Vanguard index funds strategy

Ldneast

Hello all,

I am a new investor – learning the ropes and trying to soak up as much information from people more experienced than myself.

I currently have a Vanguard LifeStrategy 60 fund. I opened it in April 2020 and don’t plan to touch it for 10 plus years. I am currently putting in £100 plus any additional I have into this fund. Currently have £4k and as it currently stands is 13% up (which was unexpected). I don’t envisage this to remain for the foreseeable!

My concern is that this fund is heavily weighted towards the UK. With Covid/Brexit I am not so confident in the future performance of this fund. Would it be worthwhile to continue to add into LS 60 but also in addition open an index fund that gives more exposure to global/emerging markets to diversify? Funds I am looking at are FTSE Global All Cap or the Emerging Markets Stock Index Fund.

Does anyone have any recommendations/thoughts on the best global/emerging market funds that don’t need a lot of attention to rebalance etc and that has low fees with vanguard? Does this sound like a sound strategy or should I should invest in one fund i.e LS 60. I do not have a huge tolerance for risk.

Many thanks!

bhjm

depending on YOUR target and YOUR attitude to risk.
if you want to manage less and its for a pension - maybe the target funds are an option

i personally moved my investment during the recent months from a mixed investment more towards a 100% LS strategy as its a long term investment for me +20 years

MK62

VLS 60 has around 25% or so in the UK, so whether that constitutes heavy bias is arguable, but if it's too high for you then you could look at something like HSBC Global Strategy Balanced, a similar type of fund but with a smaller weighting to the UK......there are several other similar funds too.

Bear in mind though that funds with a heavier weighting to non UK investments may have more exposure to currency exchange risk.....so while the weaker pound has boosted performance of non UK investments recently, that could easily reverse.

MK62

PS.....similar does not mean identical, but for a new investor, the technical differences are probably moot.

Another_Saver

VLS 60 is fine, and for the amounts you're talking about I don't think you could find a cheaper platform/fund combo until you get into at least 5 figures. One comparable fund that doesn't have the UK upweighting is HSBC global strategy balanced.

It isn't "heavily" weighted, it's only a quarter UK, heavy would be my portfolio with a 2/3 UK allocation.
The return on UK bonds is likely to be higher than most of the rest of the bonds in the fund except for the US ones because the yield is higher and there's no hedging or Forex fees, so in that respect the UK upweighting is not a concern.

As for stocks - my personal view, for reasons too academic for this thread, is that UK stocks are likely to do better to than global stocks over the foreseeable future, in short because of how badly they have done in the last decade. Others hold the opposite view. But it's unlikely to make a difference worth worrying about to the future return.

Just remember if you think this will make the fund do worse than a fund without the UK upweighting, there is always someone else out there who thinks the opposite.

You're doing fine. Don't worry, keep on investing and learning.

Thrugelmir

You do realise the country weighting includes Government Gilts , Corporate bonds and other fixed interest stocks.  The more international exposure you have. The greater the volatility will be , as you currencies gyrate. Yes the UK has Brexit on the horizon. Doesn't mean that other economies are free from their own challenges. 

Albermarle

More of a question than UK weighting is that currently you are invested in VLS 60, but considering a global tracker or even an emerging index tracker.
VLS 60 is a medium risk investment , whilst a 100% equities global tracker is higher risk and an 100% emerging markets tracker is even higher risk .
If you feel VLS 60 has too much home bias ( a debatable point at least ) then as suggested a medium risk multi asset fund alternative would be the logical choice , not a 100% equities tracker. If you wanted one of those why did you not go for VLS 100 in the first place ?

El_Torro

Another vote from me for HSBC Global Strategy. However I get the impression from the first post that they are invested with Vanguard, which means only Vanguard funds are an option (unless they change platforms of course). 

If you really want to have less exposure to the UK (not a bad decision in my book) then you could invest some of your money in a global tracker with no UK bias. The problem with this is that you're increasing your risk. You might want to compensate by moving your VLS60 to a VLS40 or even VLS20 and have the rest in a global tracker.

Personally I'd change platform, though you may not want to.