Switch ISA From VLS60 to VLS80

Aviator1194

Hi
I invested in a Vanguard Lifestrategy 60 acc ISA In mid January this year.

Moving forward I feel I would be better with slightly less bond exposure in my portfolio.

Seen as VLS 60 where I am currently which is down about £2,000 currently

And no doubt VLS 80 is down by similar amount, I am trying to determine if I would actually crystallise any large on paper loss by selling down VLS60 and buying VLS80 with the proceeds. I believe if they are both down by similar then transferring shouldn't incur any significant loss, as hopefully the VLS80 will eventually climb higher

I was thinking VLS80 would give me better returns if I switched to that fund.

I don't need to access the cash for approx next 10 years, although I am retired but can live of other funds.

masonic

As you can see from the below chart, they were on top of each other for the first couple of weeks of January, after which they diverged, but have not moved far apart.

The 3, 5, and 10-year data give you an idea of longer term performance, but it is also worth considering the potential for sharp drawdowns as below:

Audaxer

VLS80 is down slightly less that VLS60 year to date. The VLS80 should give you better returns long term, but will be more volatile. If you did swap and thereafter there was a big equity crash and VLS80 fell by much more than VLS60, would you be okay with that?

Aviator1194

Thankyou, I suppose it was the bond allocation which concerns me, enough to switch from VLS 60 to VLS 80 for higher returns less losses, but as you illustrate from the Pandemic graph, drops can also be much greater without the higher allocation of bonds.

Aviator1194

Audaxer said:

VLS80 is down slightly less that VLS60 year to date. The VLS80 should give you better returns long term, but will be more volatile. If you did swap and thereafter there was a big equity crash and VLS80 fell by much more than VLS60, would you be okay with that?

Good point, maybe it would be a little scary for me to witness a heavy drop, but I  think its the fact there are 40% bonds as an allocation which also worries me, since everyone is concerned at the poor performance of bonds.

Albermarle

Aviator1194 said:

Audaxer said:

VLS80 is down slightly less that VLS60 year to date. The VLS80 should give you better returns long term, but will be more volatile. If you did swap and thereafter there was a big equity crash and VLS80 fell by much more than VLS60, would you be okay with that?

Good point, maybe it would be a little scary for me to witness a heavy drop, but I  think its the fact there are 40% bonds as an allocation which also worries me, since everyone is concerned at the poor performance of bonds.

Probably bonds have already taken most of the hit from inflation/higher interest rates, so may not move much more from here.

Although I said something similar a few weeks ago, and they have since dropped further 

Aviator1194

Albermarle said:

Aviator1194 said:

Audaxer said:

VLS80 is down slightly less that VLS60 year to date. The VLS80 should give you better returns long term, but will be more volatile. If you did swap and thereafter there was a big equity crash and VLS80 fell by much more than VLS60, would you be okay with that?

Good point, maybe it would be a little scary for me to witness a heavy drop, but I  think its the fact there are 40% bonds as an allocation which also worries me, since everyone is concerned at the poor performance of bonds.

Probably bonds have already taken most of the hit from inflation/higher interest rates, so may not move much more from here.

Although I said something similar a few weeks ago, and they have since dropped further 

Thanks, thats kind of encouraging,

But your earlier statement "Although I said something similar a few weeks ago, and they have since dropped further " I suppose just goes to show how unpredictable it all is at the moment

Its worth me also mentioning that the rest of my ISA portfolio contains bonds, so it wont be like I am moving that much higher into equity by choosing VLS 80 I reckon.


Is my belief correct, that if I switch funds providing they are down similar amounts then I shouldn't actually be crystallising a loss?

Albermarle

 I suppose just goes to show how unpredictable it allways is   at the moment

Slight amendment.

s my belief correct, that if I switch funds providing they are down similar amounts then I shouldn't actually be crystallising a loss?

I think you are right.

Albermarle

masonic said:

As you can see from the below chart, they were on top of each other for the first couple of weeks of January, after which they diverged, but have not moved far apart.

The 3, 5, and 10-year data give you an idea of longer term performance, but it is also worth considering the potential for sharp drawdowns as below:

Perhaps interesting to note that probably the main competitor to the VLS funds ( in the UK) are the HSBC global strategy funds and the equivalent funds have all dropped less. The HSBC balanced ( vs VLS 60) is only 5% down over the last year, and has performed a little better over 3 and 5 years as well. Plus it is cheaper.

Aviator1194

Albermarle said:

masonic said:

As you can see from the below chart, they were on top of each other for the first couple of weeks of January, after which they diverged, but have not moved far apart.

The 3, 5, and 10-year data give you an idea of longer term performance, but it is also worth considering the potential for sharp drawdowns as below:

Perhaps interesting to note that probably the main competitor to the VLS funds ( in the UK) are the HSBC global strategy funds and the equivalent funds have all dropped less. The HSBC balanced ( vs VLS 60) is only 5% down over the last year, and has performed a little better over 3 and 5 years as well. Plus it is cheaper.

Strangely enough
The other funds in my ISA portfolio are indeed
Hsbc global strategy conservative & Royal london sustainable div c acc

The Royal London down 11.25% since January
Hsbc down 6.6%
Vls 8%
In my portfolio, I have adequate a few further contributions since january


So was thinking vls 80 to reduce overall bond exposure slightly

Audaxer

Albermarle said:

masonic said:

As you can see from the below chart, they were on top of each other for the first couple of weeks of January, after which they diverged, but have not moved far apart.

The 3, 5, and 10-year data give you an idea of longer term performance, but it is also worth considering the potential for sharp drawdowns as below:

Perhaps interesting to note that probably the main competitor to the VLS funds ( in the UK) are the HSBC global strategy funds and the equivalent funds have all dropped less. The HSBC balanced ( vs VLS 60) is only 5% down over the last year, and has performed a little better over 3 and 5 years as well. Plus it is cheaper.

Year to Date VLS60 and HSBC GS Bal are almost identical as both down around 9.9%. I quite like the fact that HSBC GS Balanced can alter it's equity percentage (probably not by much) but the VLS funds are fixed percentages. I have some investments in both, but am a bit more concerned about VLS if bonds keep falling.