Vanguard

Type_45

Albermarle said:

Type_45 said:

NottinghamKnight said:

Type_45 said:

NottinghamKnight said:

Type_45 said:

TheAble said:

Ps for what it's worth I personally wouldn't want any exposure to bonds in my portfolio, with interest rates where they are and indebtedness of governments, but that's just my preference. Just last year the German government sold a 30 year bond with a negative yield, which is just nuts.

VLS100 has performed worse recently than the VLS's which have bonds.

May well have, until the bond rubber band snaps.......

I don't know enough about it to comment.

Personally, I have VLS80 and VLS100. Overall I have about 85% equities and 15% bonds.

I have toyed with the idea of being 100% equities, but the performance of the VLS bonds over the past year has persuaded me to retain my 15% VLS bonds for now.

Bond interest is typically near zero as it reflects base rate, so any increases that have occurred are as a result of capital appreciation. The capital appreciation is due to current and future interest rate expectations, interest rates continue to fall so people re prepared to pay more for bonds giving a 'relatively' high rate. This process will not continue indefinitely ans when interest rates rise then very large capital losses will occur in bonds and bond funds. 

Interest rates won't be rising anytime soon, so I don't think what you say is an issue.

You are most likely right in saying that interest rates will not rise anytime soon .
However it is also correct to point out that the attraction of holding bonds long term is a lot less than it used to be.

Yes, I personally agree (not that I have much knowledge on the subject). That's why I have only 15% in bonds, and I will be reducing that amount.

NottinghamKnight

Type_45 said:

NottinghamKnight said:

Type_45 said:

NottinghamKnight said:

Type_45 said:

TheAble said:

Ps for what it's worth I personally wouldn't want any exposure to bonds in my portfolio, with interest rates where they are and indebtedness of governments, but that's just my preference. Just last year the German government sold a 30 year bond with a negative yield, which is just nuts.

VLS100 has performed worse recently than the VLS's which have bonds.

May well have, until the bond rubber band snaps.......

I don't know enough about it to comment.

Personally, I have VLS80 and VLS100. Overall I have about 85% equities and 15% bonds.

I have toyed with the idea of being 100% equities, but the performance of the VLS bonds over the past year has persuaded me to retain my 15% VLS bonds for now.

Bond interest is typically near zero as it reflects base rate, so any increases that have occurred are as a result of capital appreciation. The capital appreciation is due to current and future interest rate expectations, interest rates continue to fall so people re prepared to pay more for bonds giving a 'relatively' high rate. This process will not continue indefinitely ans when interest rates rise then very large capital losses will occur in bonds and bond funds. 

Interest rates won't be rising anytime soon, so I don't think what you say is an issue.

It's not the fact that interest rates won't rise as much as the expectation of whether rates will rise and fall in the future and how that compares with the current or recent view, ie direction of travel. My portfolio probably is just under 10% bonds currently but corporate bonds are in the minority of that and the consideration also needs to be whether you are looking at sovereign debt or corporate. I don't think your current 15% allocation raises particular concern but there seems to be little to recommend bonds in the near future given minimal returns and the risk of capital loss. Institutional investors may effectively be forced to hold some bonds, even at negative returns, whereas for individuals cash could still be a better option even given the near certainty of losses in real terms.  

Type_45

NottinghamKnight said:

Type_45 said:

NottinghamKnight said:

Type_45 said:

NottinghamKnight said:

Type_45 said:

TheAble said:

Ps for what it's worth I personally wouldn't want any exposure to bonds in my portfolio, with interest rates where they are and indebtedness of governments, but that's just my preference. Just last year the German government sold a 30 year bond with a negative yield, which is just nuts.

VLS100 has performed worse recently than the VLS's which have bonds.

May well have, until the bond rubber band snaps.......

I don't know enough about it to comment.

Personally, I have VLS80 and VLS100. Overall I have about 85% equities and 15% bonds.

I have toyed with the idea of being 100% equities, but the performance of the VLS bonds over the past year has persuaded me to retain my 15% VLS bonds for now.

Bond interest is typically near zero as it reflects base rate, so any increases that have occurred are as a result of capital appreciation. The capital appreciation is due to current and future interest rate expectations, interest rates continue to fall so people re prepared to pay more for bonds giving a 'relatively' high rate. This process will not continue indefinitely ans when interest rates rise then very large capital losses will occur in bonds and bond funds. 

Interest rates won't be rising anytime soon, so I don't think what you say is an issue.

It's not the fact that interest rates won't rise as much as the expectation of whether rates will rise and fall in the future and how that compares with the current or recent view, ie direction of travel. My portfolio probably is just under 10% bonds currently but corporate bonds are in the minority of that and the consideration also needs to be whether you are looking at sovereign debt or corporate. I don't think your current 15% allocation raises particular concern but there seems to be little to recommend bonds in the near future given minimal returns and the risk of capital loss. Institutional investors may effectively be forced to hold some bonds, even at negative returns, whereas for individuals cash could still be a better option even given the near certainty of losses in real terms.  

Any idea how the bonds held in VLS80 are affected under these scenarios? To be honest, I don't even know what sort of bonds they are.

