Investing 50k in a Vanguard LS fund

bowlhead99

Purplefleur wrote: »

Any suggestions, examples? I chose VLS as it is the most discussed on this forum and in the few blogs I have read, so as a newbie, it felt like the easiest, safest option...
Also not sure what artificial concentration means?
Trying to learn as much as I can before making any firm decisions...

It is a straightforward and easy option, although the fact that something is talked about a lot (as a simple example of how to spread your money across lots of different investments at low cost) does not mean it is the very best thing for you to buy, and it will not really be 'safer' than other rival fund managers' funds offering a similar thing.

The 'artificial concentration' to which Joe refers is just the fact that over 90% of the investible company stocks in the world market by value are traded on stockmarkets outside the UK, but Vanguard created a product which it thinks its UK customers would prefer, which has a higher UK allocation than that (25% UK instead of, say, 6% UK).

In the VLS fund, the UK allocation is provided by putting money into Vanguard's UK index funds, which allocate capital by putting the most money into the biggest companies by value, which means that a large proportion of it goes into the multinational giants of the FTSE index in the oil / big pharma / financial sectors. So with the 'UK bit' you get a big allocation to those sectors (because the UK indexes have a lot of those, compared to other world stockmarkets which might be more balanced) and a small or tiny allocations to others.

Some people would say that putting 'more in the UK' but then having that allocation be mostly allocated to the FTSE100 multinationals in just a few sectors, is a poor choice, and it would be better to just have a small UK allocation and put more money in the other international indexes which might have better long term growth potential.

There are some mixed asset funds that do have over 90% of their equities outside the UK (the HSBC Global Strategy range is one of them which Joe would probably prefer) although it is fair to say that most of the 'balanced' medium risk mixed asset funds pitched at the UK market don't. 93-94% equities being outside the UK is what the 'global index' of investible companies tells you, but it is not necessarily something with which typical UK investors are comfortable.

People on this forum who spend their leisure time talking and debating investments and financial matters are probably not 'typical UK investors', because most UK residents don't spend their time doing that. So, just because someone here tells you that they are a smart investor and would not want VLSxx because it's terrible that VLS allocates 'so much to the UK, artificially' in the way it does, shouldn't imply that everyone thinks that way.

Albermarle

Also VLS 60 , does what it says on the tin , which is that it contains 60% equities .
Some similar multi asset funds , like Blackrock Consensus, are targeted at a risk level , and the % equities will vary over time, say between 40% and 80%.
The end result is similar but not exactly the same .

bowlhead99

Albermarle wrote: »

Also VLS 60 , does what it says on the tin , which is that it contains 60% equities .
Some similar multi asset funds , like Blackrock Consensus, are targeted at a risk level , and the % equities will vary over time, say between 40% and 80%.
The end result is similar but not exactly the same .

You are right that Blackrock Consensus will vary its equity component over time although unlikely to be as extreme as 40-80. It was originally conceived as deriving its allocations from a consensus of how other asset managers were mixing their assets rather than 'targeted at a risk level'; later adding the equity % caps to produce a broader range of products.

Blackrock MyMap series (launched this summer) has a target volatility range, as does their older (and costlier) Managed Index Portfolio. And Architas MA Passive Intermediate, L&G Multi Index 5, HSBC Global Strategy Balanced Portfolio are all examples of doing what you suggest, with their allocations constructed mostly on index funds without having a rigid ratio between equities and bonds or a permanent UK to non-UK split.

Those funds attempt to 'do what they say on the tin' by delivering a decent return for the risk / volatility range that they say on the tin they will try to take - but the tin does not say what the split of equity/bonds/other or UK/not-UK will be.

Purplefleur

How does the HSBC Global Strategy range compare to VLS 60 as I have read a lot of people recommending that? I don’t mind if the equities are outside the UK if the possible returns are better for an equal risk.

Purplefleur

Or same possible return for less risk...

johnadams7

Everyone is so in love with Vanguard on this forum. Are they on commission I wonder?

BLB53

Just be aware that VLS is more exposed to oil due to its allocation to the FTSE and there are looming climate risks associated as we move to a carbon-free economy. HSBC Global Strategy funds have a lower exposure so maybe worth a look if this is a concern.

Eco_Miser

johnadams7 wrote: »

Everyone is so in love with Vanguard on this forum. Are they on commission I wonder?

Why would they be? It's just that those who have bought VLS will recommend others to do the same, as validation of their choice.

Also, there are very obviously some on the forum who are not in love with VLS, so your statement is factually incorrect.

Blackavar

Exactly as I do