Vanguard Life Strategy 100% fund

DietIrnBru

When the new tax year starts, I plan to open an account wtih Vanguard - the low fees appeal. It will be a regular investment of £200.

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

I appreciate that values can change on a daily basis. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

dunstonh

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

Yes, cash transfer will be the only option.

. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

The tiny difference in charges is less than 10 minutes of movement on the stockmarket. You will be out of the market for about 5-7 days.   It could take you more than a decade to get back the charges difference.

Not sure why you would want to pick VLS100 over a global tracker as well.

GeoffTF

DietIrnBru said:

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

Fund transactions are free with Fidelity. You could pay some cash into your Fidelity account and issue simultaneous instructions to sell your Fidelity fund to the value of that cash, and invest the same amount in the Vanguard fund. You can repeat that process until your entire holding of the Fidelity fund has been sold and reinvested in the Vanguard fund. You can then transfer the Vanguard fund to Vanguard.

Bravepants

Following up on what dunstonh said:

Have you also taken a look at Vanguard's FTSE Global All Cap fund as a possible alternative?

Alexland

DietIrnBru said:

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

Fidelity are good for free child accounts and large capped SIPPs but yes there are better choices for S&S ISAs and for that account valuation you would do better with Vanguard on lower percentage charges. At 0.22% VLS is 0.12% more expensive than your current Fidelity Index World fund discounted to 0.10% via the rebates so some of your platform fee saving would go on higher fund costs.

In picking the new fund/etf you need to consider if you want to continue to invest in Developed World only such as their VEVE etf at 0.12%, have UK bias as found in the VLS range or have Emerging Markets exposure as found in their All World etf or Global All Cap fund. An etf wouldn't work very well with a £200 per month contribution as you can only buy whole units on Vanguard so you would probably be best sticking with funds at least for the regular contribution.

dunstonh said:

Yes, cash transfer will be the only option.

To reduce time out of the market the OP could switch to the desired Vanguard fund on Fidelity and then in specie transfer the asset to Vanguard Investor. However if they choose to invest in an etf then this trade would cost £10 on Fidelity.

OP - remember to leave enough cash in the account to pay the ongoing fees for however long the transfer might take which is often longer than expected.

Albermarle

DietIrnBru said:

When the new tax year starts, I plan to open an account wtih Vanguard - the low fees appeal. It will be a regular investment of £200.

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

I appreciate that values can change on a daily basis. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

You will save 0.08% in charges but will change to a significantly poorer performing investment.

5 years annualised growth of Fidelity world - 11.2%
5 years annualised growth of VLS 100 - 9% 

So if that were to continue then every year you will lose over 2 % and gain 0.08% 

GeoffTF

Albermarle said:

DietIrnBru said:

When the new tax year starts, I plan to open an account wtih Vanguard - the low fees appeal. It will be a regular investment of £200.

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

I appreciate that values can change on a daily basis. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

You will save 0.08% in charges but will change to a significantly poorer performing investment.

5 years annualised growth of Fidelity world - 11.2%
5 years annualised growth of VLS 100 - 9% 

So if that were to continue then every year you will lose over 2 % and gain 0.08% 

That is in the past, and has no bearing on the future.

MK62

Albermarle said:

You will save 0.08% in charges but will change to a significantly poorer performing investment.

5 years annualised growth of Fidelity world - 11.2%
5 years annualised growth of VLS 100 - 9% 

So if that were to continue then every year you will lose over 2 % and gain 0.08% 

That's the golden question though....

dunstonh

GeoffTF said:

Albermarle said:

DietIrnBru said:

When the new tax year starts, I plan to open an account wtih Vanguard - the low fees appeal. It will be a regular investment of £200.

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

I appreciate that values can change on a daily basis. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

You will save 0.08% in charges but will change to a significantly poorer performing investment.

5 years annualised growth of Fidelity world - 11.2%
5 years annualised growth of VLS 100 - 9% 

So if that were to continue then every year you will lose over 2 % and gain 0.08% 

That is in the past, and has no bearing on the future.

True.  However, VLS is a managed fund with key management decisions on weightings whereas a global tracker is passive.  The decision should be about investing style preference.      

tebbins

dunstonh said:

GeoffTF said:

Albermarle said:

DietIrnBru said:

When the new tax year starts, I plan to open an account wtih Vanguard - the low fees appeal. It will be a regular investment of £200.

I've currently got a share ISA with Fidelity - with all cash in the Fidelity World Index Tracker - total value £5932 - once the new account with Vanguard is open - the £200 per month to Fidelity will cease.

With a view to consolidating the accounts - I am considering transferring my cash from Fidelity to Vanguard, Am I correct in assuming that the Fidelity funds would need to be sold and the resulting money invested in the chose Vanguard fund?

I appreciate that values can change on a daily basis. Is it prudent to just leave the funds where they are at present, given that current volatility could wipe out any potential gains from cheaper fees?

You will save 0.08% in charges but will change to a significantly poorer performing investment.

5 years annualised growth of Fidelity world - 11.2%
5 years annualised growth of VLS 100 - 9% 

So if that were to continue then every year you will lose over 2 % and gain 0.08% 

That is in the past, and has no bearing on the future.

True.  However, VLS is a managed fund with key management decisions on weightings whereas a global tracker is passive.  The decision should be about investing style preference.      

As far as I know the weightings haven't changed since inception so in effect they both follow an index approach, one being a fund of index funds, the other being a direct index fund. To call VLS "managed" could be misleading, it is not "being managed", it's more of a set and forget strategy that may or may not be changed in future.
Have to agree with Geoff and disagree with Albemarle that describing one investment as poorer performing in the continuous tense is not accurate, though of course because of the UK upweighting and lack of small caps people will have different opinions about the future returns potential. I'm not sure the transaction costs of including that last 10-15% weighting of small caps in the global all-cap fund will be offset by any potential outperformance but it is obviously a more vanilla and more "pure" passive option. I am more UK bullish because of the relative cheapness, lack of buybacks and higher weightings towards value/yield that have faired relatively poorly over the last/current cycle - since the GFC - so I think are likely to fair better in the current/next.

DireEmblem

Alexland said:

dunstonh said:

Yes, cash transfer will be the only option.

To reduce time out of the market the OP could switch to the desired Vanguard fund on Fidelity and then in specie transfer the asset to Vanguard Investor. However if they choose to invest in an etf then this trade would cost £10 on Fidelity.

Cash transfer is not the only option, I would go with Alexland's idea if you are looking to transfer to Vanguard to save a bit on fees.  Buy the LifeStrategy on Fidelity, and then switch to Vanguard.

As an alternative, you could also consider VWRP - An ETF that has a similar track record to the LifeStrategy.  You could buy that on a platform such as InvestEngine or Trading212 with no platform fees so even cheaper, but would still give you more options to be flexible in the future.