Where to put the rest of this years ISA allowance?

Annie1612

Hi

I have been drip-feeding money into a stocks and shares isa for a year and a half now. I have been a bit hesitant and was thrown off target a bit by the pandemic and other family issues. I had meant to have 20k invested last year and 20k invested by the end of this tax year. As it stands, I currently have 20k invested in VLS60, with 15k left of this year’s allowance left and I don’t know what to do with it. 

When I started investing for the first time, I was a bit unsure of my aims and how much I wanted to invest, but I am now much clearer. I am cobbling together funds that I can use for pension income in the future. I am hoping that 50k or so in ISAs will give me a small monthly amount on top of my other modest pension income. The VLS I have is held on the Vanguard platform but next year I will open a new isa on a different platform and invest in a different multi asset fund.

I have decided I don’t want to invest any more in VLS60. I am happy to keep that £20k where it is. But I am unsure what, if anything, to do with this years £15k allowance I have left. 

- Could anyone recommend other Vanguard funds that I could buy alongside? I don’t really know much about any of them apart from VLS.  I am happy to have a bit more equity; 60-80%. 

- Alternatively, could I put £15k into a cash isa and then transfer it to a stocks and shares isa next tax year when I would have a bigger choice of funds, which would give me 35k allowance to invest in total (don’t know if I am allowed to do that!!)?

Thank you for any ideas/help.

masonic

Yes you allowed to put the £15k into a cash ISA and transfer to a S&S ISA next tax year. If you really don't want to buy more VLS60, then this might be the best option. VLS is designed to be a portfolio in a single fund, so there isn't much at Vanguard that would complement it, unless you wanted to go overweight on some of the higher risk areas such as smaller companies of emerging markets. If you wanted a higher percentage in equities, you could buy some VLS100 to get to the desired overall percentage, or if you don't like the home bias of VLS then there is are global equity or developed world index trackers without UK bias.

Annie1612

masonic said:

Yes you allowed to put the £15k into a cash ISA and transfer to a S&S ISA next tax year. If you really don't want to buy more VLS60, then this might be the best option. VLS is designed to be a portfolio in a single fund, so there isn't much at Vanguard that would complement it, unless you wanted to go overweight on some of the higher risk areas such as smaller companies of emerging markets. If you wanted a higher percentage in equities, you could buy some VLS100 to get to the desired overall percentage, or if you don't like the home bias of VLS then there is are global equity or developed world index trackers without UK bias.

Thank you for this! I will consider both options. I was planning to invest in HSBC Global Strategy dynamic next year for a bit of a change. I am assuming this is a bit more global than the VLS. 

masonic

Annie1612 said:

masonic said:

Yes you allowed to put the £15k into a cash ISA and transfer to a S&S ISA next tax year. If you really don't want to buy more VLS60, then this might be the best option. VLS is designed to be a portfolio in a single fund, so there isn't much at Vanguard that would complement it, unless you wanted to go overweight on some of the higher risk areas such as smaller companies of emerging markets. If you wanted a higher percentage in equities, you could buy some VLS100 to get to the desired overall percentage, or if you don't like the home bias of VLS then there is are global equity or developed world index trackers without UK bias.

Thank you for this! I will consider both options. I was planning to invest in HSBC Global Strategy dynamic next year for a bit of a change. I am assuming this is a bit more global than the VLS.

Yes HSBC GS has no home bias, and also includes exposure to property which VLS does not. This article usually gets referenced when weighing up different multi-asset funds: https://monevator.com/passive-fund-of-funds-the-rivals/

Billycock

Annie1612 said:

masonic said:

Yes you allowed to put the £15k into a cash ISA and transfer to a S&S ISA next tax year. If you really don't want to buy more VLS60, then this might be the best option. VLS is designed to be a portfolio in a single fund, so there isn't much at Vanguard that would complement it, unless you wanted to go overweight on some of the higher risk areas such as smaller companies of emerging markets. If you wanted a higher percentage in equities, you could buy some VLS100 to get to the desired overall percentage, or if you don't like the home bias of VLS then there is are global equity or developed world index trackers without UK bias.

