Vanguard S&S ISA investment choice

ericlered7

Thanks everyone, much appreciate all the comments.

Albermarle

Collyflower1 said:

The first decade of the 2000's was one of the worst for stocks and involved two bear markets. A 100% equity investment would have incurred a loss by the end of the decade but a 60/40 portfolio would have grown by 25%.  The equity of both portfolios was U.S based , ie, S&P500 , so not strictly comparable! Whether bonds offer as much protection now?
  The 70's US was hit with stagflation and high interest rates with 60/40 outperforming 100% equities by the end of the decade but both portfolios still ended up between about 75-87% higher!
    I'm in VLS60 and pondering whether to risk LS100 bytheway! Are todays market conditions similar/worse to the above decades?

As already said the answer to your question ( in bold ) is that it is unlikely they will perform as well.
One solution, that may or may not work , is to fully or partly replace the bond element with other investments , such as precious metals, property or infrastructure .

jimjames

dunstonh said:

For the last two tax years I have put the max £20k per year into a Vanguard S&S ISA, and invested all of this into the Life Strategy 100% Equity Fund.

With VLS100 being 100% global equities, it then gets compared with other 100% global equity funds.  That includes global tracker funds at half the cost of VLS100.   

This is a really good point. If you're happy with the global tracker option then paying half the level of fees would seem to make it a preferable choice assuming no other reasons to choose one or other.

masonic

jimjames said:

dunstonh said:

For the last two tax years I have put the max £20k per year into a Vanguard S&S ISA, and invested all of this into the Life Strategy 100% Equity Fund.

With VLS100 being 100% global equities, it then gets compared with other 100% global equity funds.  That includes global tracker funds at half the cost of VLS100.   

This is a really good point. If you're happy with the global tracker option then paying half the level of fees would seem to make it a preferable choice assuming no other reasons to choose one or other.

One can replicate VLS100 fairly closely using three low cost tracker funds: one developed world (tend to be lower cost than all world), one emerging markets, and one FTSE All share fund. With that combination, fees can be sub-0.1%. Given that the HSBC FTSE All-World Index Fund (OCF 0.13%) seems to have an issue with consistently underperforming the index by more than it should (2.2% underperformance over past 12 months; 0.6% per year underperformance over 5 years; 0.7% per year since inception), this may be the way to go as the next cheapest all world option is VWRL at the same cost as VLS100.

HCIMbtw

I changed from LS100 to FTSE global all cap last year. It meant quite a few days out of the market. 

The reason being the UK weighting of LS100 is very similar to my pension and I wanted less UK exposure. 

tebbins

A lot of further food for thought can be found in Vanguard's 2021 paper: Global equity investing: The benefits of diversification and sizing your allocation.

P933alilli

Probably a stupid question but when selling a proportion of a fund is the average unit cost affected? How does it work in practice, i suppose it depends whether the action goes through before or after the next days dealing point?

eskbanker

Collyflower1 said:

Probably a stupid question but when selling a proportion of a fund is the average unit cost affected? How does it work in practice, i suppose it depends whether the action goes through before or after the next days dealing point?

Not sure I'm really understanding the question but sales don't affect the average unit acquisition cost, which is needed for CGT calculation purposes, but isn't particularly relevant within wrappers such as ISAs.

The sale price will indeed depend on which dealing point applies but I don't get any connection between that and the first point?

masonic

Collyflower1 said:

Probably a stupid question but when selling a proportion of a fund is the average unit cost affected? How does it work in practice, i suppose it depends whether the action goes through before or after the next days dealing point?

Selling does not affect the acquisition cost of the remaining units. You use the average acquisition cost as the base for the sold units and the remaining units will have the same average acquisition cost. As eskbanker says, not relevant in a S&S ISA, other than a column in a table.

P933alilli

Ok thanks, probably ovrthinking it!