What's wrong with vanguard lifestrategy?

A_T

Audaxer wrote: »

If that is the case why have VLS made their allocations more complex with about 17 different indexes in some of the funds? I was previously advised on here by experienced investors that I would be much better with something like a professionally selected and balanced VLS fund than selecting 4 or 5 individual indexes myself.

Vanguard themselves said "We think investors prefer to hold more in their home market but we believe it’s of benefit in terms of diversification for investors to more closely reflect the global market weightings."

I'm not averse to a bit of home bias but 20%+ of equities in the FTSE 100 is not for me.

bowlhead99

A_T wrote: »

VLS is ok but over the longer term would more likely than not be beaten by a two fund portfolio of a global equity index tracker and a bond fund. Over the last 5 years a portfolio of 80% Fidelity Index World 20% Vanguard Global Bond Index would have significantly outperformed VLS80.

A greater allocation to the US and other developed world countries will have served that two-fund portfolio well over a time period in which dollars became worth 15% more sterling and euro and yen became worth 5-10% more.

And if the US stock market does better than the UK market which that fidelity fund has less of and/or better than emerging markets which the fidelity fund has none of... then yes with hindsight it was a lower-performing choice to construct the portfolio the way that Vanguard did it, for that particular five year period. That will not always be the case of course.

An argument can be made (as I suggested earlier) that if you want to have home bias in a portfolio, a ftse tracker - as vanguard uses in Lifestrategy- is perhaps not the best way to do it for overall high performance due to the reliance placed on certain large companies or industry types within the highly concentrated UK market-cap weighted index . However, you could also say that avoiding a concentration of over 60% of your equities being listed in any one country (something that Fidelity index doesn't avoid) is eminently sensible as allowing very high allocations to a particular country can increase volatility without giving an inherently higher-performing long term outlook (because you don't know it will be the best performing country).

Alexland

TheShape wrote: »

Assuming I'm also correct with the above, why, when the funds I've mentioned investing in are high in their equity component (I've mentioned the HSBC Global Strategy Adventurous Fund also), has someone not said - 'What about investing in this Fidelity Index World Fund? It will track the (developed) world equity market, it's cheaper than anything you've mentioned (other than the discounted Blackrock fund with HL) and it's outperformed all the funds you've mentioned.'

I can think of a possible answer but I'd like to know why someone wouldn't highlight this fund to someone like myself (accepting that it has been highlighted on the thread in general).

I was actually thinking about the Fidelity World fund when I mentioned in post #6 that there were cheaper global equity funds than VLS100. And then I was thinking about it again when I mentioned cheaper global/world trackers in post #16.

Sorry I probably should have mentioned it by name in the second post. But then I am not entirely comfortable suggesting it because of the 60% US and I figured it's not that hard to find. It's too much US on its own but might work if accompanied by other geographic tracker funds.

Still there is no logic that I am aware of to suggest it will outperform the Blackrock fund in future (if anything the US might have the deepest correction) and you have identified a way to get Blackrock in the LISA cheaper so I would still go with the Blackrock fund given the choice.

Alex

Audaxer

A_T wrote: »

Vanguard themselves said "We think investors prefer to hold more in their home market but we believe it’s of benefit in terms of diversification for investors to more closely reflect the global market weightings."

The way I read that is that they think that their funds benefit from being diversified to more closely reflect global market weightings, although investors normally prefer more home bias.

I'm not averse to a bit of home bias but 20%+ of equities in the FTSE 100 is not for me.

Just looked at the Vanguard fact sheet for the VLS60 which I hold - the only UK equity is the FTSE All Share index and it is only 15% of the total fund. Also looking at the VLS100 factsheet is shows only 5.6% in the FTSE100 with 18.3% in the FTSE All Share.

Thrugelmir

A_T wrote: »

I'm not averse to a bit of home bias but 20%+ of equities in the FTSE 100 is not for me.

The FTSE 100 companies generate around 75% of their earnings from overseas though. Nor are you exposed to the currency risk in holding the shares. If the £ makes a progressive recovery.

TheShape

Alexland wrote: »

Sorry I probably should have mentioned it by name in the second post. But then I am not entirely comfortable suggesting it because of the 60% US and I figured it's not that hard to find. It's too much US on its own but might work if accompanied by other geographic tracker funds.

