LifeStrategy 40

Linton

Sue58 said:

Linton, could I ask you why you prefer to hold Trojan O as opposed to Personal Assets?

Sorry, I missed the posting. According to Trustnet Charting Trojan O  dropped around 10% in the 2008 crash, Personal Assets dropped 20%.  Also, I am not too keen on ITs where I have the choice as Stamp Duty becomes significant in £ terms given the size of my holdings.

Aminatidi

So ironically having spent a lot of time looking into LS40 for my mums investments I find myself on the verge of opening a direct Vanguard general account today for myself.

I have around £175K invested in active funds and trusts with around 50% of that in CGT, PNL, and RICA.

Can't complain at what they've done for me and I do find that investing in investment trusts means I don't get tempted to trade in/out because of dealing fees.

But it also makes it impractical to just put away £100 here and there and even though I have around £2K spare each month I still find myself thinking "are equities good value?" or "is that premium or discount acceptable?" when considering which trust to add money to.

I think I've raised a thread on here before on moving from active to passive and I keep sitting on it and thinking about it so thoughts welcome.  Again

Seems £5K into a Vanguard direct account is a pretty painless way to see if I can "cope" with passive and being tied to a single platform.

I'd be looking at LS60 or LS80 most likely LS60 though people are always trying to beat into me that with a steady income I'm accumulating so don't be so cautious.

bowlhead99

Aminatidi said:

Can't complain at what they've done for me and I do find that investing in investment trusts means I don't get tempted to trade in/out because of dealing fees.

But it also makes it impractical to just put away £100 here and there and even though I have around £2K spare each month I still find myself thinking "are equities good value?" or "is that premium or discount acceptable?" when considering which trust to add money to.

You're right that investment trusts are not efficient if you just want to throw the occasional £100 at them. Many brokers do have a 'regular investment' feature where the purchase costs are discounted if you club your trades together with others on a fixed day each month. For example if you had about £2k spare in a month, at AJ Bell Youinvest you could just stick the £2k in the account and tell it to buy £2k worth of PNL shares, and you'd get 4 or 5 shares with a dealing cost of £1.50 which is under 0.1%.  And PNL doesn't really have a discount or premium as they have an effective control mechanism where if demand is high they can issue new shares and if demand is very low they will generally use spare cash to buy back at a discount, closing it. 

I think I've raised a thread on here before on moving from active to passive and I keep sitting on it and thinking about it so thoughts welcome.  Again

I've been on the forum for a decade and a half and there is always someone wanting to rehash the points of active vs passive, but 'there's nothing new under the sun'. Passive is simple to understand and there are more people talking about it these days as more cheap products have become available. So you often get people coming on here who have just discovered passive investing and read some blog or video that 'proves' it's always the best thing to do, so they come on here all passionate about how it is the best thing in the world as if they have just discovered sliced bread and want to spread the word. 

Then there ensues a discussion about how it is good in some circumstances and less good in others depending on your strategy and what you want to invest in and what risks you want to take, and the whole load of 'active beta'  options which still count as passive but help investors in automated funds capture the returns that the active managers can get by looking at company size, value, momentum etc etc, as a way of overcoming the flaws of just weighting to market cap.

You tend to get the passive evangelists who say passive is always best, and the normal people who say use passive where it is best and active where it is best. You don't tend to see people saying active is always best. So in terms of numbers of vocal people looking to ram an argument down your throat, you will hear more people saying passive is always best; and within the overall noise you hear, a very high proportion of people will be willing to agree that passive is either always or sometimes best for a task, while some people will never agree that active is sometimes best, so the online sentiment you read is that people prefer passive.

A few years ago on here, everyone was saying Tim Hale's Smarter Investing was the thing to read; rarely mentioned now because people prefer the immediacy of a youtube video or web page ,so they are all saying the Lars Kroijer videos are the ones to watch. This doesn't mean it's invalid to use active funds for particular objectives.

Seems £5K into a Vanguard direct account is a pretty painless way to see if I can "cope" with passive and being tied to a single platform.

I'd be looking at LS60 or LS80 most likely LS60 though people are always trying to beat into me that with a steady income I'm accumulating so don't be so cautious.

It is probably a pretty meaningless exercise. I don't doubt that you will be able to 'cope' with buying £5k of passive investments when you've already got £175k of not-passive investments elsewhere.

