you don't physically need the income, because the VLS does have a bunch of FTSE100 and international bluechips and bonds that produce income, it's just much lower yielding overall.

But you have to look at what led you to hold the fund in the first place, instead of just buying more VLS as you had considered back then. I think you thought : UK equity income is a popular sector for people like me; the fund has performed better than VLS in the last 3 years and better than the other funds in this sector (70% in 3 yrs to March 2014 vs 40% sector average). 70% every 3 years will do me quite nicely thank you very much, buy buy buy.

Now without waiting for even 3 years let alone 5 years or 10 years you are thinking, hmm the fund is only flattish can I dump it and get another quick win? Wow look at this other one on my radar, JPM India is up 80% in just one year. Some of that is discount narrowing but 80% in a year sounds very nice. Should I pile in now? Sell the thing that has fallen this year and buy the thing that has doubled? What could possibly go wrong, they must be a good manager if they can make 80% in a year.

Nobody really knows where markets are going next but this board does see a lot of newbie investors buy high and sell low and take a long time to realise where they went wrong. So we would generally caution against being a magpie/goldfish hybrid, flitting from one shiny thing to the next with an attention span or memory of less than a minute. That's certainly how AFOS appeared when first being active on this board but hopefully that is all in the past.

I am not sure it is, if I'm seeing questions about dropping good quality equity income funds to buy incredibly volatile single country emerging market funds while at the same time dropping the risk level of the core diversified tracker to get less exposure to equities in strong economies.

masonic

bowlhead99 wrote: »

It is true that the dilution levies shift the cost of trading to the investor who is doing the trading rather than the investors who are sitting there quietly. So, you're right that it's not very efficient to trade in and out. A 'life strategy' fund is designed to be something that you have as a long term core holding.

However, taking money off the table to put into another fund with lower volatility is not something you should avoid doing simply to avoid a charge of 0 point something percent. If the old fund loses 20% and the new one only 15% over your investment timescale, you will be happy you paid the fee.

Well yes that's true, but another option is hold a separate bond fund to bring the bond allocation up to the desired level. Especially if the addition of the bonds is a temporary measure in reaction to the current market outlook. And of course if a year is the typical holding period, after which time the OP will get itchy feet, perhaps it would be better to sell and reinvest into funds where there is no initial charge of this kind.

A_Flock_Of_Sheep

Cheers Bowlhead. Most comprehensive. But I havent "piled into" unicorn. I hold only £1,200 in that. But it was doing well but seemed to drop like a stone a while back and is down by3.5% currently

JohnRo

If you're investing and stressed about a 3.5% negative enough to start panic selling perhaps you didn't ought to be investing?

A_Flock_Of_Sheep

Where did I say I was panicking? I have simply made an observation

I'd like to dump it and use the money to top up my VLS. Which would then be my only holding.

mollycat

A_Flock_Of_Sheep wrote: »

You are right. It's the fire and forget I quite like.

Reading back ColdIron quite rightly points out my scepticism of the Vanguard LS funds earlier on. He may remember when I first came to investing and was a bit like Ryan Futuristics.

That's like Bobby Zamora saying he used to be a bit like Kun Aguero!

takesyourchances

A_Flock_Of_Sheep wrote: »

Cheers Bowlhead. Most comprehensive. But I havent "piled into" unicorn. I hold only £1,200 in that. But it was doing well but seemed to drop like a stone a while back and is down by3.5% currently

If you have the same conviction that made you invest in the fund, why not add to it while it has dropped and buy more for your money?

Personally each holding I buy into I want to give them the longest possible chance and I expect ups and downs with them.

I am only investing myself in the last couple of years and some of my more niche fund holdings have swung from -15% to plus 25% and I have drip feed throughout and I am glad I did.

3.5% down is really very very little, so if you hold the same conviction in the fund give it a chance I would say. My Marlborough Multi Cap Income moved more than that down and I was topping up and at present it is plus 9%. Short movements is really too short a timescale for me personally.

Also I will continue to hold my VLS as well as the rest.

Good luck!


PS, just read your post after I typed this. If you want to move your money into the VLS I see nothing wrong with simplifying if that is your reason over movement.

Paulrm71

A_Flock_Of_Sheep wrote: »

Cheers Bowlhead. Most comprehensive. But I havent "piled into" unicorn. I hold only £1,200 in that. But it was doing well but seemed to drop like a stone a while back and is down by3.5% currently

I believe the fund is mainly small and mid caps and that's why it didn't perform well last year. I bought in early last year and am looking 7% down at the moment. As I am a longer term investor, and it still pays avoid dividend, I am sticking with it , it'll come good again in the longer term.