Thank you for this! I will consider both options. I was planning to invest in HSBC Global Strategy dynamic next year for a bit of a change. I am assuming this is a bit more global than the VLS. 

Broadly similar to Vanguard FTSE Global All Cap

masonic

Billycock said:

Annie1612 said:

masonic said:

Yes you allowed to put the £15k into a cash ISA and transfer to a S&S ISA next tax year. If you really don't want to buy more VLS60, then this might be the best option. VLS is designed to be a portfolio in a single fund, so there isn't much at Vanguard that would complement it, unless you wanted to go overweight on some of the higher risk areas such as smaller companies of emerging markets. If you wanted a higher percentage in equities, you could buy some VLS100 to get to the desired overall percentage, or if you don't like the home bias of VLS then there is are global equity or developed world index trackers without UK bias.

Thank you for this! I will consider both options. I was planning to invest in HSBC Global Strategy dynamic next year for a bit of a change. I am assuming this is a bit more global than the VLS. 

Broadly similar to Vanguard FTSE Global All Cap

Not really as the Vanguard FTSE Global All Cap is 100% equities with additional exposure to smaller companies, while the HSBC GS Dynamic is curently only 77% equities (includes bonds and property which the Vanguard fund does not, and has a mandate to adjust the asset mix to achieve a target volatility) and doesn't include additional exposure to smaller companies.

Billycock

Therefore Vanguard GA is more globally diversified 

masonic

Billycock said:

Therefore Vanguard GA is more globally diversified 

That's not true either, HSBC GS Dynamic currently has 1% UK exposure while Vanguard GAC has 6.5% Edit: 4% UK exposure.

The most similar Vanguard fund to HSBC GS Dynamic is probably their FTSE Developed World ex-U.K. Equity Index Fund, but even that is quite different (not multi-asset, no EM) and would be no substitute for the former.

Billycock

masonic said:

Billycock said:

Therefore Vanguard GA is more globally diversified 

That's not true either, HSBC GS Dynamic currently has 1% UK exposure while Vanguard GAC has 6.5% UK exposure.

The most similar Vanguard fund to HSBC GS Dynamic is probably their FTSE Developed World ex-U.K. Equity Index Fund, but even that is quite different (not multi-asset, no EM) and would be no substitute for the former.

Hmm, regardless of percentages, which in your mind is more globally diversified, HSBC GS Dynamic or Vanguard GAC?

masonic

Billycock said:

masonic said:

Billycock said:

Therefore Vanguard GA is more globally diversified 

That's not true either, HSBC GS Dynamic currently has 1% UK exposure while Vanguard GAC has 6.5% UK exposure.

The most similar Vanguard fund to HSBC GS Dynamic is probably their FTSE Developed World ex-U.K. Equity Index Fund, but even that is quite different (not multi-asset, no EM) and would be no substitute for the former.

Hmm, regardless of percentages, which in your mind is more globally diversified, HSBC GS Dynamic or Vanguard GAC?

HSBC GS Dynamic. It has the lower allocation of the two funds to the home market, the Vanguard fund has some home bias (index is 4% UK, fund is 6.5% UK) Edit: looking at the wrong fund, is actually 4%. I fail to see the relevance of "which is more globally diversified". One would pick a fund with the asset allocation they desire, which, if considering multi-asset funds, Vanguard GAC would be immediately excluded by virtue of not in fact being a multi-asset fund.

tebbins

I am not sure either figure is correct, between HL and Vanguard, V FTSE GAC is 3.93-4.1% UK. The HSBC fund holds funds classed as int'l or European which may suppress the apparent UK weighting so I suspect is about the same.
In any event, like-for-like the Vanguard Lifestrategy and HSBC Global Strategy have behaved almost identically since inception.

 Most in the forum upweight the UK more than a standard index fund would but that's a matter of individual opinion and preference.

Personally depending on your age and financial situation I would consider sticking with a single fund, VLS 80, HSBC Dynamic or something comparable, for the lot. But that's just me and I know nothing about you, your risk tolerance etc (although there isn't a huge difference in risk between 60% and 80% equity).