Vanguard Life strategy post brexit

samiam85

I am completely bought into passive investing and have a chunk of money in Vanguard Lifestrategy.
I have just come in to some money and would like to invest more ~£100k.
The problem is that after brexit the price is up significantly which I can only assume is due to the conversion into the poor pound.

It feels wrong buying at this price. I don't think I am trying to time the stock market in saying that but I am probably timing the currency market.
How can i mitigate the poor pound?
e.g Is there a way that I can purchase part of the underlying shares that are not affected by the currency so partially seal my position while waiting patiently for the pound to increase before buying the rest or selling what I have and buying vanguard?
What other ways are there to hedge against the pound strengthening in the future?
Or is there some other passive and diversified index fund that I could invest in that would hedge against this issue?
What would you do?

webnibbler

If you're concerned about volatility then drip feed your money in over months rather than putting it in as a lump sum. But if you're investing for the long term (10+ years) then these short term movements won't really have a noticeable effect.

There is likely to be further volatility over the next few years and there is money on there being more large currency movements ahead too.

chockydavid1983

I am kind of in the same position (though not nearly as much as 100k lol) but I'm now thinking of just dumping it in once I get my remortgage offer. Time in the market seems to be much more important than timing the market.

dunstonh

The problem is that after brexit the price is up significantly which I can only assume is due to the conversion into the poor pound.

And the recovery of the stockmarket following the crash last Autumn and a range of economic data globally.

I am completely bought into passive investing

You say this but then you say....

Is there a way that I can purchase part of the underlying shares that are not affected by the currency

So, you havent bought into passive investing at all. You are making management decisions.

BLB53

It feels wrong buying at this price. I don't think I am trying to time the stock market in saying that but I am probably timing the currency market.

Totally agree. Due to the (temporary) fall in sterling post Brexit, investments valued in US$ are less attractive until the pound recovers which should not be too long.

It fell to $1.28 just after the result a month back and has crept back up to ~$1.33. I have certainly held off topping up my VLS fund but will be doing so when it gets back above the $1.40 level.

With the US elections looming and the possibility of Trump, I suspect the pound will be gaining ground before too long.

I don't think this is much to do with timing the market but more just being sensible having regard to events.

Locoblade

I'm in a similar boat, I've just consolidated two previous employer pensions into a SIPP to have better choice/control over the investments. They;ve transferred as cash so I now have a significant sum I intended to put predominently into LifeStrategy funds but having seen the funds go up due to the weak pound I'm slightly wary of putting it all in at what could be the high point for a while

hennerz

Most of the big analyst firms are predicting that the pound will slide further against the dollar.

AnotherJoe

hennerz wrote: »

Most of the big analyst firms are predicting that the pound will slide further against the dollar.

In which case, quite seriously, the chances are the opposite will happen.

I can't find it but I read a recent article which had done statistical analysis on analyst forecasts, and betting against them (eg the opposite of what they said re buy or sell) would have been the winning strategy by a long way. A very long way.

kevin52

Topped up my holding this week as sterling will likely fall further when the cut in bank rate is announced later today.

Malthusian

webnibbler wrote: »

If you're concerned about volatility then drip feed your money in over months rather than putting it in as a lump sum.

If you're concerned about volatility then put it in as a lump sum and then don't look at the value for at least a year.

Only if you have doubts over your own discipline, think you won't be able to stop yourself from opening the lid constantly, and might cash in your investment if you see a day 1 paper loss, do you need to reduce your long-term returns by drip-feeding.

Also DunstonH got there before me, you have not completely bought into passive investing. "I really want to believe in X" is not the same thing as believing in X.

That said, if my portfolio consisted entirely of a chunk of money in LifeStrategy, I would be aiming to diversify away from that in order to not have almost half my money in the US. This isn't anything to do with passive/active: passive investing means that you don't believe in the mystical ability of fund managers to beat the market, not that you have to surrender all your investment decisions including asset allocation to a third party. But I don't tell people how they should allocate their portfolios (unless they are doing something really dumb, and putting all your money in LifeStrategy isn't).

Someone who didn't invest money they had available in May 2013 because "the markets are at a high point" would have lost about 9% today in opportunity cost (using Vanguard 60/40 for the sake of argument). Someone who didn't invest money in July 2007 because "the markets are at a high point", and then found excuses to keep not investing until today (by no means an impossibility - "don't try to catch a falling knife" "dead cat bounce" "we haven't seen the last of the credit crisis" "oh look it's 2016 already") would have lost 65% or 5.5% per year. (BlackRock Aquila 60:40 as Vanguard hadn't launched)

dunstonh

This actually my be an area where the L&G funds offer better potential than the VLS. VLS is return focused and very static in its allocations. L&G is risk focused and has more fluid allocations. So, for someone that doesnt mind a bit of management but using passives as the underlying investments, it may be a case of looking at the different multi-asset funds and picking the one that is appropriate to them.