VLS 80 and 100 - time to take some profit?

adonis10

Whilst it is very pleasing to see my holdings skyrocket, I do wonder if I should take a little profit out of my VLS 80 and 100 holdings, if nothing else to hold in cash to use when further opportunities present themselves over the next few weeks and months  of inevitable vaccine announcements and general covid related turbulence. I paused my regular investments this month as I want to take stock and I appreciate that this could be seen as trying to time the market (it isn’t, I just can’t see how they can continue rising as they are) but I’m a fairly novice investor and learning my way (trying to do so in a sensible and controlled manger) and so see this as another learning curve (if nothing else, this year has been a massive learning curve!).

Not seeking financial advice, obviously, but just some thoughts.

veryintrigued

Depends on your personal goals and what you've got planned with it I suspect.

I sent a partial withdrawal instruction on the 11th of the 80/20 I hold.

I'll continue with my monthly drip feed though.

It's my first withdrawal so it's been useful as it's given me an idea of the mechanics and timescales of the withdrawal.

I.e. only the equivalent of my monthly payment has so far been received. The other is still outstanding.

AlanP_2

I paused my regular investments this month as I want to take stock and I appreciate that this could be seen as trying to time the market (it isn’t, I just can’t see how they can continue rising as they are)

That is exactly what timing the market is - trying to second guess what might or might not happen. It may be sensible but don't kid yourself that you aren't trying to time the market.

Alexland

If you want to be more dynamic with your asset allocation across the cycle you might find it easier to run a 2 fund portfolio of a separate equities and bond fund so you only need to switch a small number of units to change the ratios. Personally I am not against tilting into risk or making larger contributions when opportunities occur and running at my normal allocation the rest of the time. At current prices I am getting on with some house repairs for which I always have a backlog.

adonis10

AlanP_2 said:

I paused my regular investments this month as I want to take stock and I appreciate that this could be seen as trying to time the market (it isn’t, I just can’t see how they can continue rising as they are)

That is exactly what timing the market is - trying to second guess what might or might not happen. It may be sensible but don't kid yourself that you aren't trying to time the market.

Yeah I get it, what I’ve said is contradictory. I think what I mean is it may be worthwhile taking some profits, pausing regular investment and look for other areas of investment as I just don’t see how 80 and 100 can keep going up and up and up. So if I planned to jump straight back into them, I’d be trying to time the market but I’m thinking of diversifying further which I feel is slightly different.

adonis10

veryintrigued said:

Depends on your personal goals and what you've got planned with it I suspect.

I sent a partial withdrawal instruction on the 11th of the 80/20 I hold.

I'll continue with my monthly drip feed though.

It's my first withdrawal so it's been useful as it's given me an idea of the mechanics and timescales of the withdrawal.

I.e. only the equivalent of my monthly payment has so far been received. The other is still outstanding.

Personal goals and what I’ve got planned for it? In short, to grow it as much as possible for as long as possible. I’m 37 so plenty of time to retirement and it is money I have no intention spending in the short or medium term.

adonis10

Alexland said:

If you want to be more dynamic with your asset allocation across the cycle you might find it easier to run a 2 fund portfolio of a separate equities and bond fund so you only need to switch a small number of units to change the ratios. Personally I am not against tilting into risk or making larger contributions when opportunities occur and running at my normal allocation the rest of the time. At current prices I am getting on with some house repairs for which I always have a backlog.

So, in simple terms, 2 funds one asset heavy and one bond heavy, for example VLS20 and VLS100 and then switch the ratios by selling one and buying into the other when opportunities present themselves? Used VLS as the example as it is topical but I will naturally research various others.

Zola.

Time in the market, not market timing.

AlanP_2

I just don’t see how 80 and 100 can keep going up and up and up.

In short, to grow it as much as possible for as long as possible. I’m 37 so plenty of time to retirement and it is money I have no intention spending in the short or medium term.


So, to rephrase what these posts are saying - Over the next 30 years I do not expect global equities to go up in price.

If the volatility of VLS80/100 is higher than you would like dial back a bit and go for VLS60 maybe.

You plan to retain some cash and buy something in the future at a lower price than it is currently. Apart from the obvious difficulty of identifying "what" and "when" unless you buy real-time traded ETFs / Shares instead of Funds your purchase instructions will take 24-72 hours to work through so the price will have moved relative to when you thought it was "good" anyway.



 

adonis10

AlanP_2 said:

I just don’t see how 80 and 100 can keep going up and up and up.

In short, to grow it as much as possible for as long as possible. I’m 37 so plenty of time to retirement and it is money I have no intention spending in the short or medium term.


So, to rephrase what these posts are saying - Over the next 30 years I do not expect global equities to go up in price.

If the volatility of VLS80/100 is higher than you would like dial back a bit and go for VLS60 maybe.

You plan to retain some cash and buy something in the future at a lower price than it is currently. Apart from the obvious difficulty of identifying "what" and "when" unless you buy real-time traded ETFs / Shares instead of Funds your purchase instructions will take 24-72 hours to work through so the price will have moved relative to when you thought it was "good" anyway.



 

You're doing a good job of critically analysing what I am saying, and I like that (that's what I am here for)!

The volatility doesn't worry me at all so perhaps I am simply overthinking the situation (many people worry when prices nosedive rather than rocket!). I didn't do anything silly when the fund prices tanked in Feb-April so I like to think I am not too reactive to dips.

Alexland

adonis10 said:

So, in simple terms, 2 funds one asset heavy and one bond heavy, for example VLS20 and VLS100 and then switch the ratios by selling one and buying into the other when opportunities present themselves? Used VLS as the example as it is topical but I will naturally research various others.

Multi asset funds are great if you are going to keep things simple with one fund per account but a limitation of the VLS fund series is that by keeping a fixed allocation the risk exposure isn't constant across the cycle.

A simple example is when stock markets have dropped 50% then VLS60 is pretty safe (as equities are unlikely to go down much further) but when markets are at all time highs it will be at greater risk of falling around 25%. So to maintain a constant risk you might want to gradually hold more equities as markets drop and less as equities are up high - but still enough equities to ensure you are not out of the market as markets rise from all time highs to new all time highs. When markets are high I just tilt into the same asset allocation that my imaginary IFA (a tiny free dunstonh sitting on my shoulder) would probably put me in.

So if you decide to manage risk across the cycle then rather than holding 2 multi asset funds at different risk levels (which is complicated as you start having percentages of funds with different percentages of assets) you could just hold a 100% equities and a 100% bond fund. If you are on the Vanguard platform something like their Global All Cap and Global Bond Index Hedged funds might appeal.