Diversifying away from Vanguard

Exodi

MX5huggy said:

It doesn’t have 16% in Ireland. Whatever information you are looking at is miss allocated one or more funds held within LS100 as being Irish as that is where the fund is set up, maybe the S&P 500 ETF that is about 15% of LS100 but clearly Is invested in US stocks. 

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-100-equity-accumulation/fund-analysis/geographical-analysis

I agree this is almost certainly due to VUSA being misallocated due to the ETP being domiciled in Ireland (whereas in reality is should be attributed to US) - Apologies I should have not misportrayed this.

But the point still stands that UK stocks accounting for 20%-25% of the fund, when appropriately weighting should have them around 4%, is something people should be aware of. I believe the target retirement funds have the same home bias.

Albermarle

But the point still stands that UK stocks accounting for 20%-25% of the fund, when appropriately weighting should have them around 4%, is something people should be aware of. I believe the target retirement funds have the same home bias.

4% for UK is the percentage if the fund replicated the size of each financial market exactly.

However for many this would not be an 'appropriate weighting', as they prefer having a so called home bias, sometimes more than the 20/25% typical of Vanguard funds.

Exodi

Albermarle said:

But the point still stands that UK stocks accounting for 20%-25% of the fund, when appropriately weighting should have them around 4%, is something people should be aware of. I believe the target retirement funds have the same home bias.

4% for UK is the percentage if the fund replicated the size of each financial market exactly.

However for many this would not be an 'appropriate weighting', as they prefer having a so called home bias, sometimes more than the 20/25% typical of Vanguard funds.

Assuming they were actively aware of it, which was my point.

If people want a big home bias, that remains their prerogative.

bostonerimus

Exodi said:

Albermarle said:

But the point still stands that UK stocks accounting for 20%-25% of the fund, when appropriately weighting should have them around 4%, is something people should be aware of. I believe the target retirement funds have the same home bias.

4% for UK is the percentage if the fund replicated the size of each financial market exactly.

However for many this would not be an 'appropriate weighting', as they prefer having a so called home bias, sometimes more than the 20/25% typical of Vanguard funds.

Assuming they were actively aware of it, which was my point.

If people want a big home bias, that remains their prerogative.

We are now talking asset allocation. It's possible to get a perfectly adequate asset allocation on Vanguard UK just buying Vanguard funds. You have to do the minimal amount of work involved in looking at a few Pie charts, but that goes for any platform. So I see no issue with platform risk or the availability of funds compared to other platforms if you go with Vanguard. You won't be able to buy BG funds or HSBC or Fundsmith so don't use Vanguard if you want those, but owning such funds has very little to do with a successful financial plan.

Exodi

bostonerimus said:

Exodi said:

Albermarle said:

But the point still stands that UK stocks accounting for 20%-25% of the fund, when appropriately weighting should have them around 4%, is something people should be aware of. I believe the target retirement funds have the same home bias.

4% for UK is the percentage if the fund replicated the size of each financial market exactly.

However for many this would not be an 'appropriate weighting', as they prefer having a so called home bias, sometimes more than the 20/25% typical of Vanguard funds.

Assuming they were actively aware of it, which was my point.

If people want a big home bias, that remains their prerogative.

We are now talking asset allocation. It's possible to get a perfectly adequate asset allocation on Vanguard UK just buying Vanguard funds. You have to do the minimal amount of work involved in looking at a few Pie charts, but that goes for any platform. So I see no issue with platform risk or the availability of funds compared to other platforms if you go with Vanguard. You won't be able to buy BG funds or HSBC or Fundsmith so don't use Vanguard if you want those, but owning such funds has very little to do with a successful financial plan.

It's like you've tried to deliberately misinterpret what I said. Obviously if someone wanted to replicate something like the ftse all-world index, they can just buy VWRL or global all cap on vaugard (or a mix of other vanguard funds that also achieve this) - I'm not trying to discourage people away from using Vanguard... If I'm completely honest, it's probably the best platform for the majority of investors. I'm just informing people that may not have realised that several vanguard funds have a huge home bias. I for one didn't notice when I first started investing and the only way someone would realise is if you starting looking at the portfolio allocations in a bit more depth. (In my opinion) VLS100 only appeals to novice investors, so it's less likely they'd be 'looking at a few pie charts', and more than likely they either would not have realised or were led to believe that the UK does represent 20-25% of the global market. I'm only spreading awareness, people remain entitled to invest in whatever the hell they want. I personally am not comfortable over-weighting the UK by at least 5x in my portfolio, but I have a dim view on the future UK economy.

The OP only has equities in their portfolio and mentioned VLS100, which is why I mentioned equities.

Diversifying in multiple asset classes is a completely seperate (and valid) matter for discussion, but is nothing to do with the OP or I said.

dllive

Just seen this: https://www.youtube.com/watch?v=TxGfMklUPF8 . Perhaps useful for others that have similar concerns than me about Vanguard (or similar) go bust.
Having said that - I may still invest on another platform as a belt n braces approach.

dunstonh

dllive said:

Just seen this: https://www.youtube.com/watch?v=TxGfMklUPF8 . Perhaps useful for others that have similar concerns than me about Vanguard (or similar) go bust.
Having said that - I may still invest on another platform as a belt n braces approach.

It probably would have been better if you had not watched that and messed your mind up.  Trying to compare vanguard to Beaufort is like comparing chocolate to cheese.  Beaufort had an extremely high ratio of illiquid assets.   It was that which caused the bulk of the problems.     A platform with a high level of liquid assets would not suffer the same problem.

This is why time and again you see on here that using a platform with a low ratio of illiquid assets is best.     Don't be charmed by ultra low cost platforms with low capital adequacy, not profitable and trading in all sorts of rubbish. 

The use of illiquid assets can take a decade to unwind if it fails.   This is why another rule of thumb is to not invest in funds with high levels of illiquid assets.

[Deleted User]

@dunstonh Thank you for your insights regarding VLS100. I have investments in this and now considering moving them (or, at least, not continuing to invest additional funds in VLS100). Of the other VLS products, is there one in particular you'd recommned?

bostonerimus

The take away from this video should be that a fund provider like Vanguard has never gone bust whereas smaller ones with dubious management have.

Zorillo

What is propping the value of VLS100 up currently? On Friday all the major stock indexes appeared to fall, but the price of VLS rose. I assume it was to do with currency valuation, but I didn't understand the mechanics behind it.