Vanguard Lifestrategy - fees and popularity

dunstonh

Am I right in thinking that if I opened a Vanguard Lifestrategy ISA the annual fee would be 0.15%+0.22%=0.37%? So £37 a year on a £10k investment?

0.15% platform
0.22% OCF
0.11% TC (varies depending on with version)
So, not quite as cheap as you suggest. Although there is a lot of debate about the quality of TC as a measure of charges.

but I understand it is not an actively managed fund and read on iWeb that there are many trackers with fees of 0.06%.

VLS is not an index tracker. It is a fettered fund of funds that uses underling passive funds.

What make Lifestrategy so attractive to investors on here? Past performance perhaps? I might consider it, just interested in the pros and cons.

It used to be the best option for small value multi-asset fund investing. There are several others that could fill that now but VLS is still viable even if it is not the absolute best.

Thrugelmir

londoninvestor wrote: »

Doesn't a world tracker give you that exposure though?

Sectors such as Emerging Markets are better served by active management rather than trackers. Far more volatile in nature (risk factors) and less well researched. Well removed from Jack Bogle's reason for creating the tracker fund concept all those years ago.

Beware of fog clouding marketing in the financial world.

londoninvestor

Thrugelmir wrote: »

Sectors such as Emerging Markets are better served by active management rather than trackers. Far more volatile in nature (risk factors) and less well researched. Well removed from Jack Bogle's reason for creating the tracker fund concept all those years ago.

I have some sympathy with that view - but the comparison bostonerimus was making was a DIY portfolio of index funds vs a multi-asset fund that contains EM indexes, rather than active EM funds.

MarkBargain

arnoldy wrote: »

Don't forget that none of the fund fees quoted above include dealing costs. The 'OCF' does not include dealing costs - which to my mind is a bit like buying a package holiday that doesn't include accommodation.


Dependent on share type, market, and frequency of trading these costs can be low but significant. Remember if the fund buys a share in FTSE they pay 0.5% stamp duty straight away , spreads and commission on top of that.

Is that the 'transaction fee' which is usually stated as "0.5% (based on industry average)" on the iWeb website? How would that translate to the ordinary person buying funds in an ISA, a difference in buying and selling prices of the units or just absorbed into the unit price? Or would it be taken from a cash balance in the ISA?

Thrugelmir

londoninvestor wrote: »

I have some sympathy with that view - but the comparison bostonerimus was making was a DIY portfolio of index funds vs a multi-asset fund that contains EM indexes, rather than active EM funds.

EM indexes (like all the others) have a capitisation bias (adjusted for stock liquidity). My reference was more to do with finding value etc. As a totally different sector to say the US. Where stocks are tracked and followed with an almost religous zeal. Which was the thinking when Vanguard was originally founded. Likewise an era when Vanguard didn't actively market itself.

There's horses for courses as they say.

bostonerimus

londoninvestor wrote: »

Doesn't a world tracker give you that exposure though?

What some of the multi-asset funds do seem to offer that's attractive is exposure to a broader range of non-equity assets, such as property. VLS don't though - the non-equity exposure is all in bonds. And Vanguard already offer a well-diversified Global Bond Index fund which would do pretty well for that.

You'd have to look at the asset allocation. If a world tracker is cap weighted it might have very little EM and a multi-asset could overweight that as part of it's strategy. If you start adding either passive or active sector funds to a portfolio of individual funds you construct yourself things can quickly get complicated.

londoninvestor

bostonerimus wrote: »

You'd have to look at the asset allocation. If a world tracker is cap weighted it might have very little EM and a multi-asset could overweight that as part of it's strategy. If you start adding either passive or active sector funds to a portfolio of individual funds you construct yourself things can quickly get complicated.

That's true in principle - although VLS80 actually underweights EM. (Admittedly I haven't checked the other 4 VLSs.) Not surprising I guess, since the large UK overweight pushes everything else underweight.

VLS80 has 6.3% in EM (including Korea), which is 7.5% of its total equity. The FTSE All World is about 11.5% EM (again including Korea).

bostonerimus

londoninvestor wrote: »

That's true in principle - although VLS80 actually underweights EM. (Admittedly I haven't checked the other 4 VLSs.) Not surprising I guess, since the large UK overweight pushes everything else underweight.

VLS80 has 6.3% in EM (including Korea), which is 7.5% of its total equity. The FTSE All World is about 11.5% EM (again including Korea).

I think you are asking all the right questions and understand the issues well enough to make an informed decision. The decision I've taken is to minimise costs and use a few cap weighted broad market indexes ie a global equity, domestic equity and a domestic bond. It's a consciously boring large cap approach because I'm retired and I don't need any alpha, big returns or the volatility of EM or small caps. I won't be winning any races, but I won't come last either.

System

Have you looked to see what the fees would be if you got a VLS fund in an ISA from Vanguard themselves? They do UK ISAs.

lpgm

Tarambor wrote: »

Have you looked to see what the fees would be if you got a VLS fund in an ISA from Vanguard themselves? They do UK ISAs.

I think they did, right back in post number 1.