Monevator 'Slow & Steady' vs. Global All Cap Index

geeovana

I currently invest solely in the Vanguard Global All Cap Index ETF. I am interested in how this stacks up against the Monevator 'Slow and Steady' portfolio.


Whilst Vanguard make it simple to view Region / Weighted exposure and Market allocation, how would I find out the percentage invested in Small / Large Cap ?

dunstonh

I am interested in how this stacks up against the Monevator 'Slow and Steady' portfolio.

The slow and steady portfolio is not anywhere near the same risk profile as the Vanguard fund. So, they should not be compared.

Why would you want to compare them given the high difference in volatility and risk that exists?

Audaxer

geeovana wrote: »

I currently invest solely in the Vanguard Global All Cap Index ETF. I am interested in how this stacks up against the Monevator 'Slow and Steady' portfolio.

The Vanguard Global All Cap Index will be 100% equities, whereas the Monevator 'Slow and Steady' portfolio included bonds when I last looked, so you can't really compare the two.

Whilst Vanguard make it simple to view Region / Weighted exposure and Market allocation, how would I find out the percentage invested in Small / Large Cap ?

Try the Morningstar Analysis Tool:
http://tools.morningstar.co.uk/uk/xray/editholdings.aspx?LanguageId=en-GB

geeovana

dunstonh wrote: »

The slow and steady portfolio is not anywhere near the same risk profile as the Vanguard fund. So, they should not be compared.

Why would you want to compare them given the high difference in volatility and risk that exists?

Audaxer wrote: »

The Vanguard Global All Cap Index will be 100% equities, whereas the Monevator 'Slow and Steady' portfolio included bonds when I last looked, so you can't really compare the two.
Try the Morningstar Analysis Tool:
http://tools.morningstar.co.uk/uk/xray/editholdings.aspx?LanguageId=en-GB

I understand the differences with regards risk, bonds etc. I was interested from a perspective of understanding his allocation percentages such as for small cap, emerging markets and property. I understand there is no property in the all-cap fund.

Interesting you say the risk is a lot lower yet his allocation percentage appears high for emerging markets? 10% / 70% equities?? Is he due a re-balance?

dunstonh

I was interested from a perspective of understanding his allocation percentages such as for small cap, emerging markets and property.

Made up based on his opinion. Not structured based on methodology.

Investing is a lot about opinion. Nothing wrong with that at all. However, when following portfolios like that you need to be aware that they will not have the same sort of methodology that multi-asset fund or structured portfolio would have. One of the most common missing elements is a target volatility range or risk profile range not being considered.

Read the articles with interest but don't consider them to be some gospel or magic solution that is better than other things.

Interesting you say the risk is a lot lower yet his allocation percentage appears high for emerging markets? 10% / 70% equities?? Is he due a re-balance?

35% fixed interest lowers the volatility.
Property share, emerging markets and small cap increase the volatility
Overall though, it would have less volatility than a 100% equities.

BLB53

Why bother with holding 6 funds and rebalance from time to time when you can just hold the likes of Vanguard Lifestrategy 80 which has an average return of 10% p.a over past 7 years? Keep it simple.

bowlhead99

BLB53 wrote: »

Why bother with holding 6 funds and rebalance from time to time when you can just hold the likes of Vanguard Lifestrategy 80 which has an average return of 10% p.a over past 7 years? Keep it simple.

As Dunstonh said, investing is about opinion.

Their portfolio has more smallcap (compared to none with Lifestrategy), a dedicated property shares allocation (compared to none with Lifestrategy), more emerging markets, less UK FTSE, more bonds than Lifestrategy 80, and the bonds used are UK govt (including index-linked) but no corporate and no overseas. They also achieved the average return of 10% after platform costs since they set it up seven and a half years ago, even with a lower bond allocation; though greater ex-UK equity exposure has been beneficial vs Vanguard, as it turned out.


Note that when they set it up (January 2011), the option of instead buying an auto rebalancing cheap fund of funds from Vanguard did not exist because Vanguard only launched that in summer 2011.

Also, this is a virtual portfolio written for a blog site which affords them the opportunity to give commentary on how the various components have performed from one quarter to the next. As they noted on the update before the current one, it can be interesting to look back at their old quarterly update commentaries (which Vanguard factsheets don't give you, and which you would never write down if you were running the portfolio for yourself rather than an audience) and see what has happened over the last x years as asset classes ebb and flow.

Since they started monitoring their virtual slow-and-steady portfolio, Vanguard launched Lifestrategy and other rivals launched multi-asset index-based fund-of-funds too. They don't ignore them on their site at all. However, they haven't stopped their 'monitor a vitrual multi-asset index portfolio' project just because succesfull and easy-to-buy off-the-shelf rivals now exist for it.

Nobody is saying you have to build your own portfolio to someone else's (Monevatoe blogger's) preference, nor buy a Vanguard product modeled to Vanguard's preference (which will have been professionally constructed from a risk/reward perspective, but based on what they think customers want to buy rather than on your own specific personal foibles). They are all just options.and opportunities for discussion or education.

A_T

BLB53 wrote: »

Why bother with holding 6 funds and rebalance from time to time when you can just hold the likes of Vanguard Lifestrategy 80 which has an average return of 10% p.a over past 7 years? Keep it simple.

Lifestrategy is a simple solution but is is heavily overweight to UK-listed equity and it contains a significant proportion of corporate bonds.

BLB53

True but the annualised returns are almost the same - Monevator 10.2% p.a. and VLS 80 10.0% p.a.

If you can get the same return from a simpler option which would be easier for most, if not all investors...

Chris75

It might have returned the same in the prevailing market of the last few years but that does not necessarily mean that it will continue to do so.

I also do not understand the popularity of LifeStrategy with its heavy overweight UK position.

Amoux

BLB53 wrote: »

True but the annualised returns are almost the same - Monevator 10.2% p.a. and VLS 80 10.0% p.a.

If you can get the same return from a simpler option which would be easier for most, if not all investors...

I have multiple index funds, similar to the monevator portfolio (but I don't hold bonds or property).

It might be seen as pedantic, but the average OCF costs of buying multiple index funds is cheaper than buying an all-inclusive global tracker. That is even after including trading costs. But yes, it's more effort and requires some maintenance.

The Global All Cap Index costs 0.24% (or Lifestrategy 0.22%) whereas you could get a near equivalent via multiple index funds for near half that cost. You can get a North America index tracker which is 56.5% of the Global All Cap Index for a mere 0.10% or the S&P 500 for even cheaper (If you don't mind losing Canadian shares). When you get other geographical indexes and global small cap you are still going to be under 0.15%. This doesn't make much difference for small portfolios but it can for very large ones.

But yes, if you want simplicity then the Global All Cap is a good way to go. I don't like the Lifestrategy as it's overweight in UK shares for my liking.