Vanguard LS 60 fund - performance going forward

Sailtheworld

By Christmas everyone will know the results of the US election, how it's going with brexit, what progress is being made with Covid etc. There's zero advantage in waiting when everyone else will be just as informed as you are now. Besides which the stuff you don't know now but will by Christmas will have been replaced by a whole load of new stuff to not know about.

Invest according to the level of risk you're willing to take which is informed by attitude and when you need the cash.

Sebo027

My understanding of the Vanguard Life Strategy products (40, 60, 80 etc.) - they are based on the popular investment strategy of diversifying your invested money between bonds and equities at a suitable ratio to suit your overall financial situation and risk tolerance. Historically bonds may generate growth when equities do not, and investment-grade quality bonds typically reduce the volatility across the portfolio when compared with equities. The downside is that bonds will typically provide a lower rate of return. A common strategy for people nearing retirement is to increase their holding of bonds in their portfolio.

Sometimes it's better to see these things visually. For example, below graphs are across a 1-year time period, comparing performance numbers for the Vanguard LS60 and LS40 product across the COVID-19 crash:
February 20/02/2020  - Before the Crash:


March 18/03/2020 - The Trough

09/09/2020 - The Present 

VL60 started at 104.34 and dropped 18% of it's value to a low of 85.75. It has now recovered to 102.12.
VL40 started at 103.28 and dropped 14% of it's value to a low of 89.13. It has now recovered to 103.04.

That one year can appear dramatic. To provide more context, below is a 10 year graph comparing VLS60 and VLS40:

Here you can see the benefit in growth of the increased equity holding in VLS60 compared with VLS40 particularly from 2016-2020. For me a key calming factor when the crash occurred was the reminder that it's relative losses. If the markets did not recover in the way they did and they were still sitting at the 18th March prices, I may have lost 2, 3, 4 years of growth. However if I had kept that money in a bank account for 5 years, for sure, I would actually be in a worse place financially. On this occasion, ofcourse. There is no guarantee the markets will continue to perform as they have. Based on my longer term view (10-20 years) the risk is acceptable to me. 

I would highly recommend this book - Smarter Investing - to give a broad but thorough introduction to it all. It will help give you more confidence investing yourself, or even in discussions with a financial adviser if you choose to do that, before you make any decisions. 

AnotherJoe

longleggings said:

Thanks guys for the informative and tolerant comments. What i take from this is that LS 60 will not necessarily perform well in the next 5 years. 

That's true Of any investment

The consensus seems to be that it is more of a 10yr + investment.

Thats true of any investment

 Events may still make fools of us all

they always do

and i will probably lock this away (at low interest rate, but guaranteed) until xmas when i believe i will have a better idea which way the wind is blowing.

so that's equivalent to saying you can forecast (successfully) the markets. 

Hopefully make a more informed decision at that point. 

No you won't be able to. No one can. 

I'm not sure any of us can really second guess the markets at this point in time 

No one can

though obviously some on here are more experienced than others.

and they can't either

It's surely all about confidence, something we seem to lack in our leaders at this point, also hard to be confident on covid, recession, Brexit etc. Time to be patient ?
LL

No.  You do seem to be suffering from the delusion that you or someone can time the markets. That when this or that event are over, then it will be clear.
But there's always this or that event. So it's never really clear. And even when it's clear then something happens to mess things up. 

About all that can be said is, in the long run the markets will rise. That's why we invest. Because we believe that. 

Note that a financial adviser knows no better than you me or the cat what markets will do.  What they may be able to do better than you or the cat is advise which investments meet your risk Level and aims. But they don't know what markets will do. If they did they wouldn't be FAs they'd be billionaires. 

longleggings

Thanks Alber - I am indeed now thinking about hedging in the short term, poss. 85k in LS and 85K in a fixed rate savings with the remainder to be decided
LL

csgohan4

longleggings said:

Thanks Alber - I am indeed now thinking about hedging in the short term, poss. 85k in LS and 85K in a fixed rate savings with the remainder to be decided
LL

Don't forget to have some cash for emergency access, don't plough everything into long term funds

Sailtheworld

longleggings said:

Thanks Alber - I am indeed now thinking about hedging in the short term, poss. 85k in LS and 85K in a fixed rate savings with the remainder to be decided
LL

We don't know much about your circumstances but a £200k windfall might be an opportunity to start considering future IHT and giving some of it away or spending some.

barnstar2077

AnotherJoe said:

longleggings said:

Thanks guys for the informative and tolerant comments. What i take from this is that LS 60 will not necessarily perform well in the next 5 years. 

That's true Of any investment

The consensus seems to be that it is more of a 10yr + investment.

Thats true of any investment

 Events may still make fools of us all

they always do

and i will probably lock this away (at low interest rate, but guaranteed) until xmas when i believe i will have a better idea which way the wind is blowing.

so that's equivalent to saying you can forecast (successfully) the markets. 

Hopefully make a more informed decision at that point. 

No you won't be able to. No one can. 

I'm not sure any of us can really second guess the markets at this point in time 

No one can

though obviously some on here are more experienced than others.

and they can't either

It's surely all about confidence, something we seem to lack in our leaders at this point, also hard to be confident on covid, recession, Brexit etc. Time to be patient ?
LL

No.  You do seem to be suffering from the delusion that you or someone can time the markets. That when this or that event are over, then it will be clear.
But there's always this or that event. So it's never really clear. And even when it's clear then something happens to mess things up. 

About all that can be said is, in the long run the markets will rise. That's why we invest. Because we believe that. 

Note that a financial adviser knows no better than you me or the cat what markets will do.  What they may be able to do better than you or the cat is advise which investments meet your risk Level and aims. But they don't know what markets will do. If they did they wouldn't be FAs they'd be billionaires. 

I hope you are joking, you have no idea how high the fees are that the cat has been charging me!!!

longleggings

As a matter of interest - are F Advisors worth their fees in these times (or any other for that matter)
I assume the general advice since the Covid crash has been to hold your nerve and sit tight and things will improve
Has any one had any alternative advice ?

dunstonh

As a matter of interest - are F Advisors worth their fees in these times (or any other for that matter)

That depends on the individual.

As it happens, and as this thread is about VLS60, our portfolio of the equivalent risk has outperformed VLS60.  So, that would be an example of worth it.   

I assume the general advice since the Covid crash has been to hold your nerve and sit tight and things will improve

And lots of people were grateful for that advice.

Has any one had any alternative advice ?

The alternative being take it out and crystallise the loss and miss out on the recovery?

longleggings

Thanks Dunst