Vanguard funds - which to choose

zagfles

Cus said:

Audaxer said:

Linton said:

zagfles said:

Cus said:

I think @zagfles has inferred an incorrect view in my opinion. The difference in performance is very likely to be linked to a UK bias for vanguard, that has led to a reduced performance. The HSBC fund performs an appropriate balance based on market caps so is not US biased, but actually correctly weighted.

Well, yes, however you want to describe it, VLS is more UK and less US than HSBC, and that's the reason for the performance difference. I think we're all agreeing on this substantive point. The minutiae seem very important to some people, but on the main point we all agree.

Actually I dont agree that the difference in %UK is the main reason for the performance difference - if it was the performance difference would be larger.  It is part of the picture but on the other hand you also need to consider that HSBC GS Balanced has a lower % equity than VLS60 which in the growth era would have led to lower performance and reduced volatility.

Other factors include HSBC GS Balanced currently having a significantly lower Gilt allocation and a greater % in US bonds. I am investigating but not yet sure whether HSBC's risk targeting strategy includes adjusting the bond investments according to market conditions.

It will be interesting to see how the two funds compare now (or perhaps if)  Growth investments are less dominant.

Just to add, the performance difference isn't that much between the two funds. Over the last 10 years:
HSBC Global Strategy Balanced - 7.61% annualised
Vanguard LifeStrategy 60 - 7.10% annualised
Looking at them both on a graph the volatility also looks very similar.

I like the fact that the HSBC fund can vary it's percentages, but as far as I can see they don't seem to change very much as the equities total (including property) always seem to be around 60%. I'm not sure if they change the weightings of the different equity and bond indexes very often?

Blood has been spilt on this forum over less than 0.51% per year when discussing fees 😀

Fees are a bit different as you know what they'll be. When looking at performance a 0.5% difference is unlikely to be a good predictor of future returns, but if fees are 0.5% higher you know that'll likely be the case in the future too.

It's a bit like when people say not to worry about forex markups when using cards abroad because the exchange rate often moves by more than the typical forex markup. But the forex markup is always a negative, you always lose, but exchange rate movements can go either way, you win some and lose others.