What I do know is that VLS 100 has not performed as well as VLS 20/60/80, so that bonds must be doing ok.

eskbanker

Formatting below isn't brilliant but, as reported by Trustnet, VLS100 has outperformed its siblings over each of the past month, 3 months, 6 months, year, 3 years and 5 years:

Vanguard LifeStrategy 100% 3.1% 10.2% 14.3% 9.6% 24.8% 91.0%

Vanguard LifeStrategy 80% 2.4% 8.3% 11.6% 9.3% 23.0% 75.9%

Vanguard LifeStrategy 60% 1.6% 6.3% 8.7% 8.6% 20.8% 61.4%

Vanguard LifeStrategy 40% 0.7% 4.3% 5.7% 7.7% 18.2% 47.1%

Vanguard LifeStrategy 20% -0.0% 2.4% 2.9% 6.7% 16.0% 34.6%
although obviously during other selective time periods over which markets were down, the opposite effect would be seen (as expected).

Alexland

barty88 said:

So it would be better to withdraw the money from the s&p 500 and start investing the in the world all cap equity fund? And then maybe open a life strategy fund as well 

Some options on Vanguard are to (1) go for a single multi asset fund with a mix of equities and bonds such as VLS60 or VLS80 which have a home bias, (2) to have a 2 fund portfolio of equities and bonds such as Global All Cap and Global Bond Index Hedged, (3) just go 100% equities such as the Global All Cap fund or VLS100 which has a home bias, (4) construct your own bespoke portfolio with the building block funds (inc the S&P500) for each country and asset class with your own weightings.

Hal17

I apologise for jumping on the OP original post, but the last comment by Alexland is very relevant to what I am considering at the moment. I am drawing my state pension and have my main DC pension with Royal London. I have a S&S ISA with Vanguard. Currently 80% is invested in the Lifestrategy 40% Equity Fund and 10% in Lifestrategy 100% Equity Fund. I am in the process of moving around £50K of poor performing cash ISA money into my S&S ISA with Vanguard.

I was thinking of doing some research and perhaps consider building a bespoke portfolio with the pending incoming transfer. I like the idea doing the the research but where to start? I can see all the various individual funds within my portfolio, so was considering looking at those of interest to me and their performance and then cherry pick the ones that I think are worth investing in as stand alone funds. Then I think if I don't really know where to start, it is worth me doing. Perhaps I should just put the money in the 40% equity fund?

I thought that whilst we are in lockdown it might be an interesting project, worse thing that can happen is I might lose some money. Appreciate any thoughts.

Alexland

Building a bespoke portfolio is an advanced option for people who have read widely enough to have formed opinions about the market, are able to weigh up the options and have concluded that one of the multi asset funds or global trackers doesn't meet their needs. When you look at the ready made VLS or All Cap funds (or All-World etf) do you see anything wrong with them that you feel you could do better? If not then accept them until you find a compelling reason to do anything differently.

Hal17

Thank you Alex I really appreciate that. Guess I needed that reality check, which you have kindly supplied. I will keep with same split as I am currently using - I have been happy with the returns. Thanks again.

Type_45

eskbanker said:

Formatting below isn't brilliant but, as reported by Trustnet, VLS100 has outperformed its siblings over each of the past month, 3 months, 6 months, year, 3 years and 5 years:

Vanguard LifeStrategy 100% 3.1% 10.2% 14.3% 9.6% 24.8% 91.0%

Vanguard LifeStrategy 80% 2.4% 8.3% 11.6% 9.3% 23.0% 75.9%

Vanguard LifeStrategy 60% 1.6% 6.3% 8.7% 8.6% 20.8% 61.4%

Vanguard LifeStrategy 40% 0.7% 4.3% 5.7% 7.7% 18.2% 47.1%

Vanguard LifeStrategy 20% -0.0% 2.4% 2.9% 6.7% 16.0% 34.6%
although obviously during other selective time periods over which markets were down, the opposite effect would be seen (as expected).

I've obviously got that wrong. I thought I'd seen somewhere that VLS100 hasn't performed well of late. Nevermind. 👍

Thrugelmir

Type_45 said:

eskbanker said:

Formatting below isn't brilliant but, as reported by Trustnet, VLS100 has outperformed its siblings over each of the past month, 3 months, 6 months, year, 3 years and 5 years:

Vanguard LifeStrategy 100% 3.1% 10.2% 14.3% 9.6% 24.8% 91.0%

Vanguard LifeStrategy 80% 2.4% 8.3% 11.6% 9.3% 23.0% 75.9%

Vanguard LifeStrategy 60% 1.6% 6.3% 8.7% 8.6% 20.8% 61.4%

Vanguard LifeStrategy 40% 0.7% 4.3% 5.7% 7.7% 18.2% 47.1%

Vanguard LifeStrategy 20% -0.0% 2.4% 2.9% 6.7% 16.0% 34.6%
although obviously during other selective time periods over which markets were down, the opposite effect would be seen (as expected).

I've obviously got that wrong. I thought I'd seen somewhere that VLS100 hasn't performed well of late. Nevermind. 👍

Markets can move sharply over the course of a few days.