Now that's was one of my possible answers as to why someone might not mention a fund. Being wary of mentioning something that one might not invest in themselves incase someone goes off and invests in something that they perhaps shouldn't.

I'd not found it myself perhaps because I'm not sure where best to look.
I've often used the fund finder on HL. Fidelity Index World Fund is listed under the Global Sector heading but looking at that sector on HL returns only 16 (acc) funds with an ocf/ter under 0.5%. Where are the others? HSBC Global Strategy funds do not appear at all and are listed in the unclassified section which might make it difficult to find. Blackrock consensus 100 is there but not any of the other versions. Blackrock Consensus 85 is listed under 'Mixed Investment 40-85% Shares'. Where is the best place to look for/assess funds?

firestone

Another Fidelity fund that some may be interested in or opinions of it would be appreciated is their Allocator World fund which is a cheap managed fund made up mainly of trackers some of which are non Fidelity funds

Alexland

TheShape wrote: »

Now that's was one of my possible answers as to why someone might not mention a fund. Being wary of mentioning something that one might not invest in themselves incase someone goes off and invests in something that they perhaps shouldn't.

I would be happy to invest in the Fidelity World in a LISA by making appropriate adjustments to my funds in other accounts however you never know who is reading these forums and they might just go 'yes that looks cheap' and go off and do it in isolation without realising what they are getting into.

TheShape wrote: »

I'd not found it myself perhaps because I'm not sure where best to look. I've often used the fund finder on HL. Fidelity Index World Fund is listed under the Global Sector heading but looking at that sector on HL returns only 16 (acc) funds with an ocf/ter under 0.5%. Where are the others? HSBC Global Strategy funds do not appear at all and are listed in the unclassified section which might make it difficult to find. Blackrock consensus 100 is there but not any of the other versions. Blackrock Consensus 85 is listed under 'Mixed Investment 40-85% Shares'. Where is the best place to look for/assess funds?

Yes I have never really got the hang of the HL tools and my preference is the YouInvest Fund Quickranker. Sort by ongoing charge and view lots per page. Work your way down until you find something interesting then do lots of research all over the place.

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

Alex

grey_gym_sock

TheShape wrote: »

I'd not found it myself perhaps because I'm not sure where best to look.
I've often used the fund finder on HL. Fidelity Index World Fund is listed under the Global Sector heading but looking at that sector on HL returns only 16 (acc) funds with an ocf/ter under 0.5%. Where are the others? HSBC Global Strategy funds do not appear at all and are listed in the unclassified section which might make it difficult to find. Blackrock consensus 100 is there but not any of the other versions. Blackrock Consensus 85 is listed under 'Mixed Investment 40-85% Shares'. Where is the best place to look for/assess funds?

http://www.hl.co.uk/funds/index-tracker-funds/view-index-tracker-funds can also be useful when you're looking for passive (or relatively passive) funds.

that gives you all the passive funds on 1 screen (and you can also search within them). the funds that might be an all-in-one solution are generally the ones in these sectors:

* Global
* Mixed Investment 40-85% Shares
* Mixed Investment 20-60% Shares
* Mixed Investment 0-35% Shares

however, while that page includes all the blackrock consensus funds, and all vanguard lifestrategy, and some global trackers like the fidelity index world, it doesn't include hsbc global strategy, nor L&G multi index ... perhaps because they are less passive (the L&G funds include some direct property, and the hsbc funds include some individual bonds).

Linton

Audaxer wrote: »

The way I read that is that they think that their funds benefit from being diversified to more closely reflect global market weightings, although investors normally prefer more home bias.
Just looked at the Vanguard fact sheet for the VLS60 which I hold - the only UK equity is the FTSE All Share index and it is only 15% of the total fund. Also looking at the VLS100 factsheet is shows only 5.6% in the FTSE100 with 18.3% in the FTSE All Share.

80% of the FTSE all share consists of the FTSE 100 which puts the total of FTSE 100 companies to about 20%. Your interpretation of what Vanguard says may be right but was that referring to the VLS series? Vanguard wants to sell its funds so they confgure the VLS’s in a way they believe UK investors want.