Vanguard question

elementelement

Hello all,

Looking for advice from more seasoned investors. I am late 30's and have just started investing for the future. Last few years I have  saved extra into the pension and looking to add stocks and shares ISA into my overall savings. 

I currently have a 10k spread in vanguard 80 & 100% life strategy funds. I am looking to add another 5k in and was thinking of putting it into the s&p 500. Would this provide diversity on my portfolio as my understanding is VGLS is UK focussed where as the S&P is in the American market. 

I'm looking to invest for 10-15 years minimum. I stick with Index funds mainly as I want to leave and forget as the pot isn't high enough to focus on it yet. 

Is this a good way to go or should I be thinking wider and looking at property etc.. 

Thank you for reading 

Chris 

barnstar2077

I'm not exactly seasoned, but when people have asked simular questions before the general consensus has been not to meddle unless you know what you are doing.   The VLS funds are supposed to be one stop shops.  If you add the US fund you will just end up overweighted there instead.  Someone with more knowledge may be able to suggest a gap in the VLS funds that you could fill though.  I do think that doing nothing and sticking to our plans is the hardest part of investing, as we are always hearing about new theories and strategies, especially on youtube. 

AlanP_2

It won't diversify what you already have as the VLS range invests in a S&P500 tracker already. What it will do is reduce the UK allocation and increase the US allocation.

Is that what you want? If you do, why use VLS and then rework the asset allocation they have chosen when you could have gone for an alternative that didn't have the UK weighting?

Not a big deal, but think about your objective and your ideal asset allocation, then  choose investmnents based on that and then choose a platform to hold them on.

grumiofoundation

elementelement said:

Hello all,

Looking for advice from more seasoned investors. I am late 30's and have just started investing for the future. Last few years I have  saved extra into the pension and looking to add stocks and shares ISA into my overall savings. 

I currently have a 10k spread in vanguard 80 & 100% life strategy funds. I am looking to add another 5k in and was thinking of putting it into the s&p 500. Would this provide diversity on my portfolio as my understanding is VGLS is UK focussed where as the S&P is in the American market. 

I'm looking to invest for 10-15 years minimum. I stick with Index funds mainly as I want to leave and forget as the pot isn't high enough to focus on it yet. 

Is this a good way to go or should I be thinking wider and looking at property etc.. 

Thank you for reading 

Chris 

I would also not describe myself as seasoned, maybe starting to marinate?

The VLS range is overweight in the UK with respect to global index fund (with subsequent underweighting of other regions, see link below for FTSE global all-cap where UK is 4%) but is still only ~25% UK equities.
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/portfolio-data

Overall VLS 100 is still nearly 50% US equities so as said above holding S and P 500 alongside this doesn't really diversify but simply alters the percentages.

(Simplistically) if you currently have 10,000 invested split 50% US, 25% UK, 25% rest of world.
if you added 5000 of S and P 500 your split would now be 
~66% US, ~17% UK, ~17% rest of world.

If you are looking to reduce UK weighting to ~4% then a combination of FTSE global all-cap and a bond fund (to achieve desired equity/bond ratio) might be an option.* If you want somewhere in between a mix of FTSE global all-cap + VLS (although in the long term who can say what the difference between the returns on 25% or say 15% uk weighting will be so this might be overcomplicating matters!).

If you want to diversify then look at things that aren't represented/you feel are underrepresented in your current portfolio e.g. property, smaller companies, gold, specific sector(s). 

*(This assumes you want to stick with vanguard, there are multi-assest funds available from other provider without the UK overweighting of VLS https://monevator.com/passive-fund-of-funds-the-rivals/).

Alexland

VLS is not 'UK focused' but has a home bias compared to the global market cap but still contains more US than UK.

If you don't value the home bias in VLS100 then go with their Global All Cap fund.

However by adding this extra money into a 100% equities fund then you are diluting the ratio of bonds you already hold in the account via the VLS80 fund. Try to determine target asset allocation and stick to it with new contributions rather than buying something different each time.

JohnWinder

Some very useful ideas there. Sounds like you might need to sort out your thoughts on how much 'home bias' you want in your equities. Here's some information:

1. Search for 'Global equity investing:The benefits of diversification and sizing your allocationVanguard Research February 2019'

2. https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/

mrlegend123

anyone know of a decent global index tracker? 

Alexland

mrlegend123 said:

anyone know of a decent global index tracker? 

If you are on a platform that gives you whole market choice then HSBC FTSE All World index fund at 0.13%

AlanP_2

mrlegend123 said:

anyone know of a decent global index tracker? 

VWRL if an ETF is an option.

Ciprico

My 2p's worth...
Generally the US is currently seen as over-priced, and the UK seen as under-priced, so UK bias may not be such a bad thing in today's climate.
I supplemented my VLS80 with VFEM (emerging markets) and Vmig (smaller UK companies) for diversity.
I stopped buying more VLS as came to the conclusion that for me a 80/20 share/bond product was no better than a 80/20 share/cash holding, so currently keep more cash and buy a low cost HSBC tracker.

Albermarle

AlanP_2 said:

mrlegend123 said:

anyone know of a decent global index tracker? 

VWRL if an ETF is an option.

No UK bias , and still quite concentrated in US but not as much as some as it has 11% in emerging markets , which make it more diversified than some global trackers ( in my opinion ) 

Generally the US is currently seen as over-priced, and the UK seen as under-priced, so UK bias may not be such a bad thing in today's climate.

The argument swings back and forth so I tend to take a middle view . About 15% UK in equities ( used to be higher ) but more in fixed income.