Alternatives to Vanguard LifeStrategy

Murmansk

I'm interested in Vanguard LifeStrategy but wondering if there are any other similar products available direct from other companies?

I'm not keen to put more then £50K with one company so that I'm covered if they should go into liquidation.

bostonerimus

There are lots of alternatives from companies like Blackrock and Legal and General.
However, don't worry about money in VLS. VLS is a separate legal entity from Vanguard.....the funds actually own Vanguard.......and there's basically zero chance of the fund going into liquidation unless all the companies and bonds it owns do.

A_T

HSBC have their Global Strategy series which are the same cost or a little cheaper.

_pete_

I share the concern of the OP. My understanding is that if there is a major fraud at Vanguard we could lose the all our investments above £50k. And I'm struggling to find more than 4 close alternatives (Blackrock, L&G, Fidelity, HSBC).

Am I incorrect? Is there any risk at all in having my whole pension pot with Vanguard (beyond the normal performance risks?)

Alexland

Blackrock is the world's biggest fund manager and Vanguard are number two and forecast to overtake.

I have my pension split between both (Blackrock via a Fidelity DC scheme and Vanguard via a Halifax SIPP) as I figure that if either goes bust the world has much bigger problems than me to worry about.

If either goes bust (and takes the assets down) then money will probably become worthless and if both go bust we will be too busy hunting each other for food to care.

Linton

_pete_ wrote: »

I share the concern of the OP. My understanding is that if there is a major fraud at Vanguard we could lose the all our investments above £50k. And I'm struggling to find more than 4 close alternatives (Blackrock, L&G, Fidelity, HSBC).

Am I incorrect? Is there any risk at all in having my whole pension pot with Vanguard (beyond the normal performance risks?)

There is always a risk in anything you do. You could drop dead tomorrow, the world economic system could collapse, or we could be invaded by the planet Zog. Any of these events could mess up your pension plans, holding multiple funds wouldn't help much.

At some point you have to decide what risks are so unlikely that it's not worth bothering about. Any money you invest in mainstream funds remains your property so if Vanguard or your platform runs into financial problems they can't use it. Vanguard is one of the largest fund managers in the world looking after $billions if not $trillions. Are you really afraid that their internal control systems and their external regulation are inadequate to ensure your money is safe? If anything untoward did happen to your money Vanguard would cover it if they could, so the risk you bear is that Vanguard suffers a catastrophic multi-billion fraud that no-one notices until that vast amount of money is squirrelled away somewhere that cant be traced and no-one notices until it is too late. Sounds like a plot for a film, not the real world.

bostonerimus

Don't worry about Vanguard imploding, you're invested in VLSxxx which is made up of individual index funds and the only way you'll lose money is by the usual market variations. This is basically aso true for other companies like BlackRock, HSBC etc. I have most of my money with Vanguard in the US and have a lot more than 50k in a single fund and I sleep well at night. Also as VLS is a mutual fund it is highly regulated and restricted in how it operates.......this is in contrast to things like investment trusts that can use things like leverage and derivatives. Here is an excerpt from a blog that explains things well

2. Why are you comfortable having all your assets with one company? Isn’t this what tanked investors with Bernie Madoff?

Because my assets are not invested in Vanguard. They are invested in the Vanguard Mutual Funds and, thru those, invested in the individual stocks, bonds and REITS those funds hold. Even if Vanguard were to implode (a vanishingly small possibility), the underling investments would remain unaffected. They are separate from the Vanguard company. As with all investments, these carry risk, but none of that risk is directly tied to Vanguard.

Now this can start to get very complex and for the very few of you who care, there’s lots of further info you can easily Google. For our purposes here, what’s important to know is:

1. You are not investing in Vanguard, you are investing in one or more of the mutual funds it manages.

2. The Vanguard mutual funds are held as separate entities. Their assets are separate from Vanguard, they each carry their own fraud insurance bonds, each has its own board of directors charged with keeping an eye on things. In a very real sense, each is a separate company operated independently but under the umbrella of Vanguard.

3. No one at Vanguard has access to your money and therefore no one at Vanguard can make off with it.

4. Vanguard and it''s mutual funds are highly regulated and audited.

kidmugsy

Murmansk wrote: »

I'm not keen to put more then £50K with one company so that I'm covered if they should go into liquidation.

I'm not sure about the detail of your reasoning but I agree with your conclusion. I would diversify in hopes of avoiding unknown unknowns.

If a cost of a few quid a year were to let me sleep better it would be money well spent.

Linton

Murmansk wrote: »

I'm interested in Vanguard LifeStrategy but wondering if there are any other similar products available direct from other companies?

I'm not keen to put more then £50K with one company so that I'm covered if they should go into liquidation.

You are already covered for liquidation of the fund manager or platform. Unlike the situation with depositing money in a bank, money invested in a fund remains your property. If the fund manager or platform ran into financial difficulties they couldn't use your investments to pay their debts. What would happen, and IIRC has happened in the past, is that management of the funds would be taken over by someone else.

grey_gym_sock

as others have said, we are talking about very remote risks indeed here. both because of the legal set-up, in which your assets are separate from vanguard's assets. and because of the sheer size of asset managers like vanguard and blackrock.

and in vanguard's case, i'd also take some assurance from vanguard's ownership structure, in which vanguard itself is owned by vanguard's (US domiciled) funds. this might discourage vanguard's management from managing vanguard in a more risky way. they can't try to pump up vanguard's share price in the short term to increase the value of their share options, because it doesn't have a share price and they don't have share options.

there's nothing wrong with a little paranoia, however. just don't take it too far.

so if you want to use 2 fund management groups, when you go over £50k invested, fair enough. just don't try using 20 managers when you have £1m invested. 3 or 4 is enough for anybody. and a smaller number of very big fund groups might well be safer than a larger number of groups, some of which are relatively small.

nxdmsandkaskdjaqd

bostonerimus wrote: »

However, don't worry about money in VLS. VLS is a separate legal entity from Vanguard.....the funds actually own Vanguard.

So you can hold one VLS fund and another Vanguard Fund and have £100k of protection. Is that right?