Is a Vanguard Lifestrategy investment all you need

BananaRepublic

Zola. wrote: »

Why would passive investing become a bad thing if too many got involved?

The idea is that it could skew the market dynamics. Let's say almost all investors are passive. Then when a share rises, people automatically buy into that share, giving it additional upward momentum. And of course the converse could happen. So the result is an exaggeration of market movements. However, what I have written is very simplistic, and other factors might come into play, but I would hope that research has been done to find out what the actual effects of significant levels of passive investment are.

Linton

Zola. wrote: »

Why would passive investing become a bad thing if too many got involved?

Yes big companies will be inflated in their worth...but is it not the case that if capitalism prevails, we all win... to a certain extent?

Warren Buffet says he will be putting 90% of his entire wealth into index funds when he dies, if that is good for Warren it should be good for us too ?

https://www.ft.com/content/0fdc605a-a53d-11e3-8988-00144feab7de

If every investor was passive then there would be no changes in relative prices of companies. The overall index may go up and down as the total money in the market changes but each company would continue to form the same % of the index. Relative prices change because people's investment preferences change. Of course every investor wont be passive because retail investors only form a small part of the total market. However one can theorise that between the current situation and the extreme of total passivity there would be situations where a small number of active investors could cause wild swings in the market.

BananaRepublic

MonroeM wrote: »

Why are the VLS funds so much more popular than other similar type of funds already mentioned ie. HSBC and L&G?

The amount of money pouring into the VLS range of funds dwarfs the amounts going into the other two companies range of funds?

There are not all that many index funds, and very few that spread their funds across a range of indices, which effectively reduces risk by diversification. Also the Vanguard world funds do have a good historical performance record and very low charges. See here for example:

https://www.youinvest.co.uk/research-tools/quickrank/fund

Just enter 'index' for the fund name, and select Acc to limit the results.

Zola.

I can understand to an extent that if everyone just did passive, it could skew things.

There will always be active investors, chancers and those who invest in single blue chip companies, small caps etc though, wont there?

BLB53

Why are the VLS funds so much more popular than other similar type of funds already mentioned ie. HSBC and L&G?

Lower costs - VLS now 0.22%.

Also the funds are auto rebalanced to keep the fund at the level of equity chosen at the outset - there is no portfolio drift and no discretion for managers to alter percentages between equities/bonds. If you want 60% equities, that is what you will always have.

Zola.

And it is rebalanaced by computers, no human emotion

Linton

MonroeM wrote: »

Why are the VLS funds so much more popular than other similar type of funds already mentioned ie. HSBC and L&G?

......

Effective publicity.

VLS 100 has underperformed against the Fidelity World Index Fund every single calendar year since the Fidelity fund started, perhaps because of VLS's high UK %.

Zola.

When did the fidelity fund start?

Linton

Zola. wrote: »

When did the fidelity fund start?

December 2012, about 18 months after VLS100.

Zola.

Early days then!

Hopefully that and Vanguard LS funds will be about in 30 years time. Hopefully both are solid winners for the investor.