Vanguard Funds

[Deleted User]

Can someone please explain the difference between VLS60 and the Vanguard Global Balanced Fund. Both seem to have roughly 60/40 split, however, VLS60 seems to be cheaper at an OCF of 0.22% as against more than double at 0.48% for the GBF.

Alexland

Vanguard Global Balanced Fund is an actively managed fund so you are paying more for Wellington to do the stock picking.

[Deleted User]

Alexland wrote: »

Vanguard Global Balanced Fund is an actively managed fund so you are paying more for Wellington to do the stock picking.

Ah that probably explains the higher OCF. It seems to have a better performance than the LS60. Is the GBF better diversified than the LS60 as everyone on this site talks about the LS60 being biased on UK funds

Thrugelmir

[quote=[Deleted User];76203684] Is the GBF better diversified than the LS60 as everyone on this site talks about the LS60 being biased on UK funds[/QUOTE]

Totally the reverse. As an active fund will be highly concentrated into particular stocks and shares. Once holdings become too numerous then outperformance of any one single holding dilutes overall performance.

Active funds will swing up and down performance wise.

Alexland

The better performance could be due to the higher equity weighting on the active fund rather than stock picking good fortunes.

If you want a mostly passive balanced fund without the UK bias then consider HSBC Global Strategy Balanced which you can get via either Cavendish or the HSBC Investment Center. The total fund+platform fee will be a tiny bit higher.

Alternatively on Vanguard Investor you could build a 2 fund portfolio using the Vanguard Global All Cap and Global Bond Index Hedged funds in 60/40 proportions and rebalance periodically.

Linton

[quote=[Deleted User];discussion/6041368]Can someone please explain the difference between VLS60 and the Vanguard Global Balanced Fund. Both seem to have roughly 60/40 split, however, VLS60 seems to be cheaper at an OCF of 0.22% as against more than double at 0.48% for the GBF.[/QUOTE]


The GBF has performed better than VLS60: 28% vs 22% over 3 years. Its nothing to do with charges nor to one being active and the other passive. Diversity isnt the cause either. Its simply that the GBF reflects the general market importance of the UK with a 5.2% allocation whilst VLS60 chooses to fix its UK allocation at 15%. The FTSE100 (and thus the FTSE AllShare)has been one of the worst major indexes for investors for many years.


The effects of allocation differences can be much larger than charges or active/passive.

Thrugelmir

Linton wrote: »

The FTSE100 (and thus the FTSE AllShare)has been one of the worst major indexes for investors for many years.

Small matter of income to be factored into account. When making sweeping generalisations.

Linton

Thrugelmir wrote: »

Small matter of income to be factored into account. When making sweeping generalisations.

Total return over 5 years with income reinvested:

FTSE100: 27.1%
FTSE All Share: 29.2%
FTSE World: 80.5%
FTSE World Ex UK: 85.2%


The prosecution rests its case m'lud.