LifeStrategy 40

cloud_dog

Would you recognise it as a 'curve ball' if it didn't have curves?

Aminatidi

fred246 said:

I would personally go for VLS60 but if you are doing it for someone else who doesn't understand investments I understand why you may choose VLS40 to reduce volatility. That's what I mean about investing for someone else. You have to manage the investments and the person you are doing it for. VLS60 might be best in the long run but if next year turns out bad you could be out and the IFA reinstated.

It's not so much about whether they understand it's that moving from what they were in via the IFA to something that's 60% equities wouldn't feel sensible.
Compare
https://funds.standardlifeinvestments.com/uk-consumer/detail.html?isin=GB00B3RHFQ59#overview
https://www.trustnet.com/factsheets/o/10f0/standard-life-investments-myfolio-managed-ii-ret-platform-1-acc
to LifeStrategy 60 and it's too much of a leap in terms of exposure/risk I think

fred246

It's interesting comparing investments though. Take a good year. 2016 I was invested 100% in Lifestrategy 100. I gained 26.1%. MyFolio managed 6.9%. MyFolio should be better in the 'bad' years but VLS100 and MyFolio both lost 5% in 2018. The lower risk investments always seem to blunt the good years and don't really protect better against the bad years. VLS60 was better than MyFolio at a 3.1% loss. Would MYFolio suddenly be superior if we had a really awful stockmarket crash?

bowlhead99

fred246 said:

It's interesting comparing investments though. Take a good year. 2016 I was invested 100% in Lifestrategy 100. I gained 26.1%. MyFolio managed 6.9%. 

To take your example of a 'good year', over the course of 2016 sterling depreciated horribly and a US dollar went from being worth 67p to 81p (a 21% increase) while a Yen went from being 0.563p to 0.693p (a 23% increase).

So a fund like Lifestrategy 100 which puts 75% of its money in foreign stockmarkets and puts the other 25% in the UK stockmarket using market-cap-weighted trackers (where most money is allocated to the large FTSE100 stocks who have 70% of their assets and revenues in currencies other than sterling) will do very well in those times, even if equities themselves don't do very well in their local currencies.    

Myfolio is volatility managed / risk targeted and so doesn't have 90% of its portfolio in foreign-currency driven equities, so is not going to make 20%+ gains when those other world currencies become worth 20%+ extra in sterling terms. By using a volatility managed product you should be somewhat insulated from the biggest swings. It's a blunting of both the potential up and the potential down.

MyFolio should be better in the 'bad' years but VLS100 and MyFolio both lost 5% in 2018. The lower risk investments always seem to blunt the good years and don't really protect better against the bad years. VLS60 was better than MyFolio at a 3.1% loss. Would MYFolio suddenly be superior if we had a really awful stockmarket crash?

As markets don't care about days in the calendar you sometimes get unintuitive results when blocking the returns into one year chunks. In the 'bad year' it lost 5% which was an acceptable result within the volatility range. You wouldn't expect it to lose nothing at all when markets were down, and it lost a few percent, while as it happened, VLS60 lost slightly fewer percent, but no big deal.

However, VLS100 is a fund that could drop 50%+ in a major equities crash of similar magnitude to 2007-2009 (when FTSE All-World index lost 58% peak to trough in USD terms) and the linked Myfolio fund would not be expected to take anything like that level of hit. So yes MyFolio would suddenly be superior to VLS100 if we had a really awful stockmarket crash as you suggest. And really awful stockmarket crashes do happen.  And if there is no really awful stockmarket crash but sterling appreciates 20-25% instead of losing 20-25%, VLS100 will probably have a bad time compared to a volatility-managed fund that doesn't have 90% non sterling equity exposure.

fred246

OK I shouldn't have mentioned VLS100 as it's a bit irrelevant. We are discussing MyFolio, VLS40 and VLS60. 
5 year performance MyFolio 21.4% VLS40 37.33% VLS60 47.71%
Biggest annual loss MyFolio -5% VLS40 -2.3% VLS60 -3.1%
So you invest in MyFolio purely for when you expect the stockmarket to crash?

fred246

 VLS100 will probably have a bad time compared to a volatility-managed fund that doesn't have 90% non sterling equity exposure.

VLS100 has 22.3% UK equity.

bowlhead99

fred246 said:

 VLS100 will probably have a bad time compared to a volatility-managed fund that doesn't have 90% non sterling equity exposure.

VLS100 has 22.3% UK equity.

See my comment above about type of exposure

and puts the other 25% in the UK stockmarket using market-cap-weighted trackers (where most money is allocated to the large FTSE100 stocks who have 70% of their assets and revenues in currencies other than sterling) will do very well in those times    

fred246

So bowlhead what should he invest it in?

bowlhead99

fred246 said:

OK I shouldn't have mentioned VLS100 as it's a bit irrelevant. We are discussing MyFolio, VLS40 and VLS60. 
5 year performance MyFolio 21.4% VLS40 37.33% VLS60 47.71%
Biggest annual loss MyFolio -5% VLS40 -2.3% VLS60 -3.1%
So you invest in MyFolio purely for when you expect the stockmarket to crash?

I would agree that My folio (which has been a 3 on the KID 1-7 risk scale; the 3 and 4 and 5 brackets can contain funds across a pretty broad spectrum of risk) appears to have been taking lower risks than VLS60, so I can see why the OP would feel like VLS60 would be a jump up in risk. 

The myfolio product is targeting a range of volatility - that's what it's designed to do. The VLS60 product is not designed to do that, and is instead designed to deliver whatever the performance of a fixed ratio of bonds to equities, and a fixed ratio of UK stockmarket tracker equities to international equities, happens to be.

So, you could imagine why it might be useful for a more cautious investor who is not especially comfortable with market risk. Whereas someone who is happier with a performance-targeted tracker-based return of 'whatever the return happens to be', might well go for the Vanguard product.

Sue58

Linton said:

CRAIGSVILLE1 said:

Look at the Trojan O fund.  It goes back to Jun 2001 , with an annualised performance of 7.2 %

It has about 33% global equities, 10% gold , and the rest in bonds/gilts etc.

It has only lost 10% of its value twice in that time, which is good going.

Only slight downside is the AMC 1.0% fee  

If you are happy with an annualised performance of 7.2% why is the AMC a downside?  The AMC is already included in the 7.2%.