How to Fund the Life You Want - Investing in the S&P500

solidpro

Hi

I've done a speed read of this book and likely to go back in for an in-depth read later this week. I have a bunch of ISAs and SIPPs all into Vangaurd LS 80/100. I'm 44, good job, house paid off, planning for retirement in 10-15 years.

The book seems to generally recommend simply switching to a passive S&P500 fund. Do Vanguard or HL do such a thing?

Is this one? 

Is it really much different from LS100?

Thanks

JohnWinder

Actual name of the book? And one author?

dunstonh

The book seems to generally recommend simply switching to a passive S&P500 fund. Do Vanguard or HL do such a thing?

Why on earth would a book recommend an S&P500 tracker to a UK investor?  That would be poor quality investing.  I can understand it for a US based investor but not a UK investor who has to factor currency fluctuations.      Is the book written with UK investors in mind?

 I have a bunch of ISAs and SIPPs all into Vangaurd LS 80/100. I'm 44, good job, house paid off, planning for retirement in 10-15 years.

VLS100 can be improved upon as it is a global managed fund. A  global tracker would be better.   VLS80 seems pointless if you are happy to go 100% equity.

Is it really much different from LS100?

Very much so.

aroominyork

dunstonh said:

The book seems to generally recommend simply switching to a passive S&P500 fund. Do Vanguard or HL do such a thing?

Why on earth would a book recommend an S&P500 tracker to a UK investor?  That would be poor quality investing.  I can understand it for a US based investor but not a UK investor who has to factor currency fluctuations.      Is the book written with UK investors in mind?

Does your firm overweight the UK and if so why and to what degree? It seems to me there are three reasons why people overweight their home country:

- familiarity: only a valid reason if you are stock picking from companies you think you have greater insight into

- belief the UK will outperform

- reduce currency risk: would a better approach be to currency hedge a global fund?

solidpro

dunstonh said:

Why on earth would a book recommend an S&P500 tracker to a UK investor?  That would be poor quality investing.  

I actually try to avoid the UK purely because of the s-show that is at least 8 years of tory ineptitude with the UK economy.

eskbanker

solidpro said:

dunstonh said:

Why on earth would a book recommend an S&P500 tracker to a UK investor?  That would be poor quality investing.  

I actually try to avoid the UK purely because of the s-show that is at least 8 years of tory ineptitude with the UK economy.

Not necessarily an invalid opinion but definitely something worth declaring upfront if promoting investment solely in another market, which runs counter to the usual guidance about diversifying!

jaypers

Sounds like bad advice. Always look to medium to long term and my advice would be to balance your portfolio over a number of different geographical locations and different sectors. Risk factor is another thing to consider, a lot of which is based on your own profile and appetite etc. 

GazzaBloom

dunstonh said:

The book seems to generally recommend simply switching to a passive S&P500 fund. Do Vanguard or HL do such a thing?

Why on earth would a book recommend an S&P500 tracker to a UK investor?  That would be poor quality investing.  I can understand it for a US based investor but not a UK investor who has to factor currency fluctuations.      Is the book written with UK investors in mind?

 I have a bunch of ISAs and SIPPs all into Vangaurd LS 80/100. I'm 44, good job, house paid off, planning for retirement in 10-15 years.

VLS100 can be improved upon as it is a global managed fund. A  global tracker would be better.   VLS80 seems pointless if you are happy to go 100% equity.

Is it really much different from LS100?

Very much so.

Do you have any data to show the long term effect of USD/GBP currency fluctuations on US investments for UK investors?

dunstonh

Does your firm overweight the UK and if so why and to what degree?

No. it actually underweights it on the latest weightings (just 1.50%).   Although lower risk levels move that up a little.

Do you have any data to show the long term effect of USD/GBP currency fluctuations on US investments for UK investors?

yes. 

Broadly speaking, when Sterling falls against the dollar, the returns on US equities priced in Sterling (the most common method) will see a gain for UK investors.  However, when sterling rises, it creates a drag on US equities.

The last decade has mostly benefitted by being heavy in US.  However, the cycle before saw the US one of the worst areas to invest in for UK investors.  Frequently, it alternates between cycles as Sterling/dollar moves  cycle up and down.

Global vs US is another one worth looking at.  That too tends to take it in turns.

Going 100% into one country when you are not "living" the currency of that country is an increased risk.      

When articles/books are written for the US market, they tend to talk S&P500 tracker.  When the same books/articles are copied for the UK market, they tend to talk global tracker.   The risk to a UK based newbie investor is reading US targeted stuff and thinking that it applies to them.

solidpro

How to Fund the Life you Want is specifically written post-pandemic by people in the UK, for people in the UK... that's why I was reading it!

Exodi

solidpro said:

I have a bunch of ISAs and SIPPs all into Vangaurd LS 80/100

solidpro said:

I actually try to avoid the UK purely because of the s-show that is at least 8 years of tory ineptitude with the UK economy.

I'm sorry to be the bearer of bad news, but the Vanguard managed funds (VLS80 & VLS100) have a significant home (UK) bias.

Where the FTSE All World Index might show that the UK is approximately 4% of global market capitalisation, the UK makes up about 25% of VLS100.

Most global trackers will have ~60% invested in the US, going 'all in' on the S&P 500 is of course risky and is mainly promoted by those looking backwards not forwards.