Year of VLS60

GeoffTF

dunstonh said:
I didn't think Vanguard used VLS60 on their advice service. 

I would not be too sure about that:

https://www.vanguardinvestor.co.uk/investing-explained/managed-isa

A hefty fee to tell you which LS fund to buy? Jack Bogle will be turning in his grave.

JohnWinder

thriftylynny said:

I'm feeling the same as you Collyflower1……I have all my retirement savings in VLS60 , just over half in isa & half GIA ...really been concerned that I shouldn't have put all my eggs into the one basket ..it's the negative effect of the bonds within the 60/40 allocation I find a worry. 

At times of self-doubt like now, it’s useful to reflect on how we got to this situation and what the alternative might have been.

You, I and the rest of us had several options when you bought VLS60. Firstly, could we have planned the life we want with a SP and savings account, or did we need to invest hoping for something better? Choose one.

Over the last 60 years, a 60/40 mix has lost money one year in every five.

Secondly, since all assets fluctuate in value, should we have chosen just stocks?

Firstly, for all 30 year periods for US investors, for which there are decent records, stocks outperformed bonds in only two thirds of those periods. Secondly, in individual, developed countries, stocks had a 13% chance of below  inflation returns in any 30 year period. For investors in international stocks the chance was only 4% (VLS is international). For bonds it was 27% chance of negative real returns.  https://rationalreminder.ca/podcast/235

Thirdly, stocks have a much bigger variation in their values than bonds do, and with that risk comes the promise of better returns, but the returns aren’t assured, they don’t have to be delivered, and sometimes aren’t.  Bonds come with a promise to deliver, and usually do, so the return is likely to be less. Do you really want to hold only stocks?

 I also have been pondering over withdrawal of what I hold in the GIA (54k at present) & putting into a 2 year fixed rate bond & just leaving the isa (63k) in VLS60

That widely used approach is what led someone to say ‘In bear markets stocks return to their rightful owners’. 

Have a look at a Callan period table of returns. https://www.bogleheads.org/wiki/Callan_periodic_table_of_investment_returns 

In 2018 it would have been better to own only bonds; in 2021 only stocks; in 2022 neither bonds nor equities as they both fell about 15%. Can you pick the future?

If YOU have to invest, it’s probably better for YOU to hold both stocks and bonds, well diversified. 20/80 or 80/20 wouldn’t have protected you from last year’s 60/40 sadness. Some of the time you’ll wish you’d held more stocks, and other times you’ll wish you’d held more bonds. Spilt milk.

dunstonh

GeoffTF said:

dunstonh said:
I didn't think Vanguard used VLS60 on their advice service. 

I would not be too sure about that:

https://www.vanguardinvestor.co.uk/investing-explained/managed-isa

A hefty fee to tell you which LS fund to buy? Jack Bogle will be turning in his grave.

Cannot see any reference to VLS on that page.  My understanding is that they do not use VLS but a different spread of funds.

GeoffTF

dunstonh said:

GeoffTF said:

dunstonh said:
I didn't think Vanguard used VLS60 on their advice service. 

I would not be too sure about that:

https://www.vanguardinvestor.co.uk/investing-explained/managed-isa

A hefty fee to tell you which LS fund to buy? Jack Bogle will be turning in his grave.

Cannot see any reference to VLS on that page.  My understanding is that they do not use VLS but a different spread of funds.

You may be right. If so, why does Vanguard have two sets of funds serving the same purpose? Do they believe that there is something wrong with VLS? If so, why are they still selling it?

Audaxer

thriftylynny said:

I'm feeling the same as you Collyflower1 , I am 63 & held the  hopeful  intention of withdrawing within a safe withdrawal limit say 3% to top up my state pension at 66 .I have all my retirement savings in VLS60 , just over half in isa & half GIA ...really been concerned that I shouldn't have put all my eggs into the one basket ..it's the negative effect of the bonds within the 60/40 allocation I find a worry . I also have been pondering over withdrawal of what I hold in the GIA (54k at present) & putting into a 2 year fixed rate bond & just leaving the isa (63k) in VLS60 

I think 3% is still a fairly safe withdrawal rate to have started with. Let's say you had £100k in VLS60 a year ago and you took out 3% (£3,000). As VLS60 dropped in value by 11% last year, that along with the withdrawal would leave you with £86k. If you withdrew £3,000 again this year, it only represents 3.49% of that £86k, so not a disaster. 

dunstonh

GeoffTF said:

dunstonh said:

GeoffTF said:

dunstonh said:
I didn't think Vanguard used VLS60 on their advice service. 

