Vanguard Fund - Questions

TheBunting

My current one was opened this year yes. So what I am looking to do is wait until the new tax year to open this one, put in my funds and then transfer my SL into it aswell? Ok thanks guys!

I was looking at Hargreaves Lansdown? 0.45% isn't gonna be much for a beginner, would be different if I already had thousands ready to invest but I don't.

jimjames

TheBunting wrote: »

My current one was opened this year yes. So what I am looking to do is wait until the new tax year to open this one, put in my funds and then transfer my SL into it aswell? Ok thanks guys!

I was looking at Hargreaves Lansdown? 0.45% isn't gonna be much for a beginner, would be different if I already had thousands ready to invest but I don't.

I'd really suggest you would benefit from finding out what you are invested in with SL. So far it still seems pretty unclear. There isn't a massive cost for chopping and changing funds but it will have some impact so you need to be sure what you're doing is worthwhile.

TheBunting

jimjames wrote: »

I'd really suggest you would benefit from finding out what you are invested in with SL. So far it still seems pretty unclear. There isn't a massive cost for chopping and changing funds but it will have some impact so you need to be sure what you're doing is worthwhile.

It's the MyFolio Managed II Fund. I set it up when going online to setup my auto enrolment scheme which is with SL. I have already compared the two funds over a 10 year period and although the Vanguard LS 80 fluctuates a lot more, it does perform better. Hence why I am considering this move.

Ryan_Futuristics

Just on how well it's performed ... Because funds like Vanguard LS are basically passive, and track the markets, the performance only really represents what the markets have been doing recently

LS is very exposed to US stocks and bonds ... So as long as those markets keep doing well, the funds will keep doing well ... If/when they stop doing well, these funds will hit a rough patch

Because the US has had such a long period of good performance, it might not be the best place to invest in right now ... Once something's gone up so far, there's only one other way it can go ... People will tell you not to chase past performance

bigsy

TheBunting wrote: »

I have already compared the two funds over a 10 year period and although the Vanguard LS 80 fluctuates a lot more, it does perform better.

I'm not sure what you've been comparing over a 10 year period. The UK Vanguard LS funds only started in mid-2011.

TheTracker

You have to be careful with the folk who turn others away from lifestyle funds on the basis one of the elements appears overvalued. There will always be elements that are overvalued, be it the US today or China in 50 years. Were the US to hit a rough patch the composition of an all world fund would rebalance to account for it, increasing exposure in other areas as money is added. The geographical distribution of invested money today versus 50 years ago is very different, and it will again be in 50 years forth. A lifestyle fund or global tracker takes that concern or risk off your shoulders as the fund will track global performance. Even the most rational of us find that difficult to completely stomach - most pure passive investors still retain a so called home bias, and the VLS funds respect that by building it into their allocation.

dunstonh

I have already compared the two funds over a 10 year period and although the Vanguard LS 80 fluctuates a lot more, it does perform better.

The two funds are not comparable. The risk profiles are miles apart. They shouldnt be compared by someone looking at options. The myfolio IV is a closer match for risk.

roxy28

TheTracker wrote: »

You have to be careful with the folk who turn others away from lifestyle funds on the basis one of the elements appears overvalued. There will always be elements that are overvalued, be it the US today or China in 50 years. Were the US to hit a rough patch the composition of an all world fund would rebalance to account for it, increasing exposure in other areas as money is added. The geographical distribution of invested money today versus 50 years ago is very different, and it will again be in 50 years forth. A lifestyle fund or global tracker takes that concern or risk off your shoulders as the fund will track global performance. Even the most rational of us find that difficult to completely stomach - most pure passive investors still retain a so called home bias, and the VLS funds respect that by building it into their allocation.

Dad who is 59 is opening a S&S ISA to use after april, he thinks charles stanley seems ok for the ISA. He will buy the VLS 60 and drip feed the full ISA allowance over the first 12 months and add bits more in time.
He will not touch it for at least 7-8 years hopefuly.

Reading post 15 makes you think though, albeit someones opinion.

Ryan_Futuristics

Well a point a lot of economists will make is: Don't mistake share price growth for actual long-term investment growth

The US market goes up and down all the time, so you can paint any picture you want by selecting an appropriate time-frame ... Post-crash recovery, the market seems to go up by about 15%/year, other times it's around 7%

Actually when you look at the peaks of the US market, it's really only been averaging about 6% growth annually since the 80s

So if you imagine an average value line for the US market, running through all the ups and downs, you don't really want to buy when you're 6% above that line, because it will take a year (effectively) for your investment to catch up with what it's actually worth

Buy 12% above the line, and it's two years ... Right now the US is at about double its inflation-adjusted average

Buying at today's prices here are two estimates of what US stocks may return on average over the next 10-15 years:
http://www.starcapital.de/research/CAPE_Stock_Market_Expectations
http://www.gurufocus.com/global-market-valuation.php

- As for bonds, it's a similar story, with an estimated 0% gain in real terms if they do revert to their long-term averages

- As for: Vanguard deciding to change their allocations in this event ... They'd have to preempt it - which is not what not what this fund's meant to do (if they made a mistake, Bogleheads would roll)


On the other hand, if you just use valuation, you can find yourself waiting a long time to be proven right ... I wouldn't rule out monetary policy keeping US markets rising and bond yields down indefinitely ... But 200 years of market data says valuation is usually the safer bet

TheTracker

Ryan_Futuristics wrote: »

As for: Vanguard deciding to change their allocations in this event ... They'd have to preempt it - which is not what not what this fund's meant to do (if they made a mistake, Bogleheads would roll)

Not what I meant. A vanguard global tracker changes its representation continually based on global cap. If US share drops from 50% to 25% over 20 years the tracker will continually balance the representation as part of its product description.