Would you feel comfortable...

sixpence.

Holding six or seven figures in a Vanguard LifeStrategy? It's a low cost, diverse passive fund.
Or do you feel the risk of not being covered by the FCA beyond 75k makes this a bad idea. 
I'm on the fence, obviously, which is why I've started this thread 

Albermarle

I would have no issue holding several hundred thousand pound in a Vanguard fund from a security point of view .
Basically if a company like Vanguard was to collapse then it would mean that some kind of financial Armageddon had happened like a global nuclear war. In which case you would have a lot more to worry about than your investments going up in smoke.

kinger101

I wouldn't, but only because I think there's too much UK bias in the VLS.

cattie

Personally I'd have no qualms with such a well known company. I think my thinking is very much like Albermarle's.

sixpence.

Albermarle said:

I would have no issue holding several hundred thousand pound in a Vanguard fund from a security point of view .
Basically if a company like Vanguard was to collapse then it would mean that some kind of financial Armageddon had happened like a global nuclear war. In which case you would have a lot more to worry about than your investments going up in smoke.

Okay but what about when the Royal Bank of Scotland went down in 2008? Is that an adequate comparison? I'm ambivalent but playing devils advocate a bit with this.

Swipe

I have six figures in Vanguard investor (SIPP and ISA) in various funds and have no concerns at all.

EthicsGradient

Wouldn't a failure of the Investment Manager/Authorised Corporate Director of an OEIC/ICVC (Vanguard Investments UK, in this case) cause a delay of the ability to sell/buy the units, rather than a loss of the investment?
For a diagram and explanation of the actors: https://www.investcentre.co.uk/articles/what-oeic
The Depositary (State Street Trustees, in this case) has legal ownership of and responsibility for the assets, which the OEIC/ICVC has beneficial ownership of. So if Vanguard Investments UK went bust, its creditors wouldn't have any claim over the assets. VIUK wouldn't be able to arrange trading in the units, and a new ACD would need to be appointed for that, but the assets ought to be safe.
And even it it were State Street Trustees that went bust, wouldn't the beneficial ownership of the assets by the OEIC/ICVC mean that those assets can't be touched by State Street's creditors?

bowlhead99

sixpence. said:

Albermarle said:

I would have no issue holding several hundred thousand pound in a Vanguard fund from a security point of view .
Basically if a company like Vanguard was to collapse then it would mean that some kind of financial Armageddon had happened like a global nuclear war. In which case you would have a lot more to worry about than your investments going up in smoke.

Okay but what about when the Royal Bank of Scotland went down in 2008? Is that an adequate comparison? I'm ambivalent but playing devils advocate a bit with this.

Okay, you could call it an 'adequate comparison' as it is an example of a financial services business taking on too much risk and making such large losses that it needed the government to recapitalise it, causing shareholders of the bank to take heavy losses when their ownership shares plummeted in value.

How many retail investors'  open-ended investment funds managed by RBS failed when RBS "went down" in 2008, and how many individuals' bank deposits were lost without compensation?

Was it none in both cases? 

Yes. So, QED.

A better comparison would be one where an investment management firm with $6 trillion under management focusing substantially on investing that customer money in line with stock market indices somehow made such bad operating decisions or suffered internal fraud in such a big way that they no longer had enough management fee income to keep the lights on, and went bust, and for some reason the index funds being managed (holding several trillion worth of publicly listed equities and bonds) ceased to exist.

Do you have an example of that happening?

If not, then Albermarle's point seems valid.

Albermarle

Okay but what about when the Royal Bank of Scotland went down in 2008?

The key word is BANK. Vanguard is not a bank and does not lend money to people who may never pay it back.

badger09

I do, and I am.

MinuteNoodles

sixpence. said:

Holding six or seven figures in a Vanguard LifeStrategy? It's a low cost, diverse passive fund.
Or do you feel the risk of not being covered by the FCA beyond 75k makes this a bad idea. 
I'm on the fence, obviously, which is why I've started this thread 

What do you mean by FCA cover? FCA cover covers the cash balance in your investing account, not the invested money in it. If you've seven figures invested in VLS units then that is money in investing, there's no cover for a loss. Because of the way that companies like AJ Bell, Charles Stanley, Hargreaves etc are legally required to be set up even if they went completely bust you don't lose your VLS units, they're merely transferred to another broker.