And if half of your investments elsewhere (amounting to 80-90k) are in the wealth preservation vein, it doesn't really matter if you put the £5k into LS60, 80, or 100. The difference between 60 and 100 on £5k is simply £2k of equities, with the vast majority of them being either foreign listed equities or UK equities doing a lot of business overseas.  To someone with a £175k portfolio of active investments and adding another £5k to make it £180k: the prospect of fine tuning it by having £2k more equities or £2k less equities is not something to fret over. £2k is 1% of a £180k portfolio.

Aminatidi

bowlhead99 said:

Seems £5K into a Vanguard direct account is a pretty painless way to see if I can "cope" with passive and being tied to a single platform.

I'd be looking at LS60 or LS80 most likely LS60 though people are always trying to beat into me that with a steady income I'm accumulating so don't be so cautious.

It is probably a pretty meaningless exercise. I don't doubt that you will be able to 'cope' with buying £5k of passive investments when you've already got £175k of not-passive investments elsewhere.

And if half of your investments elsewhere (amounting to 80-90k) are in the wealth preservation vein, it doesn't really matter if you put the £5k into LS60, 80, or 100. The difference between 60 and 100 on £5k is simply £2k of equities, with the vast majority of them being either foreign listed equities or UK equities doing a lot of business overseas.  To someone with a £175k portfolio of active investments and adding another £5k to make it £180k: the prospect of fine tuning it by having £2k more equities or £2k less equities is not something to fret over. £2k is 1% of a £180k portfolio.

"Cope" is a poor choice of words on my part

£5K of new money in today and then £2K next month and the next month and within six months that's 10% and in a year 12-15% etc.

Only 2 years ago I was 100% "cash in the bank" so I know how these things snowball.

So yes absolutely £5K is 2% today but it's more of a psychology thing with me, which is dumb but I'm sure with many people they spend half their investing life fighting themselves.

Thrugelmir

Aminatidi said:

Sue58 said:

StellaN said:

As others have said, with PNL you do have to consider the premium/discount (although limited), the possibility of gearing being used and also the costs involved ie. stamp duty and dividend re-investment. On the other hand, with Trojan O (Acc version) you don't have to consider any of these points so its possibly a more straight forward choice. Performance figures are not dissimilar with PNL just edging it over 1-10 years and as Aminatidi said it appears the fund managers themselves prefer to invest in the IT.

Going back to the thread title, although VLS40 has performed slightly better than Trojan O or PNL over the past 5 years, it is still unclear (and nobody knows yet) whether VLS40 will hold up as well as these wealth preservation type funds during a severe market downfall? 

It's one of the paradoxes that I struggle with.

My own money is in Personal Assets and Capital Gearing Trust and Ruffer because I know they have held up well in the past.

The money I've just helped my mum liberate from her ex-IFA has gone in LS40 because it's pretty difficult to look at the likes of Bogle or Kroijer and not do what they suggest.

No doubt that makes me a hypocrite but taking active bets with my own money is one thing but I'm not entirely comfortable doing so with my mums.

Aminatidi said:

Sue58 said:

StellaN said:

As others have said, with PNL you do have to consider the premium/discount (although limited), the possibility of gearing being used and also the costs involved ie. stamp duty and dividend re-investment. On the other hand, with Trojan O (Acc version) you don't have to consider any of these points so its possibly a more straight forward choice. Performance figures are not dissimilar with PNL just edging it over 1-10 years and as Aminatidi said it appears the fund managers themselves prefer to invest in the IT.

Going back to the thread title, although VLS40 has performed slightly better than Trojan O or PNL over the past 5 years, it is still unclear (and nobody knows yet) whether VLS40 will hold up as well as these wealth preservation type funds during a severe market downfall? 

The money I've just helped my mum liberate from her ex-IFA has gone in LS40 because it's pretty difficult to look at the likes of Bogle or Kroijer and not do what they suggest.

Bogle and Kroijer suggest how to invest not where to invest. In one of his last interviews Jack Bogle said  “Tree's don't grow to the sky, and I see clouds on the horizon. I don’t know if and when they’ll arrive. A little extra caution should be the watchword.” 

jsinc

Aminatidi said:

So ironically having spent a lot of time looking into LS40 for my mums investments I find myself on the verge of opening a direct Vanguard general account today for myself.

I have around £175K invested in active funds and trusts with around 50% of that in CGT, PNL, and RICA...

Not just you. After going through similar for my mum's pension and retirement plans my own are now almost entirely low-fee global passive and multi asset investments. And that's as someone with a reasonable career in active investing (fixed income trading). But each to their own.