Vanguard lifestrstegy 80

Stargunner

Reviewing my pension and looking at funds to invest in.

The Lifestrategy 60/80 are extremely popular on here, particularly for pension funds. I am trying to find out why they are so popular.

The Lifestrategy 80 has produced a 57% return over the last 5 years, but there are so many other global funds that have far exceeded those returns, a lot have more than doubled them.
Even if you look at the short term return of what it has returned this calendar year it lags way behind many other funds.

masonic

Perhaps the performance over one 5 year period is no guide to the future.

Aminatidi

Because they're an effective one-stop shop for a balanced/diversified portfolio that matches your timescale and appetite for risk.

You're quite right you can go out and invest in any number of other funds that will return more over a given time period but you need to consider if there's a reason for it and a possible downside if circumstances change.

Funds like LifeStrategy are intended to be pretty much "set and forget" rather than having to wake up and think "Is now a good time for tech stocks?" or "Is now a good time for UK small caps?" and so on.

Lomcevak

Stargunner said:

The Lifestrategy 60/80 are extremely popular on here, particularly for pension funds. I am trying to find out why they are so popular.

The Lifestrategy 80 has produced a 57% return over the last 5 years, but there are so many other global funds that have far exceeded those returns, a lot have more than doubled them.

They're popular because in many cases they're a reasonable choice - not perfect (e.g. bias towards UK may not be desirable) but they're cheap, simple, and you can do far worse.

Comparing historical performance needs care, as different funds have different objectives. The LifeStrategy funds are built as general global trackers with equity and bond components set to give different levels of volatility, any any similar fund will have broadly similar performance (with some variance for choice of holding, tracking error, etc.). Any fund "more than doubling" it will be built for a different purpose.

kuratowski

When I looked at my current pension portfolio for most of the past 5 years the #1 performing fund has usually been Japanese smaller companies, but it also has the highest volatility, and it would be pretty silly to shift the whole lot into that.  Diversification smooths out the performance differences between the best and worst performers, and the rationale for multi-asset funds like LifeStrategy is you get your diversification in a single package.

You should compare the funds you are considering against the average of funds in the same sector as themselves.  (Easy if you use the trustnet website.)  Although, as masonic says, past performance is no guide to the future anyway.

Stargunner

I imagine that a lot of the other global funds have benefitted from the strong US stock market performance over the last few years, because most of them are about 65% invested in the US, whereas Lifestrategy is only around 40% invested in the US, but much higher invested in the UK which hasn’t  performed so well over the last few years. If only we had a crystal ball to help us make the right choices.

kinger101

The funds aren't designed to give the best returns over the short term.  Nobody can reasonably expect them to be the best performing fund in any one year, five or even ten.  They're designed to allow steady growth with risks mitigated though diversification.  People buy them because a high probability of retiring on a comfortable income is more appealing than 5h1t or bust. 

Albermarle

You can only really compare LS 80 with other similar low cost multi asset funds with a high equity content.
The Blackrock consensus or L&G Multi Index equivalents for example . There can be some differences but over a long term they should be similar. Maybe better to split the LS80 holding with one of these alternatives.

Stargunner

The LS 80 is 80% equity and 20% bonds and the equity part is invested globally, although with a higher bias to the UK than most global funds.  I was just considering investing 80% of my pension fund in one or two global funds and the remaining 20% in less risks funds like bonds.
Here are some examples of some global funds
Edinburgh Worldwide Inv Trust  3yr return 101% 5yr 163%
Fundsmith Equity 3yr return 60% 5yr 139%
Rathbone Global Opportunities 3yr return 55% 5yr 118%
LS80 3yr return 26% 5yr 57%

We all know that past performance is no guarantee of future performance but I| thought that the idea of a sipp is that you can monitor it and if things change you can easily switch to alternative funds.
Aminatidi said previously  

LifeStrategy are intended to be pretty much "set and forget" rather than having to wake up and think "Is now a good time for tech stocks?" or "Is now a good time for UK small caps?" and so on.

Lots of people on here are constantly going on about ways to get another 1 or 2% on a regular saver which will earn them another £40 or £50 a year rather than leaving the money in a Marcus account. Yet they don't bother looking at ways of maybe earning thousands and thousands of pounds more by regularly monitoring their pension account. 

What are peoples views on this? 
 

Thrugelmir

How does one make thousands of pounds more ? I'm most intrigued. 
For some people not losing hard saved money might be a priority. As taking a greater degree of risk doesn't guarantee a greater return. As taking a greater risk increases the potential for capital loss. Though the VLS funds do restrict their coverage to developed markets. 

bowlhead99

We all know that past performance is no guarantee of future performance but I| thought that the idea of a sipp is that you can monitor it and if things change you can easily switch to alternative funds.

Yes if circumstances change so that VLS80 is no longer suitable, you can easily switch to alternative funds. I didn't spot an obvious time when VLS80 became less suitable than it had previously been, as its strategy is largely unchanged since launch in 2011, other than the time they reduced the '40% of the equities being UK-listed' to 25%.

Stargunner said:
Lots of people on here are constantly going on about ways to get another 1 or 2% on a regular saver which will earn them another £40 or £50 a year rather than leaving the money in a Marcus account. Yet they don't bother looking at ways of maybe earning thousands and thousands of pounds more by regularly monitoring their pension account. 
What are peoples views on this? 

 So your idea to make 'thousands and thousands of pounds more by regularly monitoring your pension account' is to monitor what happens in the financial markets, find the funds that happened to go up the most in five years, then go back in time and buy them before they went up the most in five years?

That sounds almost foolproof   Just the matter of procuring the time machine once you have monitored your tracker-based fund and found it did not deliver a top quartile performance, but you know which ones did, with hindsight.

And that you are not comparing like with like, given that you compare the 5 year return of the 100% equity funds with the VLS 80% equity return but say that actually you would dilute the return of those named funds with a much lower-returning bond component.