Vanguard LifeStrategy 60% Equity suitability?

ChilliBob

Alexland said:

It's worth considering splitting your investments across at least 2 unrelated platforms and fund managers eg one for ISAs and another for pensions.
Rather than hold VLS60 at that valuation you would likely find it cheaper to at least run a 2 fund portfolio with 60% in an equity fund and 40% in a bond fund with a fixed/capped price platform. However the long term outlook for bonds isn't very attractive so it might be better going for a more defensive tilt on a slightly higher ratio of equities and a broader range of non-equity assets which might achieve the same volatility profile as VLS60 but with better growth potential.

Two questions I have here:

1. So you'd not advocate using iweb for both GIA (into hundreds of thousands as with OP) and ISA (120k)?

2. Bonds - I have done a lot of research into these recently, what non equity assets do you recommend? And do any have the inverse correlation with equities which Bonds have? Right now I'm mixing equities and cash and nothing else (admittedly the percentage in equities is still <1%! But that's set to change) 

Alexland

1. Yes I would advocate a reasonable split of investments across at least a couple of unrelated platforms and asset managers. Whatever you feel comfortable with and makes sense for the accounts and assets you require. Similarly it's good to have at least a couple of unrelated bank and savings accounts.

2. Cash and gold are used in several wealth preservation strategies. Also consider property investments (via closed ended trusts) and lower volatility equities. At current valuations with a balanced 60% equities allocation its going to be hard to beat inflation whatever is in the other 40% but putting it all in bonds carries it's own risks.

ChilliBob

Gotcha. Regarding 1. I guess it was cost that made me look to combine. I'll probably go eith II or something then too. Savings, yes, spread there due to the 85k limits mostly, but more to do.

2. Okay cool, makes sense. Someone on here mentioned something like Unilever as low volatility equity, but even so it's going to be  correlated with equities in general I suppose. I'm still attracted to this moay hypothesis and related funds but I need to do more research there.

Thanks as always man  

BrockStoker

ChilliBob said:

2. Okay cool, makes sense. Someone on here mentioned something like Unilever as low volatility equity, but even so it's going to be  correlated with equities in general I suppose.

Consider a healthcare/biotech fund. One of the reasons I like the sector is because it's much less correlated with other types of equities, and on top of that it also has defensive qualities, as demonstrated over the last year or so.

ChilliBob

Interesting, that makes sense too, although probably not a low volatility sector! (and certainly not low risk),but I guess that depends on the nature of the fund to a large extent. 

BrockStoker

Perhaps not low volatility, but over long timescales that should not matter, as long as you can stomach it in the short term. There are plenty of options, and you could go for something more big pharma/healthcare orientated for the lower volatility options.

Interestingly, even with biotech risk is actually comparable to other sectors. I posted this on my own thread not too long ago:

https://phys.org/news/2021-01-investment-emerging-biotech-companies-non-biotech.html

ChilliBob

Interesting, but essentially it's saying pre ipo is risky across the board, which is certainly fair to say! 

I think there's certainly a place for some health care and biotech in my portfolio.. Not too much thou  

Thrugelmir

ChilliBob said:

I think there's certainly a place for some health care and biotech in my portfolio.. Not too much thou  

You could construct your entire portfolio along thematic lines. Would then avoid duplication of holdings. 

ChilliBob

I could yeah, but I think it'd fly in the face of all the reading I had done and intend to do! I really see any kind of deviation from the global index funds side of things (and their sensible counterparts) to be a pretty small bucket/pot. 

Aged

El_Torro said:

I would say that yes, VLS60 is diversified enough for you to consider having at as your only fund in your pension. Even a pension of £500k size.

You could invest in more multi asset funds, for example HSBC Global Strategy or FIdelity Multi Asset Allocator. However you're not really adding to your diversification with these funds. You're still investing in roughly the same geographical locations, in roughly the same companies. So while it might feel more diversified it isn't really.

You could also invest in a Smaller Companies fund, or commodities, or gold, or have a stronger focus on Emerging Markets or Frontier Markets. Or even invest in specific industries. While this will make your fund more diverse it's arguable that you shouldn't be investing too much in these types of sattelite funds.

Not using a multi asset fund at all might be an option, especially if your investment size is £500k. You could save 0.10% or so in fund charges by doing this, and choosing your own geographical allocation. Is a saving of £500 per year worth it though, for the extra hassle? Bearing in mind that your £500k portfolio could lose or gain a lot more than £500 in less than a day's worth of trading.

Hi there. I am not concerned about diversification (or lack of it), it's the idea of putting such a large sum into just one investment that goes against the grain with me. It just seems risky! For example, I'd spread a large sum of cash amongst different banks so that if anything went wrong my capital would be guaranteed, so I'd feel more comfortable doing the same with the pension fund in case some sort of disaster were to happen.