Why doesn't everyone just buy Vanguard LifeStrategy?

bostonerimus

chiang_mai wrote: »

Not related to cost or performance - can you tell me which trackers you hold? I was considering MSCI ACWI and Emerging Markets.

All US Vanguard.

Total Bond Index, VBLTX 25%
International Stock Index, VTIAX 25%
Total Stock Index, VTSAX 50%

Linton

Type_45 wrote: »

Have you factored in the OCFs of your portfolio? That is where the passive trackers have an advantage. They are cheap to run.

They are also less labour intensive. And time is money!

Quoted performance figures are always after fund manager charges. OCFs aren't something deducted afterwards. Funds don't publish gross returns.

Type_45

Linton wrote: »

Quoted performance figures are always after fund manager charges. OCFs aren't something deducted afterwards. Funds don't publish gross returns.

These aren't quoted performance figures though. They are figures which chiang mai is giving us.

Who knows where the numbers are from, or whether OCFs are included.



And besides, nobody has said that passive tracker funds like VLS beats everything out there.

"VLS is low-cost, low-hassle, and beats many/most active funds" - this is the by-line of VLS and passive trackers.

Linton

Type_45 wrote: »

These aren't quoted performance figures though. They are figures which chiang mai is giving us.

Who knows where the numbers are from, or whether OCFs are included.

And besides, nobody has said that passive tracker funds like VLS beats everything out there.

"VLS is low-cost, low-hassle, and beats many/most active funds" - this is the by-line of VLS and passive trackers.

Presumably they are the figures that chiang mai has actually achieved which would be net of charges. Neither chiang mai nor anyone else can provide gross figures.

Your passive "by-line" is rather weaker than that adopted by some other passive enthusiasts and to some extent misses the point. A major benefit of active funds is that it is easier to construct a non index allocated portfolio with them than with passives. The overall asset allocation is more important than what funds are used.

Linton

Type_45 wrote: »

And besides, nobody has said that passive tracker funds like VLS beats everything out there.

"VLS is low-cost, low-hassle, and beats many/most active funds" - this is the by-line of VLS and passive trackers.

The problem with VLS is that they are a range of funds which would be chosen for a range of objectives. For any particular objective there is in my view a better choice. For example those who chose VLS 100 for maximum performance will have found that the fund has been outperformed since it started by proper global trackers. The high bond VLS's chosen by the more cautious investor have yet to be tested in adverse conditions. I suspect that they will be outperformed by the L&G funds which focus on management of risk.

AlanP_2

Unless Chiang Mai is comparing the same asset allocations across Active & Passive there will be an inbuilt distortion, even if you can find the Passives that can be put together to achieve the same mix.

I'm not saying Passive's are nec essarilly better, or Actives either, just that comparing can be difficult across a multi-fund Active Portfolio and a comparabel Passive Portfolio.

Type_45

Linton wrote: »

Presumably they are the figures that chiang mai has actually achieved which would be net of charges.

From reading his post a few times it seems he's been looking only at the last 14 days.

Audaxer

Linton wrote: »

The high bond VLS's chosen by the more cautious investor have yet to be tested in adverse conditions. I suspect that they will be outperformed by the L&G funds which focus on management of risk.

It will be interesting to see how the L&G Multi Index and the HSBC Global Strategy funds perform in a downturn compared to similar VLS funds. Even if they do manage their allocations to perform less badly in an equity crash, does that mean they will have better returns in the long term?

ColdIron

Audaxer wrote: »

Even if they do manage their allocations to perform less badly in an equity crash, does that mean they will have better returns in the long term?

The funds will perform better or worse to each other at different points in the business cycle and to a variety of events. Future performance is likely to depend upon what happens in the future which is largely unknowable

Type_45

Audaxer wrote: »

It will be interesting to see how the L&G Multi Index and the HSBC Global Strategy funds perform in a downturn compared to similar VLS funds. Even if they do manage their allocations to perform less badly in an equity crash, does that mean they will have better returns in the long term?

Who says they'll perform less badly in an equity crash? For what reason? And how much less badly?