Lifestrategy 80 Acc - can I just leave it to do its thing?

ColdIron

trickydicky14 wrote: »

I have a VLS 60 with CSD and have about 25K invested, what additional funds do you feel should be looked at to increase diversification

The VLS is already a well diversified fund, what is sometimes suggested is to add extra allocation to certain sectors, smaller companies and emerging markets being the most common. It is a generalised fund and one size does not fit all so it is quite valid to alter the asset allocation yourself if you believe that your choice is more suitable for your objectives than what Vanguard have constructed

Bear in mind that you would lose the automatic rebalancing function of the fund if you do this and also you may not be adding diversification but volatility. You could have achieved this by buying the VLS 80

Just my tuppence worth

Herbalus

ColdIron wrote: »

Bear in mind that you would lose the automatic rebalancing function of the fund if you do this and also you may not be adding diversification but volatility. You could have achieved this by buying the VLS 80

Just my tuppence worth

And a very good tuppence worth too.

It's worth bearing in mind that a fund like the VLS60 or 80 is a mini portfolio itself with a good degree of diversification. If you start adding large amounts of other stuff you're changing all of the professionally-derived asset allocations that Vanguard give their Lifestrategies. That's fine if you know what you're doing and have specific motivations, but there have been a few threads on here wanting to have £40 for a particular share for every £60 for VLS60. In my mind that's bonkers, because you're distorting the purpose of the VLS60 and have a completely different portfolio.

ColdIron

I was really only addressing the mild dilution of an all VLS strategy such as trickydicky14's. I think there are scenarios where a 60/40 (or whatever) split can make sense. Some people may employ a core and satellite approach and just use it as an easy way gain access to a wide variety of markets without having to work too hard

On the other hand I am old enough to want some bond exposure but am not keen on using Vanguard's bond indexes, which are quite heavy on sovereign debt, particularly for corporate bonds. I am happier to use the VLS 100 with other active strategic debt funds especially in the current situation of bond uncertainty

Jim Leaviss from M&G's Bond Vigilantes puts the case well

Let me start by restating our opposition to index investing when it comes to corporate bonds (we would say that, wouldn’t we). An equity index is an index of success – as the company prospers and its market capitalisation rises, its weighting in the index increases. Bond indices are buckets of failure. The more a company borrows, the greater its weighting in the bond index. If you follow a bond index, and a company within it doubles its leverage, making its failure more likely, you will have to increase your exposure to that company.

Like most things in life there is no one right answer, it's horses for courses. For many people a VLS only portfolio makes a lot of sense especially if you want to fire and forget

Can you have a thrupence worth?