Vanguard pension funds. Which one to chose.

sam_p2021

Hi, can you please guide me. I am planning to invest £40k in pension this year and may be every year for next 10 year. Vanguard seems to be most recommended fund manager. I am in my mid 40s and can easily work for another 10 years. I don't mind taking a bit of risk. Please suggest me some of best funds from Vanguard or combination of funds to chose from to distribute risk. 

Nurse2047

This could be of interest to you
https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds?cmpgn=PS0220UKBABTR0001EN&s_kwcid=AL!11156!3!419416491979!e!!g!!vanguard retirement funds&gclid=Cj0KCQjw16KFBhCgARIsALB0g8JXjGIGZc3rzEr37-HqGX4wpY0rK36w06mlXQVlHIO_SLWFnXA-mrAaAv3ZEALw_wcB&gclsrc=aw.ds

kuratowski

If you already have a clear idea of the risk level you are going to use, then you can consider the Vanguard Lifestrategy series (20-100).   Other asset managers are available (HSBC Global Strategy, L&G Multi-index, etc) which operate in a similar manner, you're not limited to Vanguard btw!   For a comparison see this table:

https://monevator.com/passive-fund-of-funds-the-rivals/

If, on the other hand, you find it difficult to choose one of the 5 risk levels you could also opt for a Vanguard Target Retirement fund - just pick the year closest to when you wish to retire, they come in 5 yearly cycles.  Again, other asset managers offer similar funds.

Were you planning to use Vanguard's pension platform too?  If you are contributing £40k per year, you are going to quickly reach the point where a fixed fee platform is better value than a percentage based one.  For details see this table:

https://monevator.com/compare-uk-cheapest-online-brokers/

Once your portfolio starts to get into 6 figures you may wish to consider a more advanced selection of funds, but to begin with it's best to keep is simple.

barnstar2077

If you definitely won't need the money for a while, and you don't mind a bit of a rollercoaster, then Vanguard's Lifestrategy 100, or their FTSE Global All Cap Index would do the job.  The VLS 100 fund has a higher weighting given to the UK than the latter.

If you would like something that will auto de-risk as you approach your expected access date then the target retirement funds would be a good choice.

Or you could select one of the other VLS funds, that have bonds in them, according to your risk appetite.

Or none of the above.

I have gone with the VLS 100 as I prefer more UK and less North America.  My plans are also quite flexible so I am not worried about a drop happening at the wrong time (which increased bonds has historically helped to negate.)

ColdIron

Just to be clear, without carry forward you can only put £32,000 into a pension per financial year including any contributions into an existing work pension and employer contributions. The other £8,000 will come from tax relief

MX5huggy

Watch some Pension Craft Videos https://www.google.co.uk/search?safe=active&client=safari&hl=en-gb&tbm=vid&sxsrf=ALeKk03IF1CAMXtSjRcFm89h2Tc32XP1jQ:1621688640459&q=pensioncraft+vanguard+youtube&sa=X&ved=2ahUKEwjp2ub6rN3wAhU2B2MBHf4YDLEQ8ccDKAF6BAgMEAI&biw=414&bih=827#ip=1

you can do Life Strategy, but they have a UK over weight (which you might like or not). Target Retirement is slightly more expensive but moves you down in risk as the target gets closer automatically. 

You could build your own Life Strategy with lower fees by picking the funds bond and stocks within Vanguard.  

sam_p2021

Thanks for suggestions. 

tacpot12

I would advise you NOT to invest in one of Vanguard's targeted retirement funds. They take a "lifestyling" approach to portfolio management that, IMHO, is no longer appropriate for the majority of retail customers. You need to be some who wants to buy an annuity to use a lifestyling approach. Annuity rates are so poor compared to the option of leaving your pension fund invested that you really want to remain invested in 'risky' investments well into your 80s. VLS100 or the equivalent from another provider is what you should be looking for. See if you can improve of VLS100. 

kuratowski

Vanguard target retirement funds are nothing to do with annuity purchase.  These funds gradually move from an 80:20 split to a 30:70 split of equities to bonds.

dunstonh

The VTR funds are not full lifestyling.   They typically start above the average risk level of the individual and end up below the risk level but not to cash.        I don't particularly like them (not specially Vanguard but lifestyling funds in general) but sometimes they can fit a need.

VLS100 or the equivalent from another provider is what you should be looking for. See if you can improve of VLS100. 

VLS100 is the weakest of the VLS funds.   So, improving upon that should not be difficult.

Please suggest me some of best funds from Vanguard or combination of funds to chose from to distribute risk. 

The normal method is to choose how you want to invest first and then the provider you wish to use to do that.  Not the other way around.

ZeroSum

tacpot12 said:

I would advise you NOT to invest in one of Vanguard's targeted retirement funds. They take a "lifestyling" approach to portfolio management that, IMHO, is no longer appropriate for the majority of retail customers. You need to be some who wants to buy an annuity to use a lifestyling approach. Annuity rates are so poor compared to the option of leaving your pension fund invested that you really want to remain invested in 'risky' investments well into your 80s. VLS100 or the equivalent from another provider is what you should be looking for. See if you can improve of VLS100. 

The target retirement funds are more for people like me who has a DB pension that I intend to take early & just want to bridge the gap between state pension. I only intend to be drawing down for about 10 years so dont want higher risk funds