I would not be too sure about that:

https://www.vanguardinvestor.co.uk/investing-explained/managed-isa

A hefty fee to tell you which LS fund to buy? Jack Bogle will be turning in his grave.

Cannot see any reference to VLS on that page.  My understanding is that they do not use VLS but a different spread of funds.

You may be right. If so, why does Vanguard have two sets of funds serving the same purpose? Do they believe that there is something wrong with VLS? If so, why are they still selling it?

I suspect there is two reasons.  The use of single sector funds on a centrally governed portfolio is cheaper than the multi-asset fund.  i.e. holding the underlying funds in VLS directly.    Secondly, their advice service is heavily restricted and limited.   You may question what you are actually getting for the money if they just used VLS.   Getting a reduction in fund costs may be a way to help alleviate that.

GeoffTF

dunstonh said:

GeoffTF said:

dunstonh said:

GeoffTF said:

dunstonh said:
I didn't think Vanguard used VLS60 on their advice service. 

I would not be too sure about that:

https://www.vanguardinvestor.co.uk/investing-explained/managed-isa

A hefty fee to tell you which LS fund to buy? Jack Bogle will be turning in his grave.

Cannot see any reference to VLS on that page.  My understanding is that they do not use VLS but a different spread of funds.

You may be right. If so, why does Vanguard have two sets of funds serving the same purpose? Do they believe that there is something wrong with VLS? If so, why are they still selling it?

I suspect there is two reasons.  The use of single sector funds on a centrally governed portfolio is cheaper than the multi-asset fund.  i.e. holding the underlying funds in VLS directly.    Secondly, their advice service is heavily restricted and limited.   You may question what you are actually getting for the money if they just used VLS.   Getting a reduction in fund costs may be a way to help alleviate that.

The Managed ISA is different from Vanguard's advice service. The managed ISA uses packaged funds:

"It will match you with one of 5 portfolios, each tailored to a different risk attitude and made up of low-cost index funds."

https://www.ftadviser.com/investments/2022/12/23/vanguard-launches-managed-isa-for-retail-investors/

"A management fee of 0.30 per cent applies, along with an account fee of 0.15 per cent and a fund fee of 0.15 per cent."

Their advice service appears to use underlying funds. Even that service is full of restrictions. I am tempted to say that anything that might justify an adviser is excluded. For the advice service:

https://www.ftadviser.com/your-industry/2021/04/19/vanguard-launches-advice-service-with-0-79-all-in-fee/

"The headline cost will incorporate annual platform charges of 0.15 per cent, ongoing fund charges of 0.12 per cent, transaction costs and an advice fee of 0.5 per cent."

The advice service seems to have disappeared from Vanguard's website.

Malthusian

GeoffTF said:

The advice service seems to have disappeared from Vanguard's website.

I found it here via a site: Google search, but if there's a way to get to it by browsing the website in the normal way, I haven't seen it.
My hunch is the Vanguard advice service is more for investors who ring them up asking questions that the frontline staff can't answer without straying into advice, rather than trying to grab a market share from IFAs and SJP. 
The "managed ISA" seems to be a halfway house for investors who don't want to pay for advice but don't feel comfortable picking their own funds either. Vanguard are competing with the likes of Nutmeg on that front.

Albermarle

Malthusian said:

GeoffTF said:

The advice service seems to have disappeared from Vanguard's website.

I found it here via a site: Google search, but if there's a way to get to it by browsing the website in the normal way, I haven't seen it.
My hunch is the Vanguard advice service is more for investors who ring them up asking questions that the frontline staff can't answer without straying into advice, rather than trying to grab a market share from IFAs and SJP. 
The "managed ISA" seems to be a halfway house for investors who don't want to pay for advice but don't feel comfortable picking their own funds either. Vanguard are competing with the likes of Nutmeg on that front.

Strange, because their competitors like HL and Fidelity, are not shy about offering their similar advice services.

eskbanker

Malthusian said:

GeoffTF said:

The advice service seems to have disappeared from Vanguard's website.

I found it here via a site: Google search, but if there's a way to get to it by browsing the website in the normal way, I haven't seen it.

A bit circuitous perhaps, but the main help page at https://www.vanguardinvestor.co.uk/need-help includes a topic headed 'Financial planning': https://www.vanguardinvestor.co.uk/need-help/topic/financial-planning