Reduce Risk VLS60

eskbanker

BLB53 wrote: »

I think its worth noting that if you had invested the day before the Lehmans collapse 10 years ago this month, your investments would fall by 46% over the coming months. However the markets always bounce back and if you continued to hold the same investments you would be up by 185% today...
http://awealthofcommonsense.com/2018/09/revisiting-the-fall-of-2008/

Perhaps worth qualifying those stats by clarifying that they apply specifically to investing in the S&P 500 index, rather than a global fund of funds such as the one this thread is primarily about (which didn't exist then!).

degs88

eskbanker wrote: »

Perhaps worth qualifying those stats by clarifying that they apply specifically to investing in the S&P 500 index, rather than a global fund of funds such as the one this thread is primarily about (which didn't exist then!).

Is that good or bad in relation to the primary thread?

eskbanker

degs88 wrote: »

eskbanker wrote: »

Perhaps worth qualifying those stats by clarifying that they apply specifically to investing in the S&P 500 index, rather than a global fund of funds such as the one this thread is primarily about (which didn't exist then!).

Is that good or bad in relation to the primary thread?

Neither - the Vanguard LifeStrategy range was only launched in the UK in 2011 so it isn't possible to compare its performance with anything else over a ten-year period from 2008.

The point I was making is that one of the major advantages of VLS (and other global funds of funds) is that they're diversified across multiple markets rather than being tied to one, such as the S&P 500. The 2008 crash was global so all markets would have been affected but not to exactly the same degree, and of course recovery rates will have varied wildly across markets since then, so, while it's a perfectly valid statistic to observe that staying in an S&P 500 tracker since 2008 would have delivered a 185% increase, other markets will have changed by different amounts, some more, some less.

dunstonh

....plus the S&P500 has outperformed global markets in this cycle. However, the previous cycle it underperformed them. Indeed, the US was one of the worst performers. The risk of single sector investing is that you could get the best but you are more likely to not. (it could be Japan next or Asia or China or Europe etc). It is rare for the top performing sector to be best two cycles in a row.

So, any comparison that uses the current top performing sector as a benchmark for everything else is going to have flaws or risk being open to manipulation.

Plus, the S&P500 would be around risk 9 on a typical 1-10 scale. You are talking about dropping to around risk 3 from around risk 5. It isnt a fair comparison.

jimjames

Linton wrote: »

So it appears the ISA is not vital to your future well being. Why do you want to substantially cut the returns when you can afford to wait for the inevitable upturn, should a major crash occur? And if you dont believe an upturn is inevitable perhaps you should not be investing in equities at all.

It's also worth bearing in mind that although the capital value may fall the income is likely to do so far less, if at all so if the primary aim is income then it will be essentially unaffected. There are investment trusts that have increased their income payments for 40+ years through all the crashes and downturns over that time and regardless of share prices at the time.

Alexland

jimjames wrote: »

There are investment trusts that have increased their income payments for 40+ years through all the crashes and downturns over that time and regardless of share prices at the time.

More impressively than the 40/50+ year club SAINTS last cut its dividend in 1938 and has been consistantly increasing dividend for 37 years. I wonder what the record is for an IT consistantly increasing its dividends above a measure of inflation as that's what an income investor should really seek?

Alex

aroominyork

dunstonh wrote: »

If you do decide to move down the risk scale, then moving away from VLS to L&GMI, HSBC or Architas may be better as they are risk targetted (unlike VLS). They are less rigid and more flexible on bonds.

I am sure this has been asked before (possible by me) but is there an existing thread which comprehensively compares multi-asset funds?

eskbanker

aroominyork wrote: »

I am sure this has been asked before (possible by me) but is there an existing thread which comprehensively compares multi-asset funds?

I rounded up some references to a number of such threads a few weeks ago at https://forums.moneysavingexpert.com/discussion/comment/74712069#Comment_74712069:

eskbanker wrote: »

The similarities and differences between VLS and other global multi-asset funds of funds have been discussed extensively in recent threads such as:

https://forums.moneysavingexpert.com/discussion/5885272/advice-on-investing-in-vanguard-and-hsbc-funds
https://forums.moneysavingexpert.com/discussion/5883131/fund-and-broker-advice-please
https://forums.moneysavingexpert.com/discussion/5879942/multi-asset-funds-differences
https://forums.moneysavingexpert.com/discussion/5869905/vanguard-alternatives-without-too-much-uk-exposure

kidmugsy

BLB53 wrote: »

However the markets always bounce back

That's factually untrue. It would be true to say "markets have always bounced back in the US, the UK and a few other favoured countries". That's not at all the same thing. Maybe our future will be more like the past of Italy, or Belgium, or Austria, or Argentina, or ......

degs88

Thanks everyone for a fascinating discussion.

For your information and in relation to the original post and some of the discussion above .......

My ISA is purely investment, my wife has an identical ISA too, again investment.

When I started my SIPP with HL I chose the investment option rather than income following telephone discussions with their helpline. The driver for going for a SIPP was split between investment and tax recovery. When and to what extent I need to dip into my SIPP is an unknown at the moment, we may even try and manage.

Thanks again.