FT & Vanguard downgrade 60:40 mix.

MK62

....atm you'll usually end up paying more than £100 for a £100 bond though......that's the issue atm, they are too expensive (which inversely means the yield is too low)

ranciduk

Doesn’t this mean that Vanguard LifeStrategy 20 is VERY poor then??

Thrugelmir

ranciduk said:

Doesn’t this mean that Vanguard LifeStrategy 20 is VERY poor then??

Poor is a relative term depending on your future expectatations of returns and requirements of maintaining capital preservation. 

Albermarle

ranciduk said:

Doesn’t this mean that Vanguard LifeStrategy 20 is VERY poor then??

It is promoted as the lowest risk VLS fund , but again that is based on historical norms and due to the uncertainties over bond values , I would think it is probably more risky than VLS40 - just an opinion.

JohnWinder

ranciduk said:

i recently made my first step into investing and went with the LS60 fund as it’s seemed the best option for me
reading the above is making me think I might have made a mistake?!

I wonder what mistake you think you may have made, perhaps you could tell us.

With your choice, you are going to get exactly what the stock and bond markets you invested in provide (less a probably very small tracking error, and a modest management fee). You couldn't have been hoping for more than market returns, with that sensible choice, and you won't get less. I can't see where the mistake might have been.

ranciduk

JohnWinder said:

ranciduk said:

i recently made my first step into investing and went with the LS60 fund as it’s seemed the best option for me
reading the above is making me think I might have made a mistake?!

I wonder what mistake you think you may have made, perhaps you could tell us.

With your choice, you are going to get exactly what the stock and bond markets you invested in provide (less a probably very small tracking error, and a modest management fee). You couldn't have been hoping for more than market returns, with that sensible choice, and you won't get less. I can't see where the mistake might have been.

Splendid!

p.s the title of this thread alone made me worry that the fund I am using has been ‘downgraded’  - I’m no expert, but that sounds bad to me?!

Linton

JohnWinder said:

ranciduk said:

i recently made my first step into investing and went with the LS60 fund as it’s seemed the best option for me
reading the above is making me think I might have made a mistake?!

I wonder what mistake you think you may have made, perhaps you could tell us.

With your choice, you are going to get exactly what the stock and bond markets you invested in provide (less a probably very small tracking error, and a modest management fee). You couldn't have been hoping for more than market returns, with that sensible choice, and you won't get less. I can't see where the mistake might have been.

To get somewhat technical/pedantic, and of no great significance to the OP in his particular situation:

The OPs "mistake" was surely that one ideally should choose a particular mixed asset fund on the basis of  objectives and risk tolerance.  It has turned out that the mix of assets in the fund are less appropriate than they would have been a few years ago.  So yes he will get the market returns of the particular balance of equities and types of bonds chosen by Vanguard.  Now whether this is as good a match for the objectives and risk tolerance as it would have been in the past or could be provided now by other funds is open to question.

That is what the "downgraded" effectively means.  But it would seem that the fund was chosen as it felt right rather than on the basis of a detailed assessment.  So fine.

JohnWinder

ranciduk said:

p.s the title of this thread alone made me worry that the fund I am using has been ‘downgraded’  - I’m no expert, but that sounds bad to me?!

Well, if you're still concerned, rather than me tilting at windmills could you let us know exactly what the FT said so we can agree with it or suggest an alternative view. As to Vanguard downgrading it, I guess you mean 'returns', but do let us know so we don't go off on a frolic that's irrelevant. I think I already addressed the returns issue.

Linton

JohnWinder said:

ranciduk said:

p.s the title of this thread alone made me worry that the fund I am using has been ‘downgraded’  - I’m no expert, but that sounds bad to me?!

Well, if you're still concerned, rather than me tilting at windmills could you let us know exactly what the FT said so we can agree with it or suggest an alternative view. As to Vanguard downgrading it, I guess you mean 'returns', but do let us know so we don't go off on a frolic that's irrelevant. I think I already addressed the returns issue.

https://www.vanguardinvestments.dk/documents/vanguard-economic-and-market-update-eu-en-pro.pdf

From a quick read Vanguard are not saying anything specifically about their funds but rather about the performance of the world's markets as a whole.  

The projections or other information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of 30 June, 2021. Results from the model may vary with each use and over time. 

My view is that this sort of stuff is pointless - they dont know, and they arent any the wiser even after 10,000 simulations of their Capital Markets Model.  Irrespective of what the projections say you need to arrange you affairs so that you will best cope with whatever happens short of the End of the World scenarios.