Hargreaves Lansdown HL Portfolio+ vs Vanguard lifestrategy

anddreou

Hi,
I am examining my options for placing regular monthly contributions on the side, over and above my regular pension. I am between two options, HL's Portfolio+ or Vanguard Lifestrategy fund. I am finding it particularly hard comparing between the factsheets. It is like comparing apples with oranges. I would have expected factsheets to be regulated and showing exactly the same information in a set format. Instead I am getting numbers which are very difficult to parse if you are trying to compare between them.

This the HL Balanced growth portfolio:
[link removed as I am not allowed to post due to being a new user]
This is the Vanguard Lifestrategy 80% equity fund (hopefully the link works):
[link removed as I am not allowed to post due to being a new user]

Factoring in expenses and typical account fees and charges (i.e. subtracting all charges from the performance), how do the two options compare when viewing their historical 5 year performance? I understand HL offers higher fees, but I do not mind that if it means a more diversified portfolio and/or returns but I can't see that on paper.

When does one choose HL portfolio+ over the vanguard lifestrategy funds?

jamesd

Your first big problem is using a five year time horizon when the last big market drop is not within that time span. So how do you know what happens during a large downturn and how each did last time? You can't even get that for the balanced growth portfolio because it hasn't been around long enough but you could look at the underlying fun it uses instead.

Normal reports available to consumers just use a five year time span so HL won't even show you more than that.

The two funds appear to have quite significantly different mixtures of investments in terms of bond/equity split. The lower equity one would be expected to perform less badly during an equity market drop and less strongly during a bull market like the one we've had since early 2009.

EdSwippet

anddreou wrote: »

When does one choose HL portfolio+ over the vanguard lifestrategy funds?

The annual charge (OCF) for the HL balanced portfolio is 1.44%. For Vanguard Lifestrategy it's 0.49% if held at HL -- 0.24% fund charge and 0.25% HL added charge (so potentially lower than 0.49% if held on a different platform).

Over 30 years that 0.95% difference could reduce your final investment's value by around 25-30%. More if growth is sluggish. To counter it, the active managers running the HL portfolio must outperform market averages year after year after year over this period. Have they so far? And far more importantly, will they continually into the future?

LHW99

HL 'recommendations' tend to be funds that give them good earnings. Nothing wrong with that, they have a business to run.
However, that doesn't mean their choices would necessarily be the best for an individual investor, there are other factors to consider as the other posters indicate.

dunstonh

I would have expected factsheets to be regulated and showing exactly the same information in a set format.

They largely do show the same information in the same format. The paid for versions are more detailed and cover long periods but the free versions give enough data for the average person.

In-house versions may not be as detailed as the independent versions. e.g HL factsheets may not be as detailed as FE for example.

Factoring in expenses and typical account fees and charges (i.e. subtracting all charges from the performance)

They are already taken into account in the performance figures with the exception of adviser costs and platform costs.

how do the two options compare when viewing their historical 5 year performance?

Why 5 years? 5 years tells you nothing of use when it comes to performance.

When does one choose HL portfolio+ over the vanguard lifestrategy funds?

It is hard to say. An IFA built portfolio is cheaper, including the cost of advice than HL's own funds. So, why would you be comparing just HL's own vs VLS and not the many other options in between?

DrSyn

anddreou

You might find the below interesting

http://www.7im.co.uk/media/455228/fifth_rule_of_investing.pdf


And these 5 videos:-

http://monevator.com/this-former-hedge-fund-manager-reveals-how-you-can-invest-for-life-in-five-quick-videos/

jamesd

DrSyn, the things you've linked to are all about pushing unmanaged investments, typically with the false argument that you can't beat the market average, when the passive funds are in part the victims that allow others to beat the market. The usual sort of false argument using long term averages when different things are suitable at different times and ignoring fund manager changes.

One of the funds that anddreou is considering does have experts selecting the underlying funds to use, removing the arguments made in the videos that anddreou can't pick winners, because anddreou doesn't have to do the winner picking. And after costs those funds have beaten their index quite comprehensively: they aren't average or below average funds and the managers picking those funds are not selecting funds blindly but at a minimum are eliminating the known consistent poor performers.

badger09

EdSwippet wrote: »

The annual charge (OCF) for the HL balanced portfolio is 1.44%. For Vanguard Lifestrategy it's 0.49% if held at HL -- 0.24% fund charge and 0.25% HL added charge (so potentially lower than 0.49% if held on a different platform).

Over 30 years that 0.95% difference could reduce your final investment's value by around 25-30%. More if growth is sluggish. To counter it, the active managers running the HL portfolio must outperform market averages year after year after year over this period. Have they so far? And far more importantly, will they continually into the future?

HL's platform charge is 0.45% (unless your portfolio exceeds £250k)

SabNys

anddreou wrote: »

[link removed as I am not allowed to post due to being a new user]

I'm a newbie here myself, and until recently I had the same problem with links. I think I made 10 posts before being promoted.

Instead of the link, just include a search string using key words from the target page. For example, I can find your OP with the following key words:

- anddreou MSE OR MoneySavingExpert Hargreaves Vanguard

(Actually, I found it with only "anddreou MSE OR MoneySavingExpert")

BTW: I think a brainless copy of a long complete paragraph can sometimes fool Google. Something to do with tiny or common words such as "a", "the", "in", etc. Better to use uncommon words such as "regulated", "factsheets", "diversified". Just keep adding one of these words till you succeed in your own browser (which might not succeed in someone else's browser because of Google's "preferences"). Note that adding "Lansdown" after "Hargreaves" does not add value to the search.

jimjames

dunstonh wrote: »

Why 5 years? 5 years tells you nothing of use when it comes to performance.

That might be true but most platforms only give you 5 years performance, certainly HL is one that does so it's unsurprising when that's the performance timeframe that is quoted by someone new.

Linton

If you want to see performance comparisons over a longer period than 5 years a good method is to use Trustnet's tools/charting facility where you can create a graph showing multiple funds going back 25 years in some cases.

Even the 10 year data (which is also available on Trustnet if you customise the main fund list) will soon be unhelpful. Never mind, perhaps something will happen in the next couple of years!