S&S ISA strategy given Brexit and interest rates

newfoundglory

Hi all.

I'm now ready to resume investing in a S&S ISA, having sold mine back in December, and I need to find a way to invest this years limit.

My previous strategy (although successful) doesn't seem to feel right to be used now, and I wonder if this is to do with Brexit and interest rates.

Specifically, FTSE trackers for example are at highs and how might these change with Brexit?
Also, gilts and bonds, and the impact of interest rates.
What about high risk investments; gold, emerging markets, japan, china and russia.
Not forgetting of course investments which would be impacted by the US dollar or Euro, the pound not being so strong.

I'm just not sure where to start! I just wondered whether anyone had a thoughts on this, and what to share some thinking on how you approach it?

masonic

The UK makes up considerably less than 10% of global equities markets. Most of the rest of the world will not be impacted by the effects of Brexit, so no special consideration needs to be paid to it really. To be honest, I think a lot has already been priced into the UK and European markets, so I don't imagine the impact will be as great as you may fear.

You should be more concerned about the potential impact of the US-China trade war, which could have a far more significant effect.

tel_

I have just started paying into a Lifestrategy ISA with Vanguard, but to my very basic knowledge, is more UK based/biased. It will be interesting to see how it performs over the coming years.

dunstonh

Specifically, FTSE trackers for example are at highs and how might these change with Brexit?

What FTSE trackers?

Why do you think Brexit will be a major issue to be concerned with when you consider all the other things going on that you have not mentioned? (and there is always things going on. As one issue goes away, along comes another).

thickasabrick

Well they are UK based funds so I would expect a little "home" bias. Quite a different allocation to what the US Vanguard personal investors are offered in their "Vanguard LifeStrategy Moderate Growth Fund ".


Looking at the allocation for the LifeStrategy 60 there appears to be 28.1 % allocated to UK funds. Although actual equities is listed at 14.9% when I'm led to believe UK represents less than 3% of the world equity markets (monevator article from 2015 so this might have changed).

19.20% Vanguard FTSE Developed World ex-U.K. Equity Index Fund Accumulation Shares
19.30% Vanguard Global Bond Index Fund Pound Sterling Hedged Accumulation Shares
14.90% Vanguard FTSE U.K. All Share Index Unit Trust GBP Accumulation Shares
13.90% Vanguard U.S. Equity Index Fund Accumulation Shares
5.80% Vanguard U.K. Government Bond Index Fund Accumulation Shares
4.80% Vanguard Emerging Markets Stock Index Fund Accumulation Shares
3.80% Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund Accumulation Shares
3.80% Vanguard U.K. Inflation-Linked Gilt Index Fund GBP Gross Accumulation Shares
3.60% Vanguard U.K. Investment Grade Bond Index Fund Accumulation Shares
2.20% Vanguard Japan Stock Index Fund Accumulation Shares
1.90% Vanguard U.S. Investment Grade Credit Index Fund Pound Sterling Hedged Accumulation Shares
1.90% Vanguard Euro Government Bond Index Fund Pound Sterling Hedged Accumulation Shares
1.80% Vanguard U.S. Government Bond Index Fund Pound Sterling Hedged Accumulation Shares
1.10% Vanguard Pacific ex-Japan Stock Index Fund Accumulation Shares
1.10% Vanguard Japan Government Bond Index Fund Pound Sterling Hedged Accumulation Shares
0.90% Vanguard Euro Investment Grade Bond Index Fund Pound Sterling Hedged Accumulation Shares
0.00% Vanguard U.K. Gilt UCITS ETF
100% Total

https://www.trustnet.com/factsheets/o/acdq/vanguard-lifestrategy-60-equity-a-acc
https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-accumulation-shares/portfolio-data

Quite a good article from Monevator which talks about "home" bias, although it is in relation to global tracker funds or ETFs.
http://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/

tel_ wrote: »

I have just started paying into a Lifestrategy ISA with Vanguard, but to my very basic knowledge, is more UK based/biased. It will be interesting to see how it performs over the coming years.

tel_

Many thanks thickasabrick for the detail on the Lifestrategy 60 fund, as this is one of them that I have.

I will read the articles with great interest too.

This is my first venture with regards to S&S ISA's, so I'm learning lots thanks to good people like yourself.