Vanguard LS vs buying the underlying funds

cloud_dog

ZingPowZing wrote: »

Why not just buy from the underlying stocks that are the bedrock of the underlying Vanguard funds, and save yourself two sets of management fees?

For example, the biggest holder of Apple stocks is Vanguard. You, as fundholders, aggregate $76b of their stock.

I'm with ZPZ.

The rest of you are just a bunch of weirdos

cheek_to_cheek

ZingPowZing wrote: »

Why not just buy from the underlying stocks that are the bedrock of the underlying Vanguard funds, and save yourself two sets of management fees?

I would go further: why buy the underlying stocks via a stockbroker, when you could save the dealing charges by finding shareholders who want to sell by asking around or putting a note up on the board at your local newsagents?

That you didn't suggest this advantageous way to avoid enriching the financial services industry unnecessarily is clear proof that you in fact work for a stockbroker, and are only posting on here to drum up more business for your employer.

aroominyork

... or just buying iPhones to the value of your holding, keeping enough back to get an Ikea cupboard to store them in. (That reminds me, I'm underweight Diageo...)

[Deleted User]

Well, Aapl stock has doubled over the last twelve months.

So, when a major market correction of 50% happens- Aapl investors would still be richer than Vanguard investors!

Enjoy!

[Deleted User]

SonOf wrote: »

but incur hundreds, possibly thousands of dealing costs on purchase and then again on rebalancing. It would be horrendous.

"Rebancing" is largely a trick whereby Vanguard, or whomever your fortune is with, roll funds to assuage your tolerance fears.

How could it be "horrendous."?

cloud_dog

Sometimes, it is best to say nothing, rather than confirming what some may believe.

[Deleted User]

cloud_dog wrote: »

Sometimes, it is best to say nothing, rather than confirming what some may believe.

But sometimes, if not always, it is best to say what you really believe.

ZPZ

bowlhead99

ZingPowZing wrote: »

SonOf wrote: »

but incur hundreds, possibly thousands of dealing costs on purchase and then again on rebalancing. It would be horrendous.

"Rebancing" is largely a trick whereby Vanguard, or whomever your fortune is with, roll funds to assuage your tolerance fears.

How could it be "horrendous."?

How could it be horrendous in terms of transaction cost or admin to manually purchase the several thousand underlying equities and bonds traded on forty different stock exchanges around the world (the underlying holdings you mention which form the bedrock of the lifestrategy 80% equity portfolio), and then periodically reach out to your stock broker to ask them to sell down some and redeploy funds among them if you become over- or under-exposed to certain asset classes or regions against your high level asset allocation plan?

I don't know, how could that be horrendous from a cost or admin perspective?

Perhaps what SonOf was thinking about was that if trading costs you £10 a trade and you are buying 5000 stocks and bonds for your £50,000 portfolio (assuming you have truly worldwide market access for only a tenner a time and no stamp duty) you will have spent £50,000 in fees to deploy the money, which is 100% of the money you had in the first place, so your returns will be quite poor. Especially if you value your time researching stocks and corresponding with brokerages, at anything approaching minimum wage.

Whereas if you buy £50,000 of VLS80 it costs you £5 to buy via a flat fee broker and then less than a third of a percent for a year of ongoing operating costs.

Yes I know, you only meant select FROM the underlying 5000 stocks rather than actually try to buy all the underlying stocks. Apple is the one that will be going up next, right? Just get that one, I guess. Much cheaper than letting Vanguard bamboozle you into a broader portfolio so that they can make money by perpetuating the fraud that is "periodic rebalance"...

Sally57

Alexland wrote: »

Rather than build out a full set of the VLS underpinning funds - once the account valuation gets large enough that the OCF difference is a material cost (and by then you may have left Vanguard Investor for a fixed or capped price platform with trade fees to consider) consider a 2 fund portfolio of a good All World equities and a good diversified and hedged global bond fund/etf.

Alex, would you mind me asking what is a good diversified and hedged global bond ETF? Also, why a hedged one? Thanks.

Alexland

Sally57 wrote: »

Alex, would you mind me asking what is a good diversified and hedged global bond ETF? Also, why a hedged one? Thanks.

Hedging, as used in VLS bond allocations, reduces the currency movements improving the stability of your portfolio.

https://www.etfstream.com/feature/6543_should-you-hedge-your-etfs/

For example Blackrock iShares AGBP which has an ongoing charge of 0.10 %.

https://www.ishares.com/uk/individual/en/products/291771/ishares-global-aggregate-bond-ucits-etf-gbp-hedged-dist-fund

Alex