Vanguard - where do I start?

aroominyork

Alexland wrote: »

I like VLS60 and 80 but never understand why someone on a broad DIY platform like YouInvest or HL would choose VLS100 when there are lower cost 100% equity funds available such as HSBC FTSE All World or the HL discounted Blackrock Consensus 100 funds?

For a little (Blackrock) or a lot (VLS) of home country bias. My daughter is starting a SIPP and with weak Sterling I've advised her, for now at least, to go with VLS100. (And she listened to me... that's a first!)

A_T

aroominyork wrote: »

For a little (Blackrock) or a lot (VLS) of home country bias. My daughter is starting a SIPP and with weak Sterling I've advised her, for now at least, to go with VLS100. (And she listened to me... that's a first!)

Most of VLS's UK-listed allocation is overseas invested so offers very little currency protection.

Nardge

P.S. Also posted on the 'Stocks and Shares' Thread. Reposted here too in the hope of timely thoughts today, apologies in advance for the irritation that may cause to some...

Good Morning

Which Vanguard Life Strategy Fund are most people using? 20, 40, 60, 80, 100% Equity?

Ideally I'd like to funnel £800 into each and see how they get on whilst I continue learning...

It seems however each would need its own attendant £100 direct debit?

I'd only likely want to pay in £200 per month, split between the five...

Initially £4000 are going in (what's left of my ISA allowance 2018/19), and:

• I will not need the money in an emergency
  
  
• Losing the money whilst annoying, would not destroy me
  
  
• The aim is to invest long-term, exactly how long I don't know, possibly into retirement
  
  
• The sum may be used for e.g. funding an Independent (Private) School place, University Tuition Fees, or may never be used at all as I've yet to start a family
  
  
• I might take a relatively small amount out now and then, for whatever random reason
  
  

Since I don't want 5 x £100 direct debits, and of course, each of the five funds will charge its own 0.22% fund manager fee, what are peoples' thoughts on Equities at 60%?

With Kind Regards

dunstonh

A_T wrote: »

Most of VLS's UK-listed allocation is overseas invested so offers very little currency protection.

Indeed. The softer Brexit is, the more Sterling will rise and the value of overseas holdings will fall in value (excluding any other market activity). Effectively the reverse of what happened following the referendum outcome.

webjaved

Nardge wrote: »

Ideally I'd like to funnel £800 into each and see how they get on whilst I continue learning...

Why not just concentrate on one instead of dipping into each one?

aroominyork

dunstonh wrote: »

Indeed. The softer Brexit is, the more Sterling will rise and the value of overseas holdings will fall in value (excluding any other market activity). Effectively the reverse of what happened following the referendum outcome.

But isolating the forex effect, wouldn’t the fall in earnings of UK companies’ that partly, or even largely, earn overseas, be less than the fall in the Sterling share price of non-UK companies/funds? And wouldn’t that mean that switching from VLS to global all cap – as and when Sterling strengthens – would be a net positive?

AnotherJoe

aroominyork wrote: »

But isolating the forex effect, wouldn’t the fall in the Sterling value of UK companies’ that partly, or even largely, earn overseas, be less than the fall in the Sterling share price of non-UK companies/funds? And wouldn’t that mean that switching from VLS to global all cap – as and when Sterling strengthens – would be a net positive?

Probably marginally the opposite, the greater % global you have the more you'd see it decline when Sterling rose. However there are so many levers pulling in opposite directions, and theres such a small pool of UK companies in that 25%, several of which are financial and commodities and so are arguably more affected by FX movements than others, and forex movements are so unpredictable, its a mugs game to forecast.

I would focus on the bigger picture, if you believe global markets will rise (and if you didn't, you wouldnt invest in them) then just invest in global markets , let the currency movements take care of themselves because otherwise give up on markets and become a currency trader.

bowlhead99

aroominyork wrote: »

But isolating the forex effect, wouldn’t the fall in the Sterling value of UK companies’ that partly, or even largely, earn overseas, be less than the fall in the Sterling share price of non-UK companies?

