Comparing VLS with L&G's equivalent Multi Index?

Audaxer

grey_gym_sock wrote: »

my first thought is that i'd rather not be risk-targeting, because "risk" (i.e. volatility) is likely to rise after a market crash, which would make me reduce my percentage in equities at that moment (in order to maintain a constant "risk" level). and hence i might partly miss out if/when equities bounce back.

I think for DIY investors with a portfolio of single sector funds to target risk levels the way L&G Multi Index do it would be very difficult as L&G managers seem to make their decisions based on information from actuaries and statisticians.

I agree that the VLS method of fixed equity/bond allocations and fixed home/away percentages seems not only the easiest, but the best strategy.

dunstonh

For a cautious investor, the L&GMI should be the better option as it ensures they remain within the target volatility band. For a more adventurous investor, the VLS could be seen to be better (plus, L&G dont cover the riskiest levels like VLS does).

L&G includes property whereas VLS does not. Property had an off period for a while but has been showing growth in recent times.

Audaxer

dunstonh wrote: »

For a cautious investor, the L&GMI should be the better option as it ensures they remain within the target volatility band. For a more adventurous investor, the VLS could be seen to be better (plus, L&G dont cover the riskiest levels like VLS does).

L&G includes property whereas VLS does not. Property had an off period for a while but has been showing growth in recent times.

I think HSBC Global Strategy and BlackRock Concensus funds both have asset allocations managed a bit like the L&G Multi Index funds. Are there any other passive globally diverse multi index funds that rebalance to fixed asset allocations like VLS does?

Not_Me_Officer

Maybe if i give a reason as to why i'm asking it may or may not explain things better...

Malthusian wrote: »

People don't come here

I wasn't referring to 'here'. I meant when you google search alternatives, which lead you to websites outside of MSE, L&G are mentioned there.

Anyway, i've investments for differing things. For my retirement plan i have included VLS100 and V-Emerging Markets.

This is £10k that will not be for retirement. It'll be for a minimum of 10 years that's for sure. I may cash in then, i may continue. It may end up being for retirement, who knows.

Now i'm happy with the VLS range, however i'm aware of the eggs in 1 basket kind of thing. I had the thought process of let's put £5k in a VLS60 and £5k in a L&G equivalent, forget about it & then take a look in 5 years time and see which did better. Then maybe either leave it for another 5 years or consolidate into the one that performed best, who knows - but see in 5 years time.

To do that i'd need to know whether i'd be putting into the L&G 4 or the L&G 5 or what.

dunstonh

I had the thought process of let's put £5k in a VLS60 and £5k in a L&G equivalent, forget about it & then take a look in 5 years time and see which did better.

Probably better to do a complete economic cycle rather than just 5 years.

For example, VLS has done well over the last 5 years as it has a high US equity content at a time the US performed well. In the years prior to its launch, the US had a period of being a consistent underperformer. So, any fund with a heavy US weighting would have taken a hit.

L&G uses property in its allocations, VLS does not. So, when property does poorly, VLS will not have that weighing down on it. And vice versa when it does well.

So, if you picked the last 5, VLS would be better most of the time. Pick further back and it would be the other way around. What is the next 5 going to be?

Not_Me_Officer

dunstonh wrote: »

Probably better to do a complete economic cycle rather than just 5 years.

For example, VLS has done well over the last 5 years as it has a high US equity content at a time the US performed well. In the years prior to its launch, the US had a period of being a consistent underperformer. So, any fund with a heavy US weighting would have taken a hit.

L&G uses property in its allocations, VLS does not. So, when property does poorly, VLS will not have that weighing down on it. And vice versa when it does well.

So, if you picked the last 5, VLS would be better most of the time. Pick further back and it would be the other way around. What is the next 5 going to be?

What is a 'complete economic cycle'? What timeframe are we looking at? 30 years? Not a problem if so but that's about my maximum timeframe i'm afraid.

I also understand that VLS does not have any weighting with emerging markets that's why i selected this fund separately. So far it's doing better than the VLS100 i have. As i continue to read and try to learn i would like to include other areas not covered by VLS (such as property like you say). To what ratio i don't yet know and i'm not sure how i would know but i'd like to cover a number of areas i do know that much.

dunstonh

What is a 'complete economic cycle'? What timeframe are we looking at? 30 years? Not a problem if so but that's about my maximum timeframe i'm afraid.

The cycle is around 10 years nowadays but its like an elastic band. It could be 9 years or 12 years as each cycle has its own events that make it different to the one before.

I also understand that VLS does not have any weighting with emerging markets that's why i selected this fund separately.

They do but the weightings are low compared to most models at the same risk profile. Its just one of the management decisions they make.

Malthusian

Not_Me_Officer wrote: »

What is a 'complete economic cycle'? What timeframe are we looking at? 30 years? Not a problem if so but that's about my maximum timeframe i'm afraid.

50 years if you believe Kondratiev and Schumpeter. There isn't any fixed time period in which we can definitively judge one fund over another, we just know that five years definitely isn't one.

VLS does have a weighting in emerging markets, but that weighting is in due proportion to their current economic significance, which is about 7% because emerging markets are, er, emerging. Which is to say, smaller. Of course, their share of future economic growth is quite likely to be much larger than 7%, which is why it does make sense for most investors looking for growth to have a greater proportion than that.

irm

I hold both. VLS 80 in my S&S ISA and L&G MI 6 in my SIPP.

Was that wise? Ask me in about 25 years...

Not_Me_Officer

irm wrote: »

I hold both. VLS 80 in my S&S ISA and L&G MI 6 in my SIPP.

Was that wise? Ask me in about 25 years...

I'm more interested in your decision behind holding both than the fact you do hold both - if you'd care to share?