55 next month, investment decisions

Thrugelmir

peterg1965 said:

Thanks for the replies so far.

Whats the views on going 50:50 with Vanguard VLS20 and VLS80? I know it isn't very sophisticated, but it might suits my needs.  

Might as well use a Vanguard Target Retirement fund and let the manager perform the rebalancing of the portfolio automatically. 

Audaxer

peterg1965 said:

This is one of my alternate options as an active fund portfolio, that I came up with a few years back when doing some research/planning.  I'm not sure how this has faired over the last 6 months, so I need to look.  This is primarily an income drawdown portfolio.

That looks more cautious than a VLS combination of 50% equities. While its an income portfolio, I think it's too much fixed income compared to ensure the annual income rises with inflation. I think you would be better off with the VLS funds. 

NoMore

Going 20 and 80 life strategy or 60 and  40 results in the exact same thing. 

All of the life strategy are fund of funds. Using the exact same funds in each.  The only thing that changes between them is the ratio of the bond funds to the equity funds. 

BritishInvestor

NoMore said:

Going 20 and 80 life strategy or 60 and  40 results in the exact same thing. 

All of the life strategy are fund of funds. Using the exact same funds in each.  The only thing that changes between them is the ratio of the bond funds to the equity funds. 

You'd likely get a slightly better risk-adjusted return from the 40/60 combo due to return per unit of risk decreasing slightly as you move up the risk curve. 

NoMore

BritishInvestor said:

NoMore said:

Going 20 and 80 life strategy or 60 and  40 results in the exact same thing. 

All of the life strategy are fund of funds. Using the exact same funds in each.  The only thing that changes between them is the ratio of the bond funds to the equity funds. 

You'd likely get a slightly better risk-adjusted return from the 40/60 combo due to return per unit of risk decreasing slightly as you move up the risk curve. 

Why? As I said overall you end up invested in the exact same things in the exact same ratios. 

Linton

NoMore said:

BritishInvestor said:

NoMore said:

Going 20 and 80 life strategy or 60 and  40 results in the exact same thing. 

All of the life strategy are fund of funds. Using the exact same funds in each.  The only thing that changes between them is the ratio of the bond funds to the equity funds. 

You'd likely get a slightly better risk-adjusted return from the 40/60 combo due to return per unit of risk decreasing slightly as you move up the risk curve. 

Why? As I said overall you end up invested in the exact same things in the exact same ratios. 

To be very picky, you wont end up exactly the same.  The reason is rebalancing.  If we assume that Vanguard rebalance continuously and that the investor rebalances once a year, the 80/20 investor will tend to be running at a higher % equity than the 60/40 one for much of the time, at least in those years when equity outperforms bonds.

Whether this is what BritishInvestor means, I have no idea.

NoMore

But we are only talking about lifestrategy funds which do the rebalancing internally. The investor doesn’t rebalance once a year he just continued to buy the same lifestrategy funds in the same ratios. 

peterg1965

I've done a little bit of research this morning into other alternatives, that could replace or supplement the VLS choice. I quite like the Mixed Investment sector - plenty of diversification in the funds, so 'active' alternatives could be Baillie Gifford Managed B (40-85% equities) and Jupiter Merlin Conservative Portfolio (0-35% equities). Both seem to have weathered the C-19 storm quite well and although they are more expensive than Vanguard, the OCF is still relatively low. Jupiter Merlin has exposure to Fundsmith Equity which is an attraction to me, as I did very well from that fund over the years.  So is it wise to mix up and include all 4 funds covering both active and passive funds, or is this an investment no no.

My next decision is who to transfer the SIPP to, as I want to move away from the Minerva SIPP - great for access to cash desposits, but not a very good online offering.  I really like the HL setup having been a previous client, but not the costs, so its looking like Interactive Investor might fit the bill.  Can anyone vouch for the II offering?

Moe_The_Bartender

At 55 with a life expectancy of another 30 years or so, I can’t think of a reason not to be 100% in equities.

cfw1994

Moe_The_Bartender said:

At 55 with a life expectancy of another 30 years or so, I can’t think of a reason not to be 100% in equities.

I almost agree with you entirely.  I guess where I hesitate (& have done with my 'buckets' is on when you want to draw down on things.   
Bonds, gilts, other 'lower volatility funds' can....er....lower volatility.   
For example, during the 'mini-crash' from Feb to Mar this year, my 'riskier funds' dropped 21%....& took months to regain their value.   The 'less risky' dropped 11%, but were back to where they were before within under a month.
If I had needed to draw on things....that would be the time to draw on those less risky funds.  & that is, of course, assuming you can pick the funds to draw on....
Of course, the fact that I am not drawing might give strength to your argument to be 100% in equities