FX can be complicated ; if sterling strengthens a UK based company has to charge more dollars or euros to its overseas customers to get the same sterling revenues and the market for its goods or services might not want to pay those higher prices and it could be bad for business. However if the company is an importer it will be happy that its pounds go further when buying from abroad and its employees are not so demanding of pay rises because their petrol bills are lower and imported goods are cheaper in the shops. So individual UK and overseas business will have a preference for sterling rises and falls depending on their line of work.

What you can probably say is if sterling gets stronger, a foreign listed business with no UK assets or revenue (e.g. an Australian domestic business) or only a few percent UK assets or revenue (e.g. Nestle, Microsoft etc) will be worth quite a lot fewer pounds if the pound strengthens significantly and nothing else whatsoever changes.

Whereas, a company which only has half its assets and revenues in foreign currencies and the other half of its business here in the UK, may get less of a drop in its pound valuation than the aforementioned Aussie or Swiss or American companies mentioned above... beecause only half of its assets are automatically worth fewer pounds due to currency movements, and the other half of its assets are UK service lines which are not automatically worse off, they might be better off or worse off depending on the business model.

So on average the UK/overseas mix company listed in the UK might have less of a valuation hit from a pound strengthening than a pure overseas company found on a foreign stock exchange, because a UK investor investing in a 'pure overseas company' has a bigger automatic exposure to currency movements

And wouldn’t that mean that switching from VLS to global all cap – as and when Sterling strengthens – would be a net positive?

You mean *not* buying global all cap for now, buying VLS instead to get a slightly higher weighting to UK assets, but then selling it to buy the global all cap fund later 'when sterling strengthens' and the global all cap fund costs fewer sterlings?

The issue with setting out a plan of hopping around from one asset mix to another, doing one thing now and another 'as and when sterling strengthens'... is that you don't know it will work out because (a) you don't know by how much or by when sterling will strengthen significantly, and (b) you don't know how much foreign assets (valued in sterling) might have done better or worse than the UK all-share (valued in sterling) in that specific timeframe.

So, 'isolating the Forex effect' is fine and dandy in theory but as a practical point you don't know how much positive or negative Forex effect there is going to be over a particular time period compared to what excess gains or shortfall over UK assets could be found in (e.g.) US or emerging markets assets with the next Trump tax cut or tax raise or global trade war or interest rate change etc etc.

Traditionally people nervous of volatility would be guided *not* to put 95% of their assets into foreign markets (as the Global All Cap index would do). The VLS puts a lower percentage of its assets into foreign markets and even though people note that VLS's UK equity assets are indexed (high weighting to large multinationals) , the Global all cap also uses indexes so its 5% UK assets are also held with a high weighting to large multinationals and a tiny proportion to UK focused business like Lloyds Bank or Royal Mail.

Zero_Sum

Nardge wrote: »

P.S. Also posted on the 'Stocks and Shares' Thread. Reposted here too in the hope of timely thoughts today, apologies in advance for the irritation that may cause to some...

Good Morning

Which Vanguard Life Strategy Fund are most people using? 20, 40, 60, 80, 100% Equity?

Ideally I'd like to funnel £800 into each and see how they get on whilst I continue learning...

It seems however each would need its own attendant £100 direct debit?

I'd only likely want to pay in £200 per month, split between the five...

Initially £4000 are going in (what's left of my ISA allowance 2018/19), and:

• I will not need the money in an emergency
  
  
• Losing the money whilst annoying, would not destroy me
  
  
• The aim is to invest long-term, exactly how long I don't know, possibly into retirement
  
  
• The sum may be used for e.g. funding an Independent (Private) School place, University Tuition Fees, or may never be used at all as I've yet to start a family
  
  
• I might take a relatively small amount out now and then, for whatever random reason
  
  

Since I don't want 5 x £100 direct debits, and of course, each of the five funds will charge its own 0.22% fund manager fee, what are peoples' thoughts on Equities at 60%?

With Kind Regards

Once youve deposited the initial £500 then you can set DD's as low as you want. The £100 minimum is misleading as it only applies when yours starting off with nothing.