Vanguard Lifestrategy - UK bias issue

eastmidsaver

hello.   so i am a fan of this fund,   and have been investing in it since around January every month in my SIPP.
however,   i have only just realised how big the UK bias is on it  (i think around 22% equity),  and this clearly impacts the overall performance.
VG state in on the KID that the UK bias is because that is what the customers want (i fund that hard to believe).
i am just wondering,  is there a simple way i can just buy 2 or 3 trackers to almost replicate this?   
for instance would a global all index, global bond index, and emerging markets index the cover the majority of it?
i appreciate this way means i need to rebalance myself every now and then,  which is why i;d only consider if can do it with a smaller number of funds.
thanks.

tigerspill

Is it an option to move to another MA fund?
This is a fundamental part of VLS so surely if this does not suit your need, would it not be better to chose another fund that suits your need better?

Thrugelmir

eastmidsaver said:

hello.   so i am a fan of this fund,   and have been investing in it since around January every month in my SIPP.
however,   i have only just realised how big the UK bias is on it  (i think around 22% equity),  and this clearly impacts the overall performance.

You've only held the fund since January.  What's changed your view? 

MX5huggy

Debated yesterday:- https://forums.moneysavingexpert.com/discussion/6283415/lifestrategy-vs-2-global-funds/p1

eastmidsaver

so what has changed is,  simply,  i did not realise how overweight it was in UK.  probably due to lack of investigation / experience.
thing is...  i know other funds out there like Blackrock MyMap etc,    but if can do within Vanguard wrapper it would be ideal because they only charge a 0.15% platform fee.    which is a key reason i transferred a good chunk of my HL Sipp over to them.

Aceace

Not all Vanguard funds have a UK bias. For example, from memory, I think VWRL has only about 4% in UK, but it's 100% in equities. So you could pick something like that and add in their bond fund to create roughly the required equity/bond split. 

Alexland

eastmidsaver said:

i have only just realised how big the UK bias is on it  (i think around 22% equity),  and this clearly impacts the overall performance.

The home bias has impacted (past tense) the performance of the VLS fund series as US share prices have accelerated beyond fundamentals but Vanguard's 2021 capital market outlook is expecting UK equities to outperform the rest of the world over the medium term.

https://intl.assets.vgdynamic.info/intl/uk_pro/assets/documents/gbp-vanguard-economic-and-market-outlook-eu-en-pro.pdf

page 36 "From a UK investor’s perspective, the expected annualised return outlook for the UK equity market is in the 6.4%–8.4% range, higher than the 4.5%–5.5% range for global ex-UK equity (Figure II-2), thanks to more attractive valuations"

Anyway to answer your question if you still don't want the UK bias in VLS then you could consider a 2 fund portfolio of the Vanguard Global All Cap fund and their Global Bond Index Hedged fund which would have been my choice until recently. Our investments are now around 25% UK similar to VLS.

Thrugelmir

eastmidsaver said:

so what has changed is,  simply,  i did not realise how overweight it was in UK.  probably due to lack of investigation / experience.

Over weight in what sense? 

dunstonh

hello.   so i am a fan of this fund,  

Its pays not to be a fan of any fund or fund house. 

i am just wondering,  is there a simple way i can just buy 2 or 3 trackers to almost replicate this?   

Which begs the question of why you are a fan of an option that doesn't meet your objectives.   There are plenty of alternatives that do. So, use them.

And the answer is no to that question.   VLS has around a dozen underlying funds. 

JohnWinder

You're on the right track. Vanguard have done more than anyone to democratise investing, bring down the costs of investing across the industry, and given ordinary folk like you and me a chance to get returns as good as the experts with very little help. Just read the product information, and around it, before you invest. But few would get it right first go.

Vanguard believes in the value of home bias for equities; have a read of their research paper on the matter, below. And it’s well recognised that there’s a strong parochialism in investors preferring investments in their home country (and not only in investing I suppose); this can be seen in the distribution of assets in pension funds at population levels. Whether home bias will be better for you or me in future is unknown.

You probably ought to be aware of this analysis too, of 16 countries including UK showing the value of home bias when you consider accumulation rates, withdrawal effects etc all rolled up together. Home bias appears not to be a hanging crime.  https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/ 

What might be a hanging crime is to compare the recent performance of one fund (particularly one’s own), see that it’s lagged some other fund, look for differences to explain that, and then conclude without decent corroborating evidence that one is in the wrong fund.

Global equity investing: the benefits of diversification and sizing you allocation. Vanguard Research, Feb 2019.

bostonerimus

I would not worry too much about the VLSxx range's home bias. You have done the most important thing already by choosing a simple and sensible strategy. But if you want a higher proportion of non-UK equities just buy VWRL and something like VAGP if you want to tweak your bond allocations.