Vanguard Life Strategy 100% fund

IanManc

tebbins said:

 

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.

The proportion of VLS allocated to UK equity fell by roughly 5% between 2011 and 2014, and Vanguard have said they intend to reduce it further:

Westaway says Lifestrategy home bias is being 'dialled down' - FTAdviser.com

@dunstonh is correct that the VLS range of funds are managed funds of funds, the management being the decision to overweight to the UK and in the choice of passive funds in which they invest and the proportions of those investments.. They are clearly and obviously "being managed".

The VLS range does not "follow an index approach" because they don't track any index. They are not passive funds, but managed fettered funds of funds.

Thrugelmir

 IanManc said:

tebbins said:

 

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.

The proportion of VLS allocated to UK equity fell by roughly 5% between 2011 and 2014, and Vanguard have said they intend to reduce it further:

Westaway says Lifestrategy home bias is being 'dialled down' - FTAdviser.com

@dunstonh is correct that the VLS range of funds are managed funds of funds, the management being the decision to overweight to the UK and in the choice of passive funds in which they invest and the proportions of those investments.. They are clearly and obviously "being managed".

The VLS range does not "follow an index approach" because they don't track any index. They are not passive funds, but managed fettered funds of funds.

Vanguard will create products that people want to buy. As they make their money from charging a % of AUM. When the wind changes direction they react accordingly again. 

GeoffTF

tebbins said:
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.

There has been one significant change in the weightings since inception, and also some small changes. Actively managed funds charge more the VLS, and usually have less diversified portfolios.

GeoffTF

Alexland said:
However if they choose to invest in an etf then this trade would cost £10 on Fidelity.

"£1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend."

https://www.fidelity.co.uk/services/charges-fees/fees-more-detail/#tab-link

Albermarle

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.

Which is why I said 'if' 

Anyway the point was more that it seemed that the OP was concentrating on the small discount on platform fees , without apparently having considered why they were also planning to change the actual investments , or at least they did not mention any reason why they were planning to do this .
It is quite a common theme amongst some posters that they focus too much on the platform rather than the investments .

dunstonh

Actively managed funds charge more the VLS, and usually have less diversified portfolios.

No they don't.   Take the HSBC GS range.  Cheaper than VLS but slightly more active.

Although with VLS's decision to go underweight in some areas and overweight in others and remain rigid in the equity split are active decsions.

Alexland

GeoffTF said:

Alexland said:
However if they choose to invest in an etf then this trade would cost £10 on Fidelity.

"£1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend."

https://www.fidelity.co.uk/services/charges-fees/fees-more-detail/#tab-link

I know but we are talking about switching an existing investment on Fidelity (in advance of transfering out to Vanguard) and one of the limitations of Fidelity is that unlike AJ Bell you cannot setup a regular investment against the cash balance it has to be for new money via DD etc. So for money already in a Fidelity account it would be £10 to trade into an ETF.

tebbins

IanManc said:

tebbins said:

 

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.

The proportion of VLS allocated to UK equity fell by roughly 5% between 2011 and 2014, and Vanguard have said they intend to reduce it further:

Westaway says Lifestrategy home bias is being 'dialled down' - FTAdviser.com

@dunstonh is correct that the VLS range of funds are managed funds of funds, the management being the decision to overweight to the UK and in the choice of passive funds in which they invest and the proportions of those investments.. They are clearly and obviously "being managed".

The VLS range does not "follow an index approach" because they don't track any index. They are not passive funds, but managed fettered funds of funds.

Geoff's point highlights the key difference, compared to a typical managed fund the VLS range have lower turnover and behave very similarly to global equity indices. If it looks, walks and quacks like a duck and all that...
The reasons they give are to reflect the decreasing home bias trend among UK investors - a trend that has been ongoing particularly since the 80s (when everything in the investing world changed...).

Purely passive investing is an impossible misnomer, investing is always an active decision, the choice between what is thought of as active and passive is between managed or indexed approaches. You could fairly criticise VLS for excluding gold, inflation-linked bonds, direct property ownership, bank deposits, shorts, whisky...
Between the active management in the FTSE global all cap - deciding how to allocate net inflows, dividends, takeover proceeds etc. to new purchases, the index selection, use of derivatives, securities lending, trade timing and execution decisions, deciding how "completely" and "perfectly" to copy index weightings, how far down the list of small caps you go before the transaction costs cease being cost effective etc. - and the additional weighting decisions in VLS there isn't much extra going on.

The active management is even more light touch in VLS than Fundsmith, SMT and Berkshire, all considered very much "buy and forget" active funds/companies with low turnover of holdings and subsidiariesa and barely more than the global all-cap.
This is really a debate over semantics and doesn't matter, active/passive/index are all just names for categories coined as convenient labels for new things. I am not a linguistic prescriptivist and disagree with investing being such an industry of standardised landugage. Air traffic control, food safety, mathematics and medicine are industries that have standardised language, investing does not.
I am merely pointing out that to categorise something that looks like a ready made index fund portfolio, walks like an index fund portfolio and quacks like an index fund portfolio obviously does not belong in the "actively managed" category.

GeoffTF

dunstonh said:

Actively managed funds charge more the VLS, and usually have less diversified portfolios.

No they don't.   Take the HSBC GS range.  Cheaper than VLS but slightly more active.

Although with VLS's decision to go underweight in some areas and overweight in others and remain rigid in the equity split are active decsions.

HSBS GS is a LifeStrategy lookalike. It is hardly more active than LifeStrategy. Neither fund is paying for stock picking.

aroominyork

With VLS 20/40/60/80 you are partly paying 0.22% for the inclusion of bonds and the equity/bond rebalancing. For a pure equity product there are cheaper ways to get a similar outcome if you are happy to do a little rebalancing yourself. Buy HSBC FTSE All World Index (0.13%) and top it up with a UK All Share Index